November 2, 2012
NLRB’s Halloween at-will advice is not so scary
Wednesday was Halloween, and my neighborhood was crawling with trick-or-treaters. The scary part was not the kids or their costumes. Rather, it was the insomnia-inducing sugar rush I got after working quality control on the night shift.
Also on Wednesday, one scary trend in the world of employment law seems to have been averted. The trend was that in a couple of National Labor Relations Board (NLRB) cases, common at-will employment clauses were interpreted as violating the National Labor Relations Act. However, on Wednesday the NLRB’s Acting General Counsel, Lafe Solomon, issued an Advice Memo which analyzed two such clauses and reached the not-so-scary conclusion that they did not violate the Act.
In one case, a handbook which had been issued by Rocha Transportation of Modesto, CA included the following at-will clause:
No manager, supervisor, or employee of Rocha Transportation has any authority to enter into an agreement for employment for any specified period of time or to make an agreement for employment other than at-will …. Only the president of the Company has the authority to make any such agreement and then only in writing.
In the other case, the handbook used by Mimi’s Café in Casa Grande, AZ said:
No representative of the Company has authority to enter into any agreement contrary to the foregoing “employment at will” relationship.
The scary part was that in other recent NLRB cases, similar clauses were interpreted as being unlawful waivers of employees’ rights to engage in collective bargaining under the NLRA. If that trend were to continue, the at-will clauses in countless employee handbooks across the country would be subject to challenge.
However, the NLRB’s Halloween Advice Memo allays those fears somewhat by concluding in the Rocha case that because the at-will clause explicitly states that the relationship can be changed, employees would not reasonably assume that their NLRA rights are prohibited. Similarly, regarding Mimi’s Cafe, the Advice Memo notes that the at-will clause was not unlawfully broad because it does not require employees to agree that the employment relationship cannot be changed, but merely stresses that the employer’s representatives are not authorized to alter it.
What you need to know: At-will employment generally gives employees and employers alike the flexibility to end their relationship at any time, with or without notice, and for any lawful reason. Handbook clauses like the ones noted above are intended to help preserve that status. However, if they are not properly drafted, or if they are inconsistent with an employer’s other documentation, the clauses may be unlawful or may not actually preserve the at-will employment relationship. Therefore, to ensure compliance, employers should have their at-will employment documentation reviewed by legal counsel.
For more information about this article, please contact me at taj@alexandriamnlaw.com.
Copyright 2012 Swenson Lervick Syverson Trosvig Jacobson Schultz, PA
September 5, 2012
Called for Interference — off the Gridiron and in the Board Room
It’s that time of year again. The Twins’ dismal season is almost over, the Lynx are enjoying another great run, and we hope that maybe — just maybe — this will be the year the Vikings make the playoffs or the Gophers make it to a bowl game. In the meantime, we’ll have to wait and see if the replacement refs hired by the NFL during the lockout can tell the difference between good pass defense and interference.
The gridiron isn’t the only place where interference can be called, for interference can also be called on the playing field of business. Specifically, if someone improperly interferes with a contract between others, the interfering party can be held liable for the interference. Interference can also be called if someone improperly interferes with the potential business relationship between others.
But like in football, where there is a difference between good pass defense and pass interference, there is a difference between good old-fashioned business competition and wrongful interference. To prove improper interference with a contract, a plaintiff must prove that s/he had a contract with another, that the defendant knew about the contract, that the defendant intentionally caused a breach of the contract without justification, and that the plaintiff suffered damage because of the interference.
For example, if a company hires a great employee who once worked for a competitor, that’s just good old-fashioned competition. But, if that company knowingly hires an employee who should not work there because of a non-compete agreement with a former employer, the former employer may have a valid claim for contractual interference against the new employer.
What you need to know: As a part of the hiring process, employers should develop a protocol for asking applicants if they are subject to any non-compete agreements, confidentiality agreements, or similar contracts that may restrict their ability to work for the new company. This is particularly true for executive and management-level hires and all hires in highly competitive and technical industries where non-compete and confidentiality / non-disclosure agreements are relatively common.
Figuring out and playing by the rules in the business play book can be difficult. When you need help understanding or enforcing them, stop in, call, or contact me at taj@alexandriamnlaw.com.
Copyright 2012 Swenson Lervick Syverson Trosvig Jacobson Schultz, PA
July 18, 2012
Is your at-will employment policy at risk?
At-will employment is perceived as a sacred cow for most employers, but in a pair of recent cases the National Labor Relations Board (NLRB) has successfully challenged the at-will employment policies of two U.S. employers.
Generally speaking, at-will employment is the concept that employees are employed for no particular duration. This means that either the at-will employee or his/her employer may end their employment relationship at any time, with or without notice, and with or without cause. The vast majority of Minnesota employees are at-will employees. The polar opposite of at-will employment is employment subject to contractual terms, such as a union contract.
When improperly written, employee handbooks and similar written policies can be interpreted as contracts which, contrary to the at-will concept, give employees the right to continued employment, pre-termination disciplinary actions and/or other protections. Thus, to preserve the at-will relationship, astute employers include in their employee handbooks and other policy documentation language disclaiming any contractual relationship and confirming the at-will status.
These types of disclaimers were recently challenged by the NLRB in the cases of Hyatt Hotels Corporation and American Red Cross Arizona Blood Services Region. The Hyatt case involved an acknowledgment form which indicated that the employees’ at-will status could not be altered except by a written statement signed by the employee and specified company executives. Similarly, the American Red Cross case involved a disclaimer which stated that the employees’ at-will status could not be amended, modified or altered in any way.
The NLRB argued that these limitations on how the employees’ at-will status could be changed were unlawful interference with the employees’ rights to engage in protected concerted activity, such as collective bargaining. The Hyatt case was settled when Hyatt agreed, among other things, to discontinue using the challenged language in its acknowledgment form. The American Red Cross case resulted in the NLRB issuing an order compelling the employer to cease and desist from using the disputed language in its forms.
What you need to know: To preserve the at-will employment relationship, employee handbooks and related policy documentation must include appropriate disclaimers. However, to reduce the risk of a legal challenge, those disclaimers must be carefully written so as to not interfere with employees’ rights under the National Labor Relations Act. Existing disclaimers should be reviewed by legal counsel for compliance in light of these recent NLRB cases.
For more information about this article, please contact me at taj@alexandriamnlaw.com.
Copyright 2012 Swenson Lervick Syverson Trosvig Jacobson Schultz, PA
August 15, 2011
Fired & defamed: MN CEO wins $4 million award
Firing its CEO and claiming it was for cause when it really was not proved to be a costly mistake for Minnesota-based Advanced BioEnergy, LLC. According to a report in Minnesota Lawyer, ABE’s founder and former CEO, Revis Stephenson III, recently won a $4 million arbitration award after the company falsely claimed he was terminated for cause.
Stephenson’s contract with ABE provided that if he was fired without cause, he would be paid a severance worth approximately $800,000.00, but if he was fired for cause, he would be paid nothing. The agreement also defined “cause.” ABE fired Stephenson and said it was for cause, and Stephenson challenged the company’s decision. The case went to arbitration, and the arbitrator found that the company did not have cause to terminate Stephenson but had only called it that to save money. Moreover, the arbitrator concluded that ABE defamed Stephenson by falsely claiming it had cause for firing him. The arbitrator awarded Stephenson $1 million for defamation, and the parties later agreed to a $4 million settlement for all claims.
As the arbitrator in this case noted, a false “for cause” label can hurt an employee’s job prospects. Therefore, employers who want to dismiss an employee for cause need to make sure that’s the true reason because a false “for cause” characterization could lead to a claim for defamation.
For more information about this case, see CEO receives $4M award for defamation, Minnesota Lawyer, Aug. 5, 2011, or contact me at taj@alexandriamnlaw.com.
Copyright 2011 Swenson Lervick Syverson Trosvig Jacobson, PA
June 30, 2011
Parades, puppies and the “Fargo” woodchipper
Last week I took a staycation. Despite the fact that it was one of the rainiest June weeks on record for our neck of the woods, we had a great time. We watched two parades and a swim meet, spent time with our son who is home on leave from the Air Force Academy, and we played with our litter of Labrador pups . We even took a side-trip to Fargo to see the wood chipper from the movie, Fargo. And, except for my first day off when I needed to put out a fire that started the day before, I managed to not check my work e-mail or voice mail for a week.
But what if I had checked my e-mail or voice mail? What if I had texted my secretary or my clients? What if I had decided to post this commentary from home during one of those downpours? Telecommuting, or “telework,” would have allowed me to turn my staycation into a working vacation.
Telecommuting offers tremendous benefits. It allows for flexible work arrangements. It can save on fuel and other transportation costs. It can keep employees productive when circumstances would otherwise prevent them from working.
But telecommuting can also be a trap for the unwary. Aside from the fact that it can distract us from our R&R, working remotely raises a number of employer-employee issues, such as:
* How are working hours tracked for an employee who works remotely?
* Is the telecommuting employee getting the break time to which s/he may be legally entitled?
* Is the employee entitled to overtime when the hours worked remotely are added to his/her workweek?
* Is an employee really on “leave” if s/he is working remotely while supposedly taking time off?
* Is the employee entitled to any tax deductions for a “home office”?
* To what extent is an employee entitled to worker’s compensation benefits if s/he is injured while working from home, and does this give the employer the right to inspect the employee’s home for safety concerns?
* How secure is the employer’s data if an employee is accessing it from or storing it on his/her home computer?
* What privacy rights, if any, does an employee have with respect to his/her cell phone, computer, etc. that is used to work remotely?
* Which jobs work best for telecommuting arrangements?
* What is lost (or in come cases, gained) when telecommuting co-workers do not have face-to-face contact?
* How can the employer be assured that the teleworking employee is actually working?
To avoid falling into a telecommuting trap, employers need to understand the risks, as well as the rewards, of remote working arrangements. Then, by developing telecommuting agreements and policies, employers can take full advantage of the benefits that telecommuting can offer. For more information about the development and use of such policies and agreements, please contact me at taj@alexandriamnlaw.com.
Copyright 2011 Swenson Lervick Syverson Trosvig Jacobson, PA
January 19, 2011
Firing over false gun rumor costs Rochester, MN hotel $476,326.00
Two weeks ago, I commented on the case of a Minnesota casino employee who was fired for bringing a gun to work (Packin’ heat at work: Is it always employment misconduct? http://bit.ly/fSLNWC). There, the Minnesota Court of Appeals upheld a determination that the employee’s actions were misconduct which disqualified him from unemployment benefits.
But what if an employer fires an employee based on the mistaken belief that he brought a gun to work and threatened to kill management, his union representative and himself if things didn’t go his way? For the Rochester, MN Marriott hotel, the mistake was very costly, for it resulted in a $476,326.00 jury verdict in favor of a discharged bellhop, Jeff Moen. The case was Moen v. Sunstone Hotel Properties, Inc. d/b/a Marriott Hotel.
The gun rumor started circulating in October, 2007. When management learned of it the next day, they took immediate steps to fire Moen. This included informing the supposedly threatened union representatives and interviewing the co-workers who had heard the rumor. When Moen reported to work, he was frisked by a police officer, escorted to a conference room and fired. Both the hotel and the union then sought restraining orders and barred him from the hotel and the union hall.
The problem for the hotel was that the rumor was false. In a subsequent investigation by Moen’s attorney, the bellman who allegedly heard Moen’s gun threat denied ever hearing or repeating it.
Moen sued for breach of his union contract and defamation. The jury awarded him $157,326.00 in lost wages, $200,000.00 for past damage to reputation and $119,000.00 for future damage to reputation.
The case points out the difficult question that arises when an employer is confronted with threats of potential workplace violence: to what extent must the employer investigate the threat before taking action? If the employer reacts too cautiously, and it turns out that the threat is real, the result could be disastrous. If, as in Jeff Moen’s case, the employer reacts too aggressively, the result could be costly. It appears that to avoid this result, Marriott should have dug a little deeper to get to the underlying source of the rumor before actually firing Moen.
For more detail about the case, see Fired bellhop gets $476K for defamation, says Olmsted County District Court, http://bit.ly/gWngAs.
If you have any questions about this post, please contact me at taj@alexandriamnlaw.com.
July 22, 2010
Scent Company Passes Smell Test after DOL Independent Contractor Audit
St. Croix Sensory, Inc. is a sensory laboratory that specializes in odor testing, training, and sales and rental of sensory equipment. It hires “sensory assessors” to perform odor evaluations. The company enters into a contract with each assessor that states that the assessors are independent contractors and not employees.
These relationships worked well until the Minnesota Department of Labor started sniffing around during a routine audit. After that audit, the DOL determined that the assessors were employees, not independent contractors. The DOL ordered St. Croix to pay unemployment taxes on the wages earned by 37 workers.
Thinking that the DOL’s decision really stunk, St. Croix appealed to the Minnesota Court of Appeals. In its July 20, 2010 decision the COA overturned the DOL’s determination and ruled that the workers were independent contractors.
In its sixteen-page opinion, the COA emphasized that the contracts themselves were not determinative. The COA also stressed that because there is no general rule that covers all situations, each case must be judged upon its own particular facts. The COA then analyzed in detail the five main factors it considered: (1) The right to control the means and manner of performance; (2) the mode of payment; (3) the furnishing of material or tools; (4) the control of the premises where the work is done; and (5) the right of the employer to discharge. The COA also considered thirteen other criteria recognized under Minnesota law.
Ultimately, the COA found that based on the facts in this case, St. Croix’s sensory assessors passed the independent contractor smell test, so St. Croix came out smelling like a rose.
The case is St. Croix Sensory, Inc. v Department of Employment and Economic Development. You can read the COA’s opinion at http://bit.ly/apRUOq.
The case highlights how important it is to not rely on just a contract or loose “independent contractor” designations of workers. Rather, the entire working relationship must be considered in light of all of these factors. After all, if workers smell like employees, they are employees even if they are called independent contractors.
The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.
June 16, 2010
Contractual Disclaimer in Employee Handbook Defeats Lund Boat Employees’ Claims
The case, Roberts v. Brunswick Corp., involved a change in the vacation policy at the Lund Boat Company which is owned by Brunswick. After Brunswick acquired Lund, it implemented a new vacation policy. Several Lund employees were unhappy with the change because they preferred the old policy, and they believed Brunswick was contractually obligated to follow it. The employees also felt that Brunswick breached that contract by refusing to honor a promise to credit them with earned vacation pay.
In the employees’ ensuing class-action lawsuit, the trial court sided with the employees. The trial court concluded that the company’s employee handbook, which included the old vacation policy, created a unilateral employment contract because it referred to vacation pay in the context of a general benefit.
Brunswick appealed, and the Minnesota Court of Appeals reversed the trial court’s decision on the handbook-as-a-contract issue. Crucial to the appellate court’s decision was the fact that the handbook included a disclaimer establishing that the handbook did not created a contract. Because it did not create a contract, Brunswick was free to modify its vacation policy, and doing so was not, therefore, a breach of contract.
The case stresses the importance of including a properly drafted contractual disclaimer in employee handbooks for Minnesota employers who do not want to be contractually bound to policies and procedures stated in their employee handbooks and policy manuals.
You can read the entire opinion at http://bit.ly/bQT99q.
The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.
June 9, 2010
When “may” means “must” in a progressive discipline policy, according to the Minnesota Court of Appeals
In a rare reversal of an unemployment law judge’s decision, the Minnesota Court of Appeals has ruled that despite an employee’s “ongoing attendance problems” which had resulted in warnings and a suspension, the employee did not commit employment misconduct, and he is, therefore, eligible for unemployment benefits.
At issue was the employer’s progressive discipline policy which said that for attendance problems, the employee “may” be disciplined in accordance with a schedule that progressed from an oral warning, to a written warning, to 3 and 10 day suspensions, and finally, termination. The Court of Appeals rejected the argument that by using the word “may” in the policy, the employer retained the discretion to skip certain steps. The Court reasoned that the employer’s only discretion was whether or not to discipline at all and that once it decided to discipline for the attendance problem, it had to follow each progressive step. Because the employer in this case skipped the 10 day suspension and fired the employee, the Court ruled that the employee’s absenteeism was not employment misconduct.
The Court also rejected the argument that the employer’s obligation to follow the progressive discipline was nullified by a contractual disclaimer. The Court noted that this argument might have been successful, but there was no evidence of any such disclaimer in the record.
The case, Stagg v. Vintage Place, Inc., highlights the importance of making sure that when employers want to maintain an at-will workforce, their employee handbooks must contain language that properly disclaims any contractual obligations and maintains the employer’s discretion regarding discipline and discharge policies and procedures. It also points out how important it is to make sure that critical evidence is part of the record before an unemployment decision is appealed.
You can read this unpublished decision at http://www.lawlibrary.state.mn.us/archive/ctapun/1006/opa090949-0601.pdf.
The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.
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