Texas Employee Awarded $11.6M by Austin Jury in Defamation Case

It's a rare day in Texas where a single-plaintiff employment case results in a seven or eight figure jury verdict.  However, as the Austin Business Journal recently reported,Microsoft was hit with an $11.6M jury verdict in a defamation case filed by a former employee falsely accused of sexually harassing a Microsoft contractor.

Defamation cases can be particularly dangerous for employers and individual supervisors alike.  Good reputations are valuable and difficult to quantify.  Additionally, defamation claims are one of the few claims where individual managers and supervisors can be held personally liable. Consequently, when it comes to discussing information about former employees with third parties, Thumper's father was right.  "If you can say something nice, don't say nothing at all."

A copy of the Mercieca v. Microsoft complaint can be viewed here.

Follow my on Twitter @RussellCawyer.

Ebola Discovered in Texas: What Employers Need to Know

As every national news program has announced, the Ebola virus has been diagnosed in a North Texas patient. This is the first diagnosed case of Ebola in the United States.  According to reports, the Liberian national traveled from Liberia through Brussels, Washington D.C., to Dallas, Texas where he was eventually diagnosed with the virus.  Given that the virus has now crossed the Atlantic to the United States, here are a few things employers should know.  

What is Ebola and how is it transmitted?

Ebola, a/k/a hemorrhagic fever, is a deadly virus with no known vaccine (although several experimental treatments are being tested).  The virus has a high fatality rate between 59 and 90 percent.  Symptoms include the sudden onset of fever greater than or equal to 101.5°F, malaise, headache, diarrhea, weakness and vomiting. Symptoms tend appear between two days and three weeks after exposure.  Patients are not contagious if they do not have symptoms.  Ebola is not transmitted through the air or through casual contact.  It is transmitted through contact with infected blood or bodily fluids.

What should employers do?

First, don’t panic.  The epidemic is primarily limited to West Africa.  Given that there has only been one case of the virus diagnosed in Texas and that instance was an imported infection, there does not appear to be an immediate need for employers to take any action other than to monitor current events and be advised if there is a spread or increase in the number of known U.S. cases.  

If, however, your employees work in certain industries such as healthcare, laboratory workers handling human specimens or international airports or airline operations, there is a greater risk of exposure to early onset Ebola virus than for members of the general population.  Healthcare and laboratory workers should strictly follow their hospital's infection control protocols when handling human bodily fluids.

Similarly, the CDC has issued guidance on steps air carriers can take to protect their work forces.

Second, if the virus spreads in the United States, employers in non-high risk operations should consider making plans for continuing operations in the event of a mass outbreak.  These can include:

  • Identifying key, critical business functions.
  • Creating clear succession plans for key personnel.
  • Training of employees in Ebola signs, symptoms and avoidance.

The Houma-Terrebonne Chamber of Commerce has information on how employers can make plans for Emergency Preparedness and Business Continuity here.

Third, if employees begin to become apprehensive about the potential for a U.S. outbreak, employers can provide training in Ebola prevention and awareness.  The CDC offers some suggestions on how to avoid contracting Ebola. (here).  Educating employees and offering them steps to take to prevent infection may relieve some of their apprehension.

Finally, if a Texas employer believes that it has knowledge of a potential case of Ebola, it should report that belief to the Centers for Disease Control and Texas Department of Health and Human Services.

Resources

The CDC has a site in its Workplace Safety and Health page on Ebola and employers should bookmark this page for reference in the event a spread of the disease occurs.  A link to the page is here.  

The U.S. Department of Labor, Occupational Health and Safety Department also has on-line resources and education about protecting employees from Ebola here.

While it currently appears that most U.S. employers and their workforces have little to fear from the Ebola virus, an ounce of prevention is worth a pound of cure.

Follow me on Twitter @RussellCawyer

Broad Definition of Disability Can Provide Some Advantages for Employers in Disability Suits

The Americans with Disabilities Amendments Act greatly expanded the definition of what constitutes a disability.  Consequently, it increased the number of employees who qualify for the protections of the Act (or as I often lament, we’re all disabled).  A positive consequence of this broad definition of disability for defendant-employers is the increased likelihood that in any disability discrimination case, the facts may allow an employer to argue that the plaintiff was not replaced with someone outside the protected class (i.e., nondisabled). Where the threshold to qualify as disabled is so low, plaintiff employees, and replacements alike, likely to qualify as disabled. Which reminds me of Syndrome statement in the The Incredibles; “everyone’s super, no one will be."

Follow me on Twitter @RussellCawyer.

Adrian Peterson Situation Spotlights Dilemma Employers Face Frequently.

Our family has a fantasy football league and my 13 year old son Benjamin drafted Adrian Peterson in the pre-season draft. Earlier this week when the Minnesota Vikings activated Peterson to play this weekend, Benjamin was faced with a decision many employers have to make; whether to allow an employee who has been charged, but not convicted, of a criminal offense will be allowed to perform his craft for the employer.

The options employers most frequently chose from when faced with an employee with a pending criminal charge are allowing the employee to continue to work; suspending the employee with or without pay pending resolution of the criminal proceeding or ending the employment relationship altogether. 

Current EEOC guidance discourages employers from making employment-related decisions based on arrests not resulting in convictions. Similarly, our criminal justice system affords the accused the presumption of innocence until proven guilty (something not binding on employment decisions of the employer).

Because the law does not dictate how these decisions are made, they are often driven by economic, business and public relations considerations rather than legal considerations. Is the employee a solid or marginal performer? Does the employee have a control over significant revenue or key customers? Is the offense charged particularly serious or heinous? Has the crime generated media coverage? Peterson was activated to play this weekend because he is a talented running back that the Viking need to play. He was deactivated following the public outcry and sponsors threating or actually pulling their sponsorships of the team. Only when the financial impact of Peterson’s participation outweighed the benefit he could bring on the field did the Vikings reverse course and deactivate the star.

This week, the Vikings made the choice for Benjamin’s fantasy team. The team deactivated the running back and my son had no choice but to bench him this week. I’d like to have watched to see whether Benjamin would have played Peterson this week if the Viking’s hadn’t deactivated him. 

Follow me on Twitter @RussellCawyer.

NFL Could Take a Lesson from Human Resources in Conducting Investigations

Yesterday TMZ released shocking video of former Baltimore Ravens running back Ray Rice knocking his then-fiancée out in a casino elevator. Roger Goodell, the NFL Commissioner had, following the league’s investigation, given Rice a two-game suspension for the incident of domestic violence. Following the release of the in-elevator footage, Goodell suspended Rice indefinitely from the league.  You can see the in-elevator video here. (graphic)

In a press release, NFL spokesman said, “We requested from law enforcement all information about the incident, including the video from inside the elevator. That video was not made available to us and no one in our office has seen it until today.” The NFL’s investigation and failure to obtain available evidence before initially suspending Rice for two games has, at a minimum, caused significant embarrassment to the league, and may cost Goodell his job.

When conducting an investigation into player misconduct, the NFL could learn some lessons from human resources professionals. When conducting investigations into complaints of discrimination, harassment or workplace misconduct, human resources professionals know that it is important to obtain all the available evidence and information before making conclusions on the investigation. This includes interviewing all of the available witnesses, requesting relevant documents and tangible items from the complaining party, the accused, witnesses and even third parties. 
 
Here, the NFL’s investigation broke down and was inadequate. While the NFL allegedly requested a copy of the video tape from law enforcement authorities (who are unlikely to provide evidence to the league on an open criminal investigation), Fox Sports is reporting that the NFL never asked the casino for a copy of the in-elevator videotape and must have never asked Rice if he had a copy. The casino told Fox Sports that it would have given a copy of the video to the NFL had it had asked just as it gave a copy to the police and to Ray Rice’s lawyer. As a result of failing to obtain or view the in-elevator footage prior to making its initial disciplinary decision, the NFL made its decision without a full appreciation of the facts –something that today, with the benefit of hindsight, I am sure the league and Goodell surely regret.

The NFL’s investigation into the Rice incident emphasizes the importance of a thorough investigation before reaching conclusions and making decisions that affect worker’s employment. If evidence that was available to the investigator at the time of the investigation is not obtained, or at least requested (without good excuse), the failure to obtain or evaluate that information can undermine the thoroughness and adequacy of an investigation. Employers, and the NFL, should strive to make important decisions, only after considering all of the information that is available or readily obtainable. 

As the NFL and Roger Goodell are about to learn, failure to conduct thorough investigations can have serious consequences. Roger Goodell’s tenure as NFL Commissioner may well be at an end.

Follow me on Twitter @RussellCawyer

Employee Wins Reversal of Religious Discrimination Defeat at the Fifth Circuit

Last week I wrote about a religious discrimination case where an employer snatched victory from the jaws of defeat at the Fifth Circuit Court of Appeals. This week, we have a Fifth Circuit opinion where the court took away an employer’s victory in another religious discrimination case and sent the case back to the trial court for trial. Today’s case should remind employers of their religious accommodation obligations and how those obligations may differ from reasonable accommodations required under the Americans with Disabilities Act.

In Davis v. Fort Bend County, Fort Bend County was scheduled to install a computer network and audiovisual system in the newly build Fort Bend County Justice Center. Lois Davis was a four year employee of the County IT department. All technical support employees were required to participate in the installation that was scheduled for the July 4th weekend. One week before the installation project, Davis told her supervisor she could not attend on Sunday, July 3rd due to a previously scheduled religious commitment. The religious commitment was the ground breaking of a new church and feeding the community. Davis told her supervisor that the commitment was a special church service but that she was more than willing to come in after church services. She also had arranged for a replacement during her absence as she had done in the past. Her supervisor did not approve the absence and told Davis that her absence would be grounds for discipline. When Davis attended her religious event rather than the IT installation, the County terminated her employment.

The trial court granted the County’s motion for summary judgment concluding that Davis’ absence from work was due to a personal commitment rather than a religious committment and noted that being an avid and active member of a church did not elevate every activity associated with the church to a legally protectable religious practice. The court of appeals rejected this conclusion observing that the proper inquiry was not whether the July 3rd event was itself a religious event but whether Davis sincerely believed it to be religious in her own belief system. The appellate court also went on to state that an employee’s sincerity of her religious practice is largely a matter of individual credibility and the judicial inquiry into the sincerity of that belief should be handled with a “light touch” or “judicial shyness.” Applying these standards to the record evidence, the court of appeals held that the employer’s victory had to be reversed and the case sent back to the trial court for a potential trial on the merits.

What Davis should remind employers is that there are significant differences in handling employee’s request for accommodation of their religious beliefs and accommodations required under the ADA. 

A few thoughts about Title VII’s religious obligations for employers:

  • Treating all employees the same despite their religious beliefs can lead to discrimination claims;
  • It is difficult to challenge the sincerity of an employee’s religious belief;
  • Virtually any religion, moral or belief system will qualify as a Title VII religion (e.g., Church of the Flying Spaghetti Monster);
  • Employers have an obligation to accommodate the known, sincerely held religious beliefs that conflict with an employee’s work obligations;
  • Reasonable accommodations that pose an undue hardship need not be granted.
  • Under Title VII, undue hardship includes any accommodation that is more than de minimis expense.

Employers may consider a variety of accommodations that might not constitute an undue hardship under the right circumstances including:

  • Voluntary Substitutes or Job Swaps;
  • Flexible scheduling;
  • Job transfers and reassignments;
  • Use of paid time off (e.g., vacation) or unpaid time off;
  • Dress and Grooming Code Changes

You can download a complete copy of Davis v. Fort Bend County here [.pdf].

Follow me on Twitter@RussellCawyer.

Texas Supreme Court Holds that Forfeiture Provision In Incentive Plan Not A Noncompete

I wrote about the case of Drennen v. Exxon Mobile over a year ago.  Drennen was the case of the Exxon executive who forfeited millions of dollars in incentive compensation when he left Exxon to work for a competitor.  You can read the background of the case here.  Today, the Texas Supreme Court held that a forfeiture clause contained in Exxon's non-contributory profit sharing plan (i.e., a plan to which the employee contributes nothing) did not constitute covenant not to compete under Texas law.

Because the forfeiture provision was not a noncompete, the public policy of the state of Texas was not implicated and the court held that the parties' choice of law provision should be honored.  The effect of applying New York, rather than Texas law, was that Exxon wins and Drennen loses his nearly $6M in incentive compensation. Not answered in today's opinion is whether such forfeiture provision would have been enforceable under Texas law.

Three takeaways from today's opinion.

  • Texas law still compels ignoring foreign choice of law provisions for noncompetition agreements with Texas-based employees;
  • Forfeiture provisions conditioned on continued loyalty in agreements do not necessarily constitute noncompetition agreements;
  • Forfeiture provisions conditioned on continued loyalty in employment agreements, may still however, be unreasonable restraints of trade under Texas law (not decided today).

You can download the court's opinion in Exxon Mobil Corp. v. Drennen here [.pdf]

Follow me on Twitter @RussellCawyer.

Distinction Between Supervisor/Nonsupervisor Makes $70,000 Difference in Religious Discrimination Case

The status of an employee as a supervisor or nonsupervisor can have a significant impact on the outcome of a discrimination, harassment or retaliation case. For example, if an employee who commits a hostile work environment is a supervisor, the employer could be deprived of valuable legal defenses like the Faragher/Ellerth affirmative defense. A recent case from the Fifth Circuit highlights the importance this distinction can make.

In Nobach v. Woodland Village Nursing Home Center, Inc, a religious discrimination case, a nursing home activities aide, sued her employer because she was terminated from her position for refusing to pray the Rosary with a patient. Kelsey Nobach was asked by a nonsupervisory co-worker to transport a patient from the dining room to the patient’s room. The co-worker informed Nobach that the resident had requested that the Rosary be read to her. Nobach told the co-worker that she could not read the Rosary to the patient because it was against her religion but invited the co-worker to do so if she wanted to. The co-worker did not respond and Nobach did not think anything more of the conversation.

When no employee read her Rosary, the patient complained to management. Management decided to terminate Nobach’s employment as a result of her refusal to read the Rosary to the patient. After being informed of the decision, Nobach, for the first time, informed management that performing the Rosary was against her religion. There being no dispute that Nobach was terminated for refusing to read the Rosary to the patient, a jury found in favor of the plaintiff on her Title VII religious discrimination claim and awarded her nearly $70,000.

On appeal, the employer challenged whether there was any evidence that the employer knew of Nobach’s religious beliefs before it discharged her. The only person Nobach ever told that praying the Rosary was against her religion was her nonsupervisory co-worker. Being unable to point to any evidence that the employer, its supervisors or management, knew at the time the discharge decision was made, that praying the Rosary was against Nobach’s religion, the Court of Appeal reversed the judgment. As noted by the Court, had Nobach told a supervisor of her beliefs before the decision was made, or if the co-worker she did advise about the conflict between her religious beliefs and her job was a supervisor, the judgment would have been affirmed.  Here the status of the employee Nobach told of her religious beliefs ended up being outcome determinative.

You can download a complete copy of Nobach v. Woodland Village Nursing Center, Inc. here [pdf].

Follow me on Twitter @RussellCawyer.

Delivery of FMLA Notices by First Class Mail Does Not Rule Out Disputes Over Receipt of Notice

The DOL regulations require FMLA-covered employers to provide various notices to employees.  The regulations do not dictate how all of the notices must be delivered.  Most employers utilize hand-delivery or regular U.S. mail for most pre-leave notices (eligibility and pre-leave designations) and use U.S. mail almost exclusively for post-leave notices (i.e., when the employee is already out on leave).  A federal court of appeals opinion earlier this month from the Third Circuit should cause employers to analyze how they deliver important notices to employees to ensure that disputes do not arise about whether the notices were sent to and received by employees.   

In Lupyan v. Corinthian College, a dispute arose over whether the employer properly notified the employee that her leave of absence was designated as FMLA leave.  Lupyan was an instructor at the Corinthian College (CCI).  When her supervisor noticed that Lupyan seemed depressed, he suggested she take a personal leave of absence.  After Lupyan requested a personal leave of absence, the supervisor then suggested she apply for short-term disability instead. She began a "personal" leave in December 2007.  Lupyan met with her physician and had him complete a DOL "Certification of Health Provider" form.  Based on the submission of the health provider certification, human resources determined that Lupyan's leave qualified for FMLA leave. 

Human resources met with Lupyan and instructed her to initial her leave request as "Family and Medical Leave".  Lupyan's FMLA leave rights, including the requirement that she return within twelve weeks, were otherwise not discussed at the meeting.  Later that afternoon, the human resources representative mailed Lupyan an FMLA Designation Notice designating her leave as FMLA leave and advising her of her rights under the Act.  The letter was mailed first class U.S. mail.  Lupyan denies she received the letter and denies that she was told she had to return within twelve weeks.   

On April 1, 2008, (five weeks after her twelve weeks of FMLA leave exhausted), Lupyan announced she was ready to return to work.  CCI refused to reinstate her citing low student enrollment and because she had not returned within her twelve weeks allotted for FMLA.  Lupyan brought suit alleging that the college interfered with her rights under the FMLA by failing to give notice that her leave fell under that law and retaliated against her for taking FMLA leave.  The trial granted CCI's motion for summary judgment concluding that CCI had advised Lupyan of her FMLA rights; specifically the obligation that she return within twelve weeks.  The court reached this conclusion relying on the "mailbox rule" evidentiary presumption that a letter properly addressed, mailed and with sufficient postage is deemed received by the recipient. 

On appeal, the Third Circuit Court of Appeals reversed the trial court's decision finding that Lupyan's denial that she received the letter created a factual dispute that could not be resolved by the trial court on summary judgment and should be resolved by a jury.  This holding is significant in that the majority of employers provide required FMLA disclosures and notices by first class U.S. mail.  First class U.S. mail provides no record that the mail was actually delivered to  or received by the employee.  In the rare case, like Lupyan, where there is a dispute about whether the employer sent or employee received required FMLA disclosures sent by first class U.S. mail, the dispute will likely need to be determined by a jury.

Lessons for Employers.

The ideal method to deliver FMLA required notices (and any other important notices the employer wants to prove the employee received) is in a manner that the employee cannot credibly dispute that the notice was received.  This is most commonly achieved by having the employee sign some form of acknowledgment of receipt.  This may be done using hand-delivery; express mail delivery; certified U.S. mail return receipt requested; or electronic delivery.

Hand-delivery alone, from an evidentiary, is not much better than delivery by U.S. mail because proof of delivery will require testimony from the employer representative delivering the notice and is as easily controverted by the plaintiff-employee as is delivery by U.S. Mail (i.e., the employee denies that she received the notice).  If hand-delivery is used, the better method is to have the employee sign an acknowledgment of receipt when the notice is handed the notice.

First class U.S. mail, return receipt requested also provide good evidence of receipt.  The green card signed by the recipient to whom the notice was delivered can be used by the employer to show that the notice was delivered and by whom it was received.

FedEx, UPS and other express delivery service is ideal so long as it requires the employee to sign a document acknowledgment of receipt.  When using express delivery services the employer will want to ensure that delivery service actually obtains a signature from the employee evidencing delivery and does not merely leave the package at the employee's address.

Electronic delivery of documents through e-mail, text message, or other digital transmission is also a good indicator of receipt so long as there is a "read receipt", "successful fax transmission certificate" or a response from the employee indicating receipt (e.g., "I got it" or "Received").

Employers should consider whether their method of delivering important or required notices to employees is done in such a manner as to reduce the likelihood that disputes will arise over whether the notices were sent and/or received.   

You can download the full opinion in Lupyan v. Corinthian College here.

Follow me on Twitter @RussellCawyer.

Texas Employers Can Pay Employees in Bitcoin, But Why Would You?

According to a recent article by DLA Piper, more employees are requesting to be paid in Bitcoin. Bitcoin is a virtual or digital currency usually used for online payments. Although Bitcoin has only been around for five or six years and I doubt it will ever be used for the widespread payment of wages, Texas law currently allows for this form of payment. 

Texas law requires that employees be paid in U.S. currency, written instrument issued by the employer that is negotiable on demand at full face value for United States currency; or by the electronic transfer of funds.  However, Texas law allows for flexibility in the payment of wages and employers and employees may agree in writing to receive part or all of the wages in kind or in another form, including Bitcoin or even Euros.   

When a Texas employer pays an employee in any form other than U.S. currency, it takes a risk that any interruption in that payment can result in the potential liability for unpaid wages.  For example, if payment is refused for any reason, the payment attributable to the employer does not constitute the payment of wages.  Given the novelty of Bitcoin payments and the potential for security breaches involving Bitcoin payments and accounts, an employer takes unnecessary risks in making payments in anything other than U.S. currency or more traditional negotiable instruments (e.g., checks).

While there does not appear to be a significant demand for payment of wages by Bitcoin, at least one payroll processing company is experimenting with processing payroll using Bitcoin.

To the extent that employees are increasingly requesting payment by Bitcoin, I speculate that the reason for those requests stem from a belief that those payments may be tax exempt or less likely to be reported to the IRS.  The IRS has clearly stated that Bitcoin payments are taxable as wages, just as more traditional payments, and must be reported by employers on Form W-2 and employees on their annual return.

Until Bitcoin has a longer track record of success and is used on a more widespread basis by employers, most Texas employers would probably be better served compensating their employees using more traditional forms of payment.

Follow me on Twitter @RussellCawyer.