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Archive for the ‘Employment Law Blog (US)’ Category

Arbitration – Is it the Happiest Place on Earth?

Posted on: May 4th, 2021

By: Anna Drake

A recent lawsuit filed in Pennsylvania state court involves the important topic of dispute resolution and how it can play out in an employment setting. It can be specifically important in terms of employment agreements that include mandatory dispute resolution provisions, impacting them both positively and negatively.

The Pennsylvania matter involves ex-employees of MickeyTravels LLC (“MickeyTravels”), a travel agency authorized by The Walt Disney Company. Similar to many other companies, the former travel agents entered independent contractor agreements (“ICAs”) at the inception of their employment. Included in these ICAs was a mandatory arbitration provision, signifying the preferred method of dispute resolution, providing an alternative forum to the more formal judicial oversight involved in a trial.

Well, why would an employer ever want to opt out of arbitration and seek formal proceedings? The former travel agents wondered the same thing when MickeyTravels brought suit against them in 2019, prompting them to file their own lawsuit in Pennsylvania. The ex-employees allege MickeyTravels blatantly ignored the arbitration clause and excluded any mention of it in their complaint. Evidenced by their complaint, MickeyTravels replaced the arbitration clause with an ellipsis, hoping to sweep it under the rug and proceed with formal litigation. It will be interesting to see what the court has to say as the case develops.

The decision will likely depend on both state and federal law. Under the Federal Arbitration Act (“FAA”) most parties will be forced to arbitrate, however, in 2018 the United States Supreme Court ruled on a very important exception. In New Prime Inc. v. Oliveira, the Court found that parties that fall into the Section 1 exception of the FAA cannot be forced into arbitration. New Prime Inc. v. Oliveira, 139 S. Ct. 532. The FAA states “. . . but nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 USCS § 1. Unlike the truckdriver in New Prime, where it was obvious the driver engaged in interstate commerce by routinely driving across state lines as part of the job, the former travel agents likely will not fall under the exception. Even so, MickeyTravels could attempt to use state law contract defenses such as unconscionability, fraud, lack of consideration, etc. in arguing the arbitration provision is not enforceable. However, the fact that MickeyTravels sued the former travel agents over alleged violations of the very agreement containing the mandatory arbitration clause, things may get tricky.

Why all the fuss about arbitration? Well, it can prevent parties from asserting their claims in court and can even expedite the dispute resolution process. Depending on one’s position, arbitration can be a good or bad thing. Some pros include the possibility of lower costs by way of decreased attorney’s fees, a flexible scheduling process, and the avoidance of strict evidence rules. Employers may see the confidential nature of the process as advantageous, keeping their dirty laundry out of the public eye. A possible downside could be seen through a typical David and Goliath situation where an employee has less bargaining power and financial resources compared to a large corporation. Additionally, an employer may pre-select the arbitrator from a list of agencies they’ve used the past, preventing the employee from having any say in the process.

Here are some things you should keep in mind when it comes to entering employment contracts and opting for a certain method of dispute resolution: read, read, and read again; get confirmation on your employment classification; review any applicable non-compete clause; evaluate the termination terms and conditions; and don’t be afraid to ask questions. Protecting your interests up front only benefits you in the long run.

Please reach out to Anna Drake at [email protected] if you have any questions or concerns.

https://www.americanbar.org/groups/dispute_resolution/resources/DisputeResolutionProcesses/arbitration/

https://www.law360.com/articles/1371752/attachments/0

https://www.law360.com/employment/articles/1371752/ex-disney-travel-agents-sue-over-illegal-noncompete-suit

Departing Lawyers’ “Theft of Files” May Lead to a Violation of M.G.L.c. 93A

Posted on: April 29th, 2021

By: Nancy Reimer, Jennifer Markowski and Lori Eller

The Massachusetts Supreme Judicial Court recently held in Governo Law Firm LLC v. Bergeron, 487 Mass. 188 (2021), that the inapplicability of G. L. c. 93A, § 11, to disputes arising from an employment relationship does not mean that an employee never can be liable to its employer under G. L. c. 93A, § 11. Rather, where an employee misappropriates her employer’s proprietary materials during the course of employment and then later uses the materials in the marketplace, that conduct is not purely internal and it comprises a marketplace transaction that may give rise to a claim under G. L. c. 93A.

In this case, Governo Law Firm (GLF) sued to protect materials stolen by a group of its nonequity partners as they left GLF and prepared to start a new law firm, CMBG3 Law LLC. Governo had created a research library containing over 20 years of materials it had collected on asbestos litigation, along with an electronic database used to search the library. The nonequity partners secretly downloaded the library and databases, along with administrative materials such as GLF’s employee handbook and client lists while still employed with GLF. They then made an offer to GLF’s sole owner to purchase GLF and stated if the offer was not accepted that same day, they would resign. GLF’s owner rejected the offer and—too late—locked the attorneys out of GLF’s computer systems. The next day, those attorneys opened for business under CMBG3 and began using the stolen materials.

The jury in the Superior Court action found some or all of the attorney defendants liable for conversion, breach of the duty of loyalty, and conspiracy, but found none of them liable for unfair or deceptive trade practices in violation of G.L c. 93A, § 11. CMBG3 was found liable for conversion and civil conspiracy. GLF was awarded $900,000 in damages calculated by lost profits and a permanent injunction was issued enjoining the defendants from using the library and the databases.

GLF appealed the judge’s trial instructions and his posttrial rulings regarding the 93A claim, the scope of the injunction, and interest on the damages award. The SJC on appeal agreed with GLF and held the judge erroneously instructed the jury that the defendants’ conduct prior to their separation of employment, namely the stealing of the materials while still employed at GLF, was not relevant to GLF’s claim under G.L. c. 93A § 11. The SJC held that in order for the jury to resolve the G. L. c. 93A, § 11 claim the jury should have considered whether the attorney defendants’ theft and subsequent use of GLF’s materials amounted to unfair or deceptive conduct.

The SJC further determined it was an abuse of discretion for the trial judge to exclude the stolen administrative materials, such as the employee handbook and client list, from the scope of the permanent injunction.  

Regarding interest, the SJC held that while prejudgment interest was not required due to the non-compensatory nature of the damages, which were awarded on the basis of the defendant’s profits and not to make the plaintiff whole, post-judgment interest was appropriate and would accrue from the date of entry of initial judgment until payment in full. This was contrary to the position taken by the attorney defendants and the trial judge that the deposit of damages with the court, rather than directly to GLF, would terminate the accrual of post-judgment interest.

If you have any questions of would like more information, please contact Nancy Reimer at  [email protected], Jennifer Markowski at [email protected] or any other member of our Lawyers’ Professional Liability Practice Group, or Employment Law Group a list of which can be found at www.fmglaw.com

Illinois Puts The Squeeze On Employers

Posted on: April 19th, 2021

By: Eileen Darroll

Illinois has passed three new laws that expand employee’s rights. These laws will impact the way employers hire and retain employees in substantial ways. 

SB 1480 amends the Illinois Human Rights Act making it a violation to discriminate against an individual based on his or her prior convictions unless (1) there is a “substantial relationship” between the conviction(s) and the position sought; or (2) granting the employment or continuing the employment would involve an “unreasonable risk” to property or the safety or welfare of specific individuals or the general public. 

A “substantial relationship” means the employer must consider whether the position creates the opportunity for the same or a similar offense to occur and whether the circumstances leading to the conviction will recur in the position. 

To determine if a “reasonable risk” exists, the employer must take certain factors into consideration such as the length of time since the conviction, the number of convictions, and the nature and severity of the convictions, the relationship to safety and security of others, the facts surrounding the conviction and evidence of rehabilitation.  If the employer decides not to hire the individual or to disqualify an employee from a new position because if his or her criminal record, there are written notification requirements the employer must follow to comply with the law.

SB1480 also amended the Business Corporations Act of 1983 by requiring corporations that file an EEO-1 report with the EEOC to provide the same information to the Illinois Secretary of State, which will publish the information on the gender, race and ethnicity of the corporation’s employees on its website.  Corporations must comply with this demographic information report with the corporation’s annual report filed on and after January 1, 2023.  The language of the Act seems to suggest that the corporation must report demographic information on all of its employees, wherever they are located, not just in Illinois.

SB1480 also requires private employers with more than 100 employees to in Illinois to obtain an “equal pay registration certificate” from the Department of Labor by March 23, 2024.  Any corporation that does not obtain the certificate or who’s certificate is suspended must pay a civil penalty of 1% of gross profits.  The certificate has five categories of information on wages that must be provided, and new corporations must obtain a certificate within three years after commencing operations.  The Act also includes whistleblower protections.  Employers should review their pay practices to ensure they are in compliance by 2024.

For more information contact [email protected].

Handling Telework Requests in a Post-COVID Environment

Posted on: April 13th, 2021

By: David Chang

As COVID-19 numbers retreat and vaccine distributions increase, many businesses that shifted to a Working From Home (“WFH”) environment are preparing to transition back to the office.  This will likely bring increased requests for “reasonable accommodations” under the Americans with Disabilities Act (“ADA”), particularly for permission to continue working remotely.

While every case is fact-specific, the EEOC has issued broad guidelines to help employers and employees determine when continued WFH could be appropriate. Two prominent issues are:

  1. Employees without a disability asking for an accommodation to protect a family member with a disability from COVID-19 exposure.
  2. Employees asking for teleworking as their reasonable accommodation because of an employer’s 2020 and 2021 WFH policy. (The employer can opt for alternative reasonable accommodation options that eschew WFH.)

With respect to the first issue, the employee here is not entitled to accommodation under the ADA, as protections based on association with an individual with a disability are currently limited to disparate treatment or harassment.

In regards to that second issue, the EEOC guidelines specifically provide,

“The fact that an employer temporarily excused performance of one or more essential functions when it closed the workplace and enabled employees to telework for the purpose of protecting their safety from COVID-19, or otherwise chose to permit telework, does not mean that the employer permanently changed a job’s essential functions, that telework is always a feasible accommodation, or that it does not pose an undue hardship.”

The Commission does note, however, that teleworking does require a closer look as a reasonable accommodation if an employee was able to satisfactorily perform all essential functions while working remotely.

As these issues are typically fact-specific, employers must be sure to promptly and properly address accommodation requests with flexibility and cooperation. To strike such a balance, obtaining the review of counsel is always recommended in an environment that continues to grow more virtual than ever.

For more information, please contact David Chang at [email protected].

Websites Not Considered Places of Public Accommodation under the ADA

Posted on: April 9th, 2021

By: Joyce Mocek

The Eleventh Circuit recently held that websites of businesses open to the public are not necessarily considered places of public accommodation under Title III of the Americans With Disabilities Act (ADA). The ADA prohibits discrimination on the basis of disability in places of public accommodations, such as hotels, grocery stores, and restaurants. However, the ADA as drafted does not specifically include websites of such places of public accommodations. As a result, there has been uncertainty as to how, when and if the ADA applies to websites of businesses that are generally open to the public.    

The Eleventh Circuit decision vacates a 2017 Florida court decision that held that Winn-Dixie’s website violated the ADA because it was “heavily integrated with” and served as a “gateway” to the grocery store’s physical locations. Winn Dixie did not actually sell its products on its website, although it had a few services its customers could use through its website such as filling prescriptions. The underlying Florida court had ruled the website did not offer a visually impaired customer “full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations,” and as a result it violated the ADA. In its decision, the Eleventh Circuit found that the absence of “auxiliary aids” on the Winn Dixie website did not act as “intangible barriers” to the customers, and “absent congressional action that broadens the definition of ‘places of public accommodation’ to include websites” ADA liability should not be extended. This ruling helps to clarify the applicability of Title III of the ADA to the websites of businesses that are generally open to the public.  

For more information about this topic, please contact Joyce Mocek at [email protected].