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Posts Tagged ‘Employment Law’

Recent Cases Remind Georgia Employers to Update Restrictive Covenant Agreements

Posted on: November 6th, 2017

By: Amy C. Bender

Many employers, in an effort to protect their valuable personnel and information, require employees to sign agreements containing restrictive covenants, which may include covenants not to compete, not to solicit employees or customers, or not to disclose confidential information. Georgia’s statute on restrictive covenants (O.C.G.A. § 13-5-80 et seq.), which was passed only a few years ago, generally is viewed as being pro-employer. It provides clear guidance on what types of limitations and language courts will consider reasonable and enforceable, and it allows courts to “blue pencil” (mark through) provisions that do not comply in order to give effect to the remainder of the agreement and achieve what the parties intended. The statute, however, applies only to agreements entered into on or after May 11, 2011.

As some recent Georgia Court of Appeals cases (Burson v. Milton Hall Surgical Associates, LLC and CMGRP, INC. v. Gallant) remind us, any agreements signed before that date will be interpreted according to principles developed through “common law” (case law). Under common law, restrictive covenants by default were disfavored and considered an illegal restraint of trade unless the employer could show they were reasonable. This often proved to be a difficult task for employers since the cases were confusing and at times inconsistent. Importantly, courts also did not have blue-penciling power; if even one part of a covenant was not enforceable, the whole covenant failed. Burson and CMGRP, while both filed several years after the enactment of Section 13-5-80, involved agreements that the employees had signed before the statute’s effective date. As a result, the agreements were analyzed under the old common law.

These cases serve as a good reminder to Georgia employers to review their restrictive covenant agreements to make sure they are up-to-date. If employers have any agreements that were signed before May 11, 2011, we recommend preparing and having employees sign new agreements that comply with the statute. FMG’s Labor and Employment Law team can assist your organization in reviewing current agreements, preparing new agreements, and representing you in disputes regarding agreements.

If you have any questions or would like more information, please contact Amy Bender at [email protected].

Do You Like Piña Coladas? What Questions Can An Employer Ask in Light of Recent Bans on Requests for Salary History Information?

Posted on: October 31st, 2017

By: Laura S. Flynn

Massachusetts, Delaware, Oregon, California, New York City, Philadelphia and San Francisco have passed laws banning employers from asking applicants about their salary history. The intent behind the legislation is to discourage perpetuation of the gender wage gap. Many employers are unclear as to what they are allowed to ask potential employees.

Generally, an employer can ask an applicant about their expectations in regard to salary, benefits, bonuses and/or commission structures. An employer can inform the applicant of the anticipated salary range for the position. While an employer cannot ask about prior W-2s or earned commissions, they can ask about gross sales or revenue. In California, employers are allowed to ask about any financial benefits an applicant would have to forego in order to take the new job, such as unvested equity or a future bonus. An employer can also ask about competing or counter-offers. In addition to inquiring about skills and prior level of responsibility, the questions asked of an applicant should seek information relating to objective indicators of work productivity. For example, an applicant for a legal position could be asked about her billable hours, her average billable rate, number of trials, and information regarding her client base. The salary history bans may prevent employers from hiring employees at below market rates. However, the anticipated decrease in pay disparities will likely result in an overall economic gain for employers, as the discovery of pay disparities by employees negatively impacts morale, can cause productive employees to leave, and can subject an employer to charges of gender discrimination.

If you have any questions or would like more information, please contact Laura Flynn at [email protected].

 

Employee Claim is Scattered, Smothered, and Covered by Waffle House Arbitration Agreement

Posted on: October 19th, 2017

By: Brad Adler and Will Collins

A recent Georgia Court of Appeals case not only reinforced that state law permits the Federal Arbitration Act (“FAA”) to control arbitration agreements, but also illustrated that state law broadly interprets and defines claims arising from employment when determining whether a claim is covered by an arbitration agreement. In Waffle House, Inc. v. Pavesi, 2017 Ga. App. LEXIS 442, No. A17A1281 (October 4, 2017) the Georgia Court of Appeals held that an employee’s personal injury claims for negligent hiring, supervision, and retention of a co-worker were all covered claims subject to mandatory arbitration under the arbitration agreement signed by the employee because: (1) the agreement showed intent to be governed by the FAA and that intent was not destroyed by merely referencing that the agreement is governed by Georgia law; and (2) the agreement covered the claims arising out of employment and, under Georgia law, this language is interpreted broadly such that “nothing more than a causal connection is required to show that a claim arose out of that relationship.”

In October of 2015, the Waffle House franchise where the complainant, Brian Mikeals, worked was re-purchased from the franchisee by Waffle House, Inc. At that time, all employees were required to re-apply for non-probationary employment and complete on-boarding paperwork, including an arbitration agreement. Mikeals entered into the arbitration agreement on November 6, 2015 and again on November 14, 2015, due to a problem in the Waffle House computer system requiring employees to complete the paperwork for a second time.

In December of 2015, Mikeals suffered a severe injury at work after a co-worker placed an illegal substance in his drink. After Mikeals’ court appointed guardian initiated this suit, Waffle House filed an emergency motion to compel arbitration. The trial court denied the motion; however, the Court of Appeals reversed.

First, where the agreement stated that it “should be construed in a manner consistent with the principles and provisions of the Federal Arbitration Act … [T]his Agreement shall be governed by and interpreted in accordance with the laws of the State of Georgia” the Court of Appeals found that the language demonstrated the parties’ intent to be bound by the FAA. Contrary to the trial court, the Court of Appeals concluded that the passing reference to a Georgia choice of law provision did not transform the intent of the parties to be subject to the Georgia Arbitration Code. Instead, the court emphasized that Georgia law permits the parties to agree to arbitrate claims and elect that such arbitration will be governed by the FAA.

Second, the court reinforced the broad application and coverage of claims arising from an employment relationship. Here, the arbitration agreement covered all claims “arising out of any aspect of or pertaining in any way to [Mikaels’] employment” and included specific language listing tort claims as covered. Before even discussing that the claims in this case were tort claims that the agreement expressly covers, the court emphasized that it has a long history of broadly including claims arising from a special relationship, requiring “nothing more than a causal connection . . . to show that a claim arose out of that relationship.” According to the court, the only claims that do not arise out of an employment relationship are those “which do not have any relationship to an employee’s work or relationship to the employer.” So, the bottom line is that this decision reinforces the need to be deliberate and wise in drafting an arbitration clause and further highlights a tendency in many courts to view an arbitration provision with a wide lens.

If you have questions or would like more information, please contact Brad Adler at [email protected] or Will Collins at [email protected].

Federal Circuit Scorecard – Title VII & Sexual Orientation Discrimination

Posted on: October 13th, 2017

By: Michael M. Hill

A Georgia case is in the running to be the one the Supreme Court uses to resolve the question of whether Title VII of the Civil Rights Act of 1964 (which prohibits employment discrimination on the basis of sex and certain other characteristics) also includes discrimination on the basis of sexual orientation. The Supreme Court is widely expected to take on this issue at some point, but no one knows exactly when or which case it will be.

In Evans v. Georgia Regional Hospital, 850 F.3d 1248 (11th Cir. 2017), a former hospital security guard alleged she was harassed and otherwise discriminated against at work because of her homosexual orientation and gender non-conformity.  While the trial court dismissed her case, the Eleventh Circuit Court of Appeals partially reversed.  The Eleventh Circuit held that Evans should be given a chance to amend her gender non-conformity claim, but it affirmed dismissal of her sexual orientation claim.

The issue, in most federal circuits, is a distinction between (1) claims of discrimination on the basis of gender stereotypes (e.g., for a woman being insufficiently feminine), which the Supreme Court has held is discrimination based on sex, and (2) claims of discrimination based on sexual orientation, which all but one federal circuit has held is not discrimination based on sex.

At present, this is how things stand now:

  • In the Seventh Circuit (which covers Illinois, Indiana, and Wisconsin), sexual orientation discrimination does violate Title VII.
  • In every other federal circuit, sexual orientation discrimination does not violate Title VII.
  • But no matter where you are, the U.S. Equal Employment Opportunity Commission (EEOC) takes the position that sexual orientation discrimination does violate Title VII.

To make matters more confusing, the full court of the Second Circuit (which covers New York, Connecticut, and Vermont) is considering whether to affirm its past position that sexual orientation is not protected by Title VII or to join the Seventh Circuit. In that case, the EEOC of course is arguing that sexual orientation is a protected category, but the U.S. Department of Justice has filed an amicus brief to argue that sexual orientation is not protected.  In the words of the Department of Justice, “the EEOC is not speaking for the United States.”

The long and short of it is that, until the Supreme Court weighs in, employers need to be mindful of the federal law as interpreted in their circuit, while also understanding that the EEOC enforces its position nationwide whether or not the local federal circuit agrees with it.

If you have any questions or would like more information, please contact Michael M. Hill at [email protected].

Updates on the “Joint Employer” Standard

Posted on: October 10th, 2017

By: Tim Holdsworth

More than two years have passed since the National Labor Relations Board (“NLRB”) handed down its new and controversial joint employer standard in Browning-Ferris Industries of California, 362 NLRB No. 186 (August 27, 2015). As you may recall, that decision greatly expanded the standard under which an entity could be found as a joint employer under the National Labor Relations Act (“NLRA”). In departing from its own well-established standards, the NLRB announced that they will no longer require a joint employer to possess and exercise authority to control employees’ terms and conditions of employment, but instead will find sufficient control if the entity merely reserves this authority. They also announced they will no longer require the employer’s control to be exercised directly and immediately. Instead, the NLRB declared that control exercised indirectly, such as through an intermediary, can establish the requisite control.

The U.S. Department of Labor (“DOL”) adopted a similar standard for who it considered a “joint employer” under the Fair Labor Standards Act (“FLSA”) and the Migrant and Seasonal Agricultural Worker Protection Act shortly thereafter.

Neither of these controversial steps has fared well. The Browning-Ferris decision has been under attack in courts, while the DOL rescinded its guidance earlier this year under new Labor Secretary Alex Acosta.

Legislative efforts also have been made to give further guidance to businesses that have struggled with the uncertain and convoluted joint employer scheme. Recently, the U.S. House of Representatives Education and Workforce Committee approved a bill that would amend both the NLRA and FLSA to require that a company exert “direct, actual and immediate” control over workers to be considered an employer.

We will continue to monitor this legislation and provide any updates. For now, however, employers need to know that the Browning-Ferris standard is still in effect.

If you have any questions about federal, state, or local wage and hour laws, please contact Tim Holdsworth at [email protected] or any of the attorneys in FMG’s Labor & Employment Law Section.