Boston Employment Lawyer Blog

Pregnancy Leave in Massachusetts: Understanding the Maternity Act

Tue, 17 Aug 2010 16:55:46 -0500

The Massachusetts Maternity Leave (MMLA) experienced a set back with the Supreme Judicial Court's ruling in Stephens v. Global NAPs. I had the opportunity to provide my thoughts about the decision to WBZ's Diane Stern. The interview can be accessed below:

As background, the MMLA, which is codified under M.G.L. c. 149, §105D, guarantees "eligible" employees 8 weeks of unpaid leave for: (1) giving birth, (2) adopting a child under the age of 18, or (3) adopting a child under the age of 23, if the child is mentally or physically disabled. To learn more about the MMLA's eligibility requirements and for a summary of the key differences between the MMLA and the Family & Medical Leave Act (FMLA), please visit our previous post, Medical Leave Eligibility and Handicap Status in the Workplace Explored.

In Stephens v. Global NAPs, Sandy Stephens worked for Global's president as a housekeeper. In late 1999, she informed her supervisor of her pregnancy and that her last day of work before maternity leave would be July 14, 2000. Under the MMLA, Ms. Stephens was guaranteed 8 weeks of unpaid maternity leave. Her employer, however, promised her an additional 3 weeks of unpaid leave if she required a Cesarean section, which she did. Unfortunately, when Ms. Stephens tried to return after 11 weeks, Global reneged on its promise and informed her that she no longer had a job. Ms. Stephens brought suit under the MMLA and a jury found against Global for compensatory damages in the amount of $1,366,165 and punitive damages in the amount of $1,000,000.

The question before the SJC was whether Ms. Stephens could properly state a claim under the MMLA. According to the Massachusetts Commission Against Discrimination (MCAD), the Commonwealth's chief civil rights agency charged with interpreting and enforcing the law in question, the answer is "yes." In fact, the MCAD's Maternity Leave Act Guidelines explicitly address this issue:

An employer may grant a longer maternity leave than required under the MMLA. If the employer does not intend for full MMLA rights to apply to the period beyond eight weeks, however, it must clearly so inform the employee in writing prior to the commencement of the leave.

Although the SJC has previously acknowledged that such guidelines "represent the MCAD’s interpretation ... and are entitled to substantial deference," it abandoned the MCAD's interpretation of the MMLA. Specifically, despite the employer's promise that Ms. Stephens could take an extra 3 weeks off, the SJC held that she "was not entitled to the protections afforded by the MMLA, given that she was absent from employment for more than eight weeks." As the SJC noted, however, the employer's broken promise may give rise to a claim "for breach of contract, breach of oral representations, detrimental reliance, or the like." For reasons beyond the scope of this discussion, such claims are significantly more difficult for an employee to pursue.

In light of the Stephens decision, employees are well-advised to understand their rights under the MMLA. As the SJC has made clear, relying solely on the word of an employer that promises more maternity leave than the MMLA contemplates may leave you unemployed.

Proving Workplace Discrimination Through Circumstantial Evidence: A Review Of Thermo King

Sun, 14 Mar 2010 00:30:42 -0500

Claims for unlawful workplace discrimination are typically proven through two types of evidence: direct and circumstantial. Direct evidence is often referred to as "smoking gun" evidence where, for example, a company informs an employee that he or she is being terminated because of his or her age. Circumstantial evidence is much more subtle. As a great trial lawyer once said, "We better know there is a fire whence we see much smoke rising than we could know it by one or two witnesses swearing to it. The witnesses may commit perjury, but the smoke cannot." Abraham Lincoln, Unsent Letter to J.R. Underwood and Henry Grider, October 26, 1864. Thus, in an age discrimination case, circumstantial evidence may take the form of an older employee (who is at least 40 years old) who is terminated without explanation.

This is exactly what occurred in Vélez v. Thermo King de Puerto Rico. There, the employer terminated a 56 year old employee without explanation. The company finally provided a reason for the termination one month later only after the employee filed a claim for age discrimination with the Equal Employment Opportunity Commission. The employer changed its reason thereafter. The First Circuit found the employer's initial silence to constitute circumstantial evidence of discrimination:

Thermo King did not initially provide Vélez with any reason for firing him. One month later, Soto told the ADU and the EEOC that Vélez had been fired for violating the company's policy on receiving gifts from suppliers. It was not until over a year later that Thermo King, responding to this lawsuit, first said that Vélez had been fired for stealing and selling company property. The fact that the employer gave different reasons at different times for its action surely supports a finding that the reason it ultimately settled on was fabricated.

In my interview with Massachusetts Lawyers Weekly, I discussed the significance of the Thermo King decision:

It appears to be the first time the 1st Circuit has held that an employer's failure to articulate the reasons for a termination before litigation equals pretext for discrimination.

Our prediction is that the Thermo King decision will encourage more transparency. Employers are now incentivized to articulate a clear reason as to why an employee is being terminated from the outset or risk an inference of discriminatory motive.

ADA Amendments Act Provides Employees with Greater Protection

Tue, 15 Dec 2009 00:00:00 -0500

Under the Americans with Disabilities Act (ADA), employees who are "substantially limited" in a "major life activity" are considered disabled and entitled to reasonable accommodations in the workplace. Handicapped employees experienced a welcome change with the ADA Amendments Act (ADAAA), which became effective on January 1, 2009.

The Americans with Disabilities Act (ADA) went into effective in 1992 and, since that time, has faced numerous criticisms. Namely, the strict standards under the ADA created scenarios in which employees were either not sufficiently disabled to state a viable claim or too disabled to be deemed qualified for the position in question.

The ADA Amendments help to minimize these concerns and, in doing so, essentially overturn certain Supreme Court precedents that made it difficult for employees to show that they suffered a substantial limitation in a major life activity. In Sutton v. U.S. Air Lines, 527 U.S. 471 (1999), for instance, the Supreme Court held that "the determination of whether an individual is disabled should be made with reference to measures that mitigate the individual’s impairment ...." The Supreme Court reiterated this principle in Murphy v. UPS, 527 U.S. 516 (1999) and Alberstons, Inc. v. Kirkinburg, 527 U.S. 555 (1999), which were both decided the same day as Sutton. Likewise, in Toyota v. Williams, 534 U.S. 184 (2002), the Supreme Court stated that a substantial limitation in a major life activity must be "interpreted strictly to create a demanding standard for qualifying as disabled ...."

The following is an overview of some of the key changes brought by the ADAAA:

1. Broadened Definition of Disability

Since the ADA was enacted, numerous federal courts found several severe medical conditions – including epilepsy, diabetes, multiple sclerosis, intellectual disabilities, major depression, and bipolar disorder – to not meet the ADA’s definition of “disability.” The purpose of the ADAAA makes explicit that its purpose is “to reinstate a broad scope of protection” by expanding the definition of “disability,” which immediately reverses more than one decade of conservative federal court decisions. The ADAAA also makes clear that a medical condition that is episodic or in remission meets the definition of disability if it would substantially limit a major life activity when active.

2. Broadened Definition of Major Life Activity

The ADA was silent as to what constituted a "major life activity." The ADAAA now provides a non-exhaustive list of examples of major life activities such as caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, sitting, reaching, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, interacting with others, and working. The ADAAA also makes clear that major life activities include major bodily functions related to the immune system, cell growth, as well as digestive, bowel, bladder, neurological, brain, circulatory, respiratory, endocrine, and reproductive functions. As a result, serious medical conditions such as cancer (which affects normal cell growth) and diabetes (which affects the endocrine system) should clearly be considered disabilities under the ADAAA.

3. The Effect of Mitigating Measures

Contrary to the trilogy in Sutton, Murphy, and Kirkinburg, the ADAAA requires that mitigating measures be ignored in evaluating whether an impairment substantially limits a major life activity. As such, a mitigating measure can longer be used against employees.

4. "Regarded As" Disabled Standard Revised

The ADA has always offered protection for those employees whom an employer wrongly "regarded" as being disabled. Federal courts, however, required ADA plaintiffs to demonstrate that the employer regarded them as being substantially limited in a major life activity in order to prevail. The ADAAA dispenses with the holding in Sutton:

Standing alone, the allegation that respondent has a vision requirement in place does not establish a claim that respondent regards petitioners as substantially limited in the major life activity of working. ... When the major life activity under consideration is that of working, the statutory phrase “substantially limits” requires, at a minimum, that plaintiffs allege they are unable to work in a broad class of jobs.

Contrary to Sutton, under the ADAAA, an employee satisfies the "regarded as" prong if she demonstrates discrimination based on "an actual or perceived physical or mental impairment whether or not the impairment limits or is perceived to limit a major life activity."

With these changes, federal law is catching up to the Massachusetts Fair Employment Practices Act. In 2001, for instance, the Supreme Judicial Court of Massachusetts decided Dahill v. Police Department of Boston, in which the court refused to follow the Supreme Court's reasoning in Sutton v. U.S. Air Lines and ruled that mitigating measures or corrective devices should not be considered when determining whether an employee is handicapped under M.G.L. c. 151B(1)(17).

EEOC Files Lawsuit Against Discrimination Based on Credit Reports and Criminal Records

Wed, 09 Dec 2009 20:03:48 -0500

If your criminal record or credit history has resulted in your not getting a job, you may have been the victim of unlawful discrimination.

When people think of workplace discrimination they tend to think of instances of intentional discrimination - for example being passed over for promotion because your boss does not like your ethnic background or being fired because of your disability. This type of intentional discrimination is known as disparate treatment discrimination.

Another, less frequently litigated, form of discrimination is known as disparate impact discrimination (some people also call it "adverse impact discrimination"). Disparate impact discrimination involves a facially neutral employment practice that has a disparate impact on different groups. So, for example, if an employer has a policy that its employees be able to lift at least fifty pounds, that policy is nondiscriminatory on its face but may have an adverse effect if fewer female than male employees are able to lift fifty pounds.

Once a litigant has demonstrated that a nondiscriminatory employment policy has a disparate impact on different groups, an employer has to show that its policy is job-related (e.g., in this particular part of the construction industry being able to lift 50 pounds is essential for most tasks). However even if an employer succeeds in showing that its policy is job-related, the policy is vulnerable if less discriminatory alternatives would also work.

Griggs v. Duke Power Co., 401 U.S. 424 (1971), the Supreme Court case that first held disparate impact discrimination to be illegal provides a good illustration of disparate impact litigation. In Griggs, a power company used some (supposed) intelligence tests to determine eligibility for promotion. These tests turned out to have a racial bias to them that resulted in white employees having, on average, higher scores.

Because of the disparity in these test scores and because Duke Power could not show that the tests were job-related (e.g., they could not show any correlation between scores on IQ tests and ability in repairing power lines), the Supreme Court struck down the practice.

Employers soon smartened up and abandoned crude so-called intelligence tests that had no relation to what an employee did in his day-to-day work.

Today, however, more employers than ever are using credit reports and criminal background checks as part of the application process. Often these facially neutral policies regarding criminal background checks and credit checks have a disparate impact on minority employees. And it's difficult to see their job-relatedness, especially in light of social science data that, five years after a conviction, a so-called convict has the same chance of reoffending as anyone else - even someone with no prior record.

As part of generally stepping up its enforcement activities under President Obama, the Equal Employment Opportunity Commission (EEOC), has begun to attack employers' use of criminal records and credit scores. In October, the Equal Employment Opportunity Commission (EEOC) filed a lawsuit against The Freeman Companies, a convention conglomerate, seeking to challenge Freeman's policy of basing hiring decisions in part on the basis of credit scores and criminal records: http://www.eeoc.gov/eeoc/newsroom/release/10-1-09b.cfm.

The Freeman case could turn out to be an important victory for employees. It could also be a big step in making employment decisions more rational.

Non-Competes and Promotions: The First Circuit's Take in Astro-Med

Tue, 01 Dec 2009 00:00:00 -0500

Non-compete agreements must be reasonably limited in time and geographic scope and supported by consideration in order to be enforceable (among other factors). In many circumstances, the "consideration" equals a job. As an employee's job changes, however, a new non-compete may be required. In 2004, three separate Massachusetts Superior Court decisions made clear that a restrictive covenant is likely unenforceable where it was entered into prior to material changes -- such as a promotion -- in an employment relationship.

Lycos, Inc. v. Lincoln Jackson, 18 Mass. L. Rep. 256 (2004) (Aug. 24, 2004) (Houston, J.) (denying request for a preliminary injunction "[b]ecause a material change in the employment relationship between [defendant] and [plaintiff] voided the previous Agreement, and because defendant did not sign the Offer Letter incorporating the old Agreement, no written nondisclosure, noncompetition and developments agreement now exists between the parties")
R.E. Moulton, Inc. v. Lee, 18 Mass. L. Rep. 157 (June 17, 2004) (Kottmyer, J.) (denying request for a preliminary injunction where employee's position and compensation changed, but no new non-compete agreement was signed and the employer did not notify the employee that he was still subject to the non-compete clause)
Cypress Group, Inc. v. Stride & Assocs., Inc., 17 Mass. L. Rep. 436 (Feb. 11, 2004) (Burnes, J.) (denying request for a preliminary injunction because employees did not sign new restrictive covenant after their promotions to new positions at company)

Recently, the First Circuit's decision in Astro-Med v. Nihon, called this principle into question. The case originated out of the District Court of Rhode Island. In Astro-Med, Kevin Plant signed a non-compete in 2002 when he joined the company as a Product Specialist, which prohibited from working in all of North America and Europe for a period of one year after his employment ended. In 2004, the company promoted Plant to a sales role in which he served the state of Florida. The non-compete agreement, as written, was unenforceable because the geographic scope was far too broad. The District Court revised the non-compete agreement for the employer so that it could enforceable. In doing so, the court curtailed its territorial reach to Florida and certain customers.

Plant argued that, even with the District Court's revisions, the non-compete was still unenforceable due to material changes in his employment when he was promoted to a sales role in 2004 and assigned a territory. Although the non-compete agreement was governed by Rhode Island law, Plant cited to Massachusetts law as persuasive authority. Noting the employer's complete lack of effort to have Plant sign a new non-compete agreement following his promotion, the First Circuit rejected this argument:

Assuming that Rhode Island would adopt Massachusetts' material change rule, the evidence in this case is insufficient to generate its application. Plant's job change from product specialist to district sales manager does not reflect a mutual abandonment and rescission of the non-competition provision; there is no suggestion that Astro-Med approached Plant with a new employment agreement; and, there is no evidence of intent on either Astro-Med's or Plant's part to revoke or supersede the employment agreement.

Unfortunately, the First Circuit ignored language in F.A. Bartlett Tree Expert Co. v. Barrington, which makes clear that a material change in employment, by itself, can be evidence that a prior non-compete has been abandoned:

The defendant worked under the 1948 contract for twelve years. In 1960, the defendant's rate of compensation and sales area were changed. Such far reaching changes strongly suggest that the parties had abandoned their old arrangement and had entered into a new relationship.

F.A. Bartlett Tree Expert Co., 353 Mass. 585, 587 (1968).

As other courts interpreting the Massachusetts "material change" rule have recognized, whether an employer has requested a new non-compete following a change in the employment relationship is not dispositive. Rather, "such efforts constitute additional proof that a new employment relationship was forming ...." See Iron Mountain v. Taddeo, 455 F. Supp. 2d 124, 134 (EDNY 2006) (emphasis added). Management-side attorneys will likely use the Astro-Med decision to argue in favor of the enforceability of non-competes that pre-date an employee's promotion. A careful reading of each Massachusetts case addressing the "material change" doctrine, however, makes clear that a promotion by itself can (under certain circumstances) constitute sufficient evidence that a new employment relationship was created -- requiring a new non-compete.

Non-Compete Agreements in Massachusetts May Soon Be Guided by New Legislation

Fri, 27 Nov 2009 10:57:05 -0500

Non-competes in Massachusetts have been a hot topic in 2009. On October 7, 2009, the Joint Committee on Labor and Workforce Development held a public hearing on proposed non-compete legislation, entitled An Act Relative to NonCompete Agreements, sponsored by Representatives William Brownsberger (D-Belmont) and Lori Ehrlich (D-Marblehead). The experience of Caroline Huang, whose career was negatively affected by a broad restrictive covenant that kept her out of her field, encouraged Representative Brownsberger to focus on non-compete legislation. Ms. Huang's website, Prohibit Restrictive Employment Covenants, provides many resources and updates regarding the proposed bill.

I was fortunate to be in the position to provide commentary on the drafts that led to the final proposed bill. I also testified at the public hearing with a client, who years prior found her livelihood in jeopardy when her former employer tried to enforce an overly broad non-compete agreement. Although we were successful in opposing the employer's Motion for Preliminary Injunction, the cost in doing so sometimes prevents employees from properly asserting their rights. Employers know this and, unfortunately, often attempt to leverage the disparity in spending power. This creates a perverse outcome in which an employee is forced to abide by an otherwise unenforceable non-compete in order to avoid legal fees.

One of the highlights of the proposed legislation is a clause that entitles employees to attorneys' fees "if the court declines to enforce a material restriction or reforms a restriction in material respect." This will discourage employers from pursuing tenuous claims and help to preserve scarce judicial resources. Notably, the bill also limits non-competes to employees earning an annual salary of more than $75,000. Finally, the proposed legislation creates a presumption of enforceability for non-compete agreements that span up to 6 months.

Workplace Discrimination Laws Broadened By The Genetic Information Nondiscrimination Act (GINA)

Mon, 16 Nov 2009 14:38:17 -0500

Employees will soon gain protection against employers that utilize genetic testing or consider genetic background in making hiring, firing, promotion decisions. The Genetic Information Nondiscrimination Act ("GINA") passed by Congress in March 2008 becomes effective law in the next coming weeks as this New York Times story details:
Law Seeks to Ban Misuse of Genetic Testing. On November 21, 2009, the Genetic Information Nondiscrimination Act takes effect for all employers with 15 or more employees and on December 7, 2009, the Act takes effect for insurers.

GINA forbids certain discrimination on the basis of genetic information and the collecting and sharing of certain genetic information. GINA only allows the collection of genetic information in a few limited circumstances:

(1) If the information is necessary for a certification requirement under the Family and Medical Leave Act or a state leave statute.
(2) If the information is used to monitor the effects of hazardous workplace exposure; or
(3) If the employer conducts DNA analysis as a forensic laboratory.

As science uncovers more and more genetic predispositions for disease, the importance of protecting employees from discrimination on the basis of their genes increases. Without GINA, employers would have a strong incentive to discriminate against talented employees whose genetic background threaten to drive up their health insurance premiums. Senator Ted Kennedy heralded the Genetic Information Nondiscrimination Act as "the first major civil rights bill of the new century." Without GINA, as genetic screening became more common place, employees with "bad genes" might have found themselves unemployable.

GINA forbids discrimination not only on the basis of an employee or prospective employee's genetic information, but also discrimination based upon genetic information of family members. A "family member" includes an individual's spouse, dependent child and certain other relatives.

Employees should know that, unlike HIPAA and some other health laws that do not allow an employee to sue for violations, the Genetic Information Nondiscrimination Act confers a private cause of action on certain victims of genetic discrimination. Section 207 of the Genetic Information Nondiscrimination Act gives a cause of action to employees and prospective employees who are discriminated against on the basis of their genetic information or whose genetic information is improperly collected or shared.

GINA enables employees to recover lost wages, costs, attorney's fees and, in some instances, punitive damages. The punitive damages provisions have ceilings. For example, if the employer has more than 500 employees, an employee may recover up to $300,000 in punitive damages. There is also a retaliation provision to GINA that gives a cause of action to any employee who opposes a policy or procedure that violates GINA.

Employeees Who Suffer Workplace Discrimination Gain Clarification On Obtaining Punitive Damages

Tue, 10 Nov 2009 14:27:20 -0500

Employees who suffer workplace discrimination in violation of the Massachusetts Fair Employment Practices Act are entitled to recover four types of damages: front pay (the amount by which someone's future earnings are reduced by discrimination), back pay (the plaintiff's lost income from the time of the discrimination up to a jury verdict), emotional distress damages, and attorney's fees. These damages are compensatory damages, designed to compensate the victim of discrimination for the actual harm s/he suffered and no more.

Punitive damages are another category of damages provided by the Fair Employment Practices Act for the victims of unlawful discrimination on the basis of race, color, religious creed, national origin, sex, sexual orientation, or handicap. However, not all victims of unlawful workplace discrimination are entitled to punitive damages. Recently, in the case of Haddad v. Walmart Stores, Inc. , the Massachusetts Supreme Judicial Court clarified the standard for the award of punitive damages.

In Haddad, a jury awarded punitive damages to the plaintiff for the gender discrimination that she had suffered. The trial judge, however, took away the punitive damages. The parties then filed cross-appeals, raising numerous questions of law.

On appeal, the plaintiff argued that the trial judge's decision to take away the punitive damages was error. Simplifying a bit here, the plaintiff went on to argue that Massachusetts law permits punitive damages for intentional acts and, since discrimination is the result of intentional acts, any finding of discrimination is sufficient to support an award of punitive damages.

The Supreme Judicial Court ("SJC") agreed with the plaintiff that the trial court's decision to take away the jury's award of punitive damages was a mistake. The SJC found that the the trial court judge may have based his decision on a belief that, in order to recover punitive damages, an employee must show that his/her employer acted with the knowledge that its actions violated applicable civil rights laws. The SJC said that, to the extent the judge's order relied upon that reasoning, it was in error.

The Supreme Judicial Court went on to clarify the circumstances under which a victim of unlawful discrimination may recover punitive damages. The SJC held that punitive damages in a discrimination case may be awarded only where the defendant's conduct is outrageous or egregious. In determining whether the defendant's conduct is outrageous or egregious, a judge or jury should consider several factors, including but not limited to:

(1) whether there was a conscious or purposeful effort to demean or diminish a class of which the plaintiff is a member (or the plaintiff because he or she is a member of a class);
(2) whether the defendant was aware that the discriminatory conduct would likely cause serious harm or recklessly disregarded the likelihood that serious harm would arise;
(3) the actual harm to the plaintiff;
(4) the defendant's conduct after learning that the initial conduct would likely cause harm; and
(5) the duration of the wrongful conduct and any concealment of that conduct by the defendant.

The Supreme Judicial Court suggested these five factors do not exhaust the list of considerations that may be relevant to an award of punitive damages in a discrimination case, but they do help clarify what an employee who is the victim of workplace discrimination should show if she hopes to recover punitive damages against her employer.

You can watch a video of the oral arguments in the Haddad case on Suffolk Law's website.

Employees Beware: Computer Fraud & Abuse Act May Restrict Ability To Retain Documents

Thu, 05 Nov 2009 13:19:12 -0500

Employees need to be especially cautious in retaining documents that may be considered the property of the employer. A law Congress passed to deter computer hackers is now being wielded by corporations in litigation against their former employees. The broad scope of this law is now on display in federal court here in Massachusetts.

The Computer Fraud and Abuse Act ("CFAA") is a federal law that establishes civil liability for anyone who:

"[k]nowingly and with the intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud or obtains anything of value.

18 USC Section 1030 (a)(4).

Sounds like a law designed to punish computer hackers, right? Well, like the civil RICO act, it's another broad federal statute that is being put to use in different contexts by clever lawyers. In CFAA's broad contours, some employment defense lawyers see a weapon for use against former employees who wish to sue their former employer for civil rights violations or other workplace torts.

As the Third Circuit Court of Appeals has noted: “Employers…are increasingly taking advantage of the CFAA’s civil remedies to sue former employees and their new companies who seek a competitive edge through wrongful use of information from the former employer’s computer system.” P.C. Yonkers, Inc. v. Celebrations the Party and Seasonal Superstore, LLC, 428 F.3d 504, 510 (3rd Cir. 2005).

Now a CFAA claim against a former employee is being litigated in New England's own First Circuit. In a recent opinion in federal district court in Massachusetts, Judge Nathaniel M. Gorton denied a Motion to Dismiss filed by Thomas Pullen after his former employer, Guest-Tek Interactive Entertainment, Inc., sued Pullen for (among other things) allegedly downloading corporate files to a personal USB device. Pullen, as Guest-Tek's former North American Vice President of Sales, had virtually unrestricted access to data on Guest-Tek's computers. However, Judge Gorton found that, at least at this early stage, the lawsuit against Pullen should not be dismissed because Pullen's use of Guest-Tek's computers might have been "without authorization" or in excess of his "authorized access," notwithstanding the fact that, as a high-ranking executive, Pullen was permitted access to all of the files at issue in the case.

Although the allegations in the Pullen case are egregious -- Guest-Tek alleges that Pullen took the files in order to share them with his new employer and help the new employer gain a competitive advantage over Guest-Tek -- employees should take heed. If you are a victim of workplace discrimination or sexual harassment and you wish to take home with you computer files that support your claims, you may expose yourself to a counterclaim by your employer under CFAA for doing so.

Sarbanes-Oxley Interpreted by First Circuit for First Time

Sat, 07 Mar 2009 17:02:32 -0500

The First Circuit in Day v. Staples recently had its first opportunity to interpret the requirements under the whistleblower protection (18 U.S.C. §1514A) provision of the Sarbanes-Oxley Act ("SOX"). Kevin M. Day worked for Staples as a Reverse Logistics Analyst. Prior to his termination, Day voiced concerns about certain business practices that he believed to be unethical and unlawful:

First, he claimed to his employer that Reverse Logistics issued monetary credits to customers without having received proper documentation; this, in his view, raised the risk of Staples overpaying credits to customers who did not return goods. Second, he alleged that Reverse Logistics knowingly withheld money from contract customers by under-issuing credits over $25.00; this, in his view, raised the risk to Staples of inaccurately accounting by overstating Staples revenues and to customers of not getting full refunds. Third, he claimed that Reverse Logistics's practice of canceling and reissuing pick-up orders could permit couriers to overbill Staples. This, in his view, raised the risk of a reduction in Staples's profits.

In considering whether Day was protected under SOX's whistleblower provision, the First Circuit noted that Section 1514A prohibits retaliation against any employee who “provide[s] information...regarding any conduct which the employee reasonably believes constitutes a violation” of the pertinent laws listed in that section.

The precise issue before the First Circuit was whether Day "reasonably believed" that Staples' conduct violated SOX. The court, thus, addressed what constitutes a “reasonable belief” under Section 1514A. In doing so, the First Circuit first noted that SOX protects employees from retaliation where the employee voices about any one of three specific types of illegal conduct:

a violation of specified federal criminal fraud statutes
a violation of any rule or regulation of the SEC
a violation of any provision of federal law relating to fraud against shareholders

The court noted that a reasonable belief must be both subjective and objective:

The employee must show that his communications to the employer specifically related to one of the laws listed in § 1514A. ... [I]n addition to a subjective belief, an objectively reasonable belief that conduct complained of constituted a violation of the relevant law set out in the statute. The employee is not required to provide the employer with the citation to the precise code provision in question. The employee is not required to show that there was an actual violation of the provision involved.

Although the court found that Day possessed subjective good faith, it concluded that his complaints lacked the objective component. Specifically, the First Circuit stated noted that "the complaining employee's theory of such fraud must at least approximate the basic elements of a claim of securities fraud." In this case, the court characterized Day's complaints as more akin to concerns over efficiency, rather than shareholder fraud. The court also found that Day failed to satisfy the materiality requirement:

[C]omplaints about purely internal practices that are not financial in nature and are not reported to shareholders do not meet the materiality requirement for an objectively reasonable belief in shareholder fraud.

The First Circuit's decision provides much needed guidance regarding the elements employees must satisfy to assert a viable whistleblower claim under the Sarbanes-Oxley Act.

Ledbetter Fair Pay Act Gains Traction Quickly

Sun, 08 Feb 2009 23:22:02 -0500

Unequal pay victims are quickly realizing the benefits of the Lilly Ledbetter Fair Pay Act (FPA). The District Court of New Jersey's recent decision in Gilmore v. Macy's Retail Holdings is believed to be the first case in the country to recognize the applicability of the Fair Pay Act in unequal pay act cases under Title VII. In that case, the plaintiff filed a charge with the Equal Employment Opportunity Commission (EEOC) on July 7, 2005 on the basis of alleged race discrimination. The court noted the FPA's retroactive application:

The FPA takes effect as if enacted on May 28, 2008 and applies to all claims of discrimination in compensation under Title VII and the Civil Rights Act of 1964 (42 U.S.C. et seq.) … that are pending on or after that date. The FPA therefore applies to this case. (internal quotations omitted) (emphasis added)

The court further noted that the FPA allows victims of unequal pay to recover back pay for up to 2 years preceding the filing of the charge.

Unequal Pay Victims Gain Protection through the Ledbetter Fair Pay Act

Mon, 02 Feb 2009 20:13:46 -0500

Gender discrimination just became more expensive. On January 29, 2009, President Obama signed the Lilly Ledbetter Fair Pay Act of 2009. After approximately 19 years as an employee of Goodyear Tire and Rubber Company, Lilly Ledbetter learned that she earned significantly less than her male colleagues. Not surprisingly, a jury found Goodyear liable for gender discrimination. In a controversial decision, the United States Supreme Court reversed, ruling that Ms. Ledbetter should have filed her claim within 180 days of the date that Goodyear first paid her less than her male counterparts. (For more information about the Supreme Court's decision, please visit our blog post entitled, Supreme Court Routs Title VII in 2007: Goodyear Wins Right to Discriminate Based on Gender.)

The Ledbetter Fair Pay Act of 2009 has three key features. First, the statute not only applies to gender discrimination, but also to unequal pay based on the following types of discrimination: (a) race, color, religion, and national origin under Title VII; (b) age under the Age Discrimination in Employment Act (ADEA); and (c) handicap discrimination under the Americans with Disabilities Act (ADA). Second, the statute allows employees who have suffered these types of unequal pay discrimination to recover back pay for up to two years preceding the filing of a charge with the Equal Employment Opportunity Commission. Third, the Act takes effect retroactively as if enacted on May 28, 2007.

The Fair Pay Act is a welcome change for employees who suffer pay discrimination. For more information on this issue please visit the New York Times article entitled,Obama Signs Equal Pay Legislation.

Commissioned Employees in a Tough Economy: Will You Get Paid?

Sat, 10 Jan 2009 09:54:09 -0500

Employees who receive commissions based on their work performance may face difficulty in securing payments from employers in this tough economy. Under certain circumstances, however, legal recourse exists to secure payment from unscrupulous employers who attempt to cut corners by depriving employees of legally earned commissions.

The Massachusetts Wage Act, namely M.G.L. c. 149, §148, explicitly defines the term "wages" to equal "commissions" where certain parameters are satisfied:

This section shall apply ... to the payment of commissions when the amount of such commissions, less allowable or authorized deductions, has been definitely determined and has become due and payable to such employee ....

Where commissions are "due and payable" and "definitely determined," the caselaw in Massachusetts makes clear that the Wage Act applies to highly paid executives, and not just hourly workers. In Wiedmann v. Bradford Group, Inc., the Supreme Judicial Court upheld a claim of pay to a professional who had earned an irregular commission which had been held, by the trial court, to have been unprotected. Thereafter, the Massachusetts Appeals Court in Okerman v. VA Software Corp. followed the Wiedmann decision, and explicitly held it was reversible error to dismiss wage claims of highly paid executives claiming irregular, contingent commissions, above and beyond a “healthy” base salary. The Appeals Court further opined that to exclude the recovery of such commissions would "vitiate the entire paragraph in the Wage Act addressing commissions,” and render the commissions paragraph meaningless.

It is illegal for an employer to in any way penalize an employee who attempts to recover unpaid commissions. The Supreme Judicial Court in Smith v. Winter Place, LLC has interpreted this provision to cover internal complaints: “Complaint made to an employer (or a manger of the employer) by an employee who reasonably believes that the wages he or she has been paid violate such laws readily qualifies as" protected conduct.

When seeking to recover unpaid commissions, its important to determine first whether the commissions can be construed as "wages" under the Massachusetts Wage Act, and second to ensure that you are protected from retaliation.

Age Discrimination Mixed Motive Standard Before the Supreme Court

Thu, 01 Jan 2009 23:18:37 -0500

Employment discrimination claims will continue to garner the Supreme Court's attention in 2009. On December 5, 2008, the Supreme Court granted certiorari in Gross v. FBL Financial to decide the following issue:

Must a plaintiff present direct evidence of discrimination in order to obtain a mixed motive instruction in a non-Title VII discrimination case?

Gross asserted an age discrimination claim under the Age Discrimination in Employment Act (ADEA) and prevailed before a jury. At trial, Gross was required to prove that his age was a "motivating factor" in his employer's decision to demote him. In doing so, Gross relied on circumstantial evidence. The 8th Circuit Court of Appeals, however, reversed on the basis that the trial court should have required Gross to use direct evidence to prove age discrimination under the ADEA.

The Supreme Court and Massachusetts courts are no strangers to mixed motive issues. In Price Waterhouse v. Hopkins, which involved gender discrimination under Title VII, the United States Supreme Court held that the burden of persuasion shifts to the employer once mixed motives have been shown. Justice O'Connor's concurring opinion in Price Waterhouse, however, required an employee to produce "direct evidence" of discrimination where mixed motive is at issue. Congress later amended Title VII to make "motivating factor" -- and not "direct evidence" -- the standard required in mixed motive cases.

The Supreme Judicial Court (SJC) of Massachusetts faced a similar issue in Wynn & Wynn, P.C. v. Massachusetts Commission Against Discrimination, which involved gender discrimination claims under the Fair Employment Practices Act (M.G.L. c. 151B, s. 4). There, the SJC followed the Supreme Court's reasoning in Price Waterhouse, holding that the burden shifts to the employer once mixed motives are shown. Once the burden shifts, the employer can avoid liability only by proving that it would have made the same decision even without the illegitimate motive.

In Wynn & Wynn, the SJC also discussed the quality of evidence needed in mixed motive cases, noting that an employee must "demonstrate with a high degree of assurance” that the challenged employment decision was a “mixture of legitimate and illegitimate motives.” The SJC ultimately applied a direct evidence standard, stating there must be “some strong (direct) evidence of discriminatory bias.” The SJC made clear that direct evidence "consists of statements by a decisionmaker that directly reflect the alleged animus and bear squarely on the contested employment decision.”

Subsequent to Price Waterhouse and Wynn v. Wynn, Congress amended Title VII to make "motivating factor" -- and not "direct evidence" -- the standard required in mixed motive cases. The Supreme Court noted this change in deciding Desert Palace, Inc. v. Costa, where it held that “[i]n order to obtain [a mixed motive instruction under Title VII], a plaintiff need only present sufficient evidence for a reasonable jury to conclude, by a preponderance of the evidence, that ‘[protected class] was a motivating factor for any employment practice.’”

Unlike Title VII, Congress has not detailed the quality of evidence needed under the ADEA. As Professor Paul Secunda of Marquette University Law School has commented, "this case is going to be a tough one to predict."

Non-Compete Dispute Pits IBM Against Apple

Wed, 10 Dec 2008 18:48:22 -0500

Don't be fooled: Non-compete agreements are enforceable. I say this because the following exchange has been all too typical over the past several months:

Client: "I just landed a new job, with better pay and more room for growth. Can you look at my new employment agreement?"
Me: "Sure. Did you happen to sign a non-compete with your old employer?"
Client: "I think so, but I've heard that non-competes are pretty much unenforceable in Massachusetts."
Me: "Unfortunately, that's not the case. Non-competes are enforceable in Massachusetts, albeit under limited circumstances."

In Massachusetts, non-competes are in fact enforceable where they protect a legitimate business interest and are reasonably limited in both temporal and geographic scope. If your employer has asked you to sign a non-compete, its a safe bet that the company's counsel has crafted the agreement to give it the best chance of standing up in court.

One of Apple Inc.'s newest executives, Mark Papermaster, recently fell victim to the non-compete he signed with his former employer, International Business Machines Corp. (IBM). After leaving for Apple in October, IBM sued Papermaster, claiming that the move violated his non-compete agreement in which he agreed not to work for a competitor within one year after leaving his job.

On October 22, 2008, IBM filed its Complaint in the Southern District of New York in which, among others requests for relief, it petitioned the court for a preliminary injunction preventing Papermaster from working at Apple. In particular, IBM claimed that the agreement is enforceable because it protects a legitimate business interest since Apple is a competitor.

In his Affidavit, Papermaster challenged IBM's assertion that Apple competes with its business. Specifically, Papermaster noted that "IBM focuses on high-performance business systems such as information technology infrastructure, servers and information storage products, and operating systems software" (Para. 13). Papermaster went on to state that "Apple, on the other hand, is in the business of designing, manufacturing and marketing consumer-oriented hardware and related products" (Para. 14). In the end, IBM's argument resonated with U.S. District Judge Kenneth Karas, who ordered Papermaster to immediately "cease his employment with Apple Inc. until further order of this court."

Non-competes have fueled a growing debate in Massachusetts over the last year. As reported in Boston.com's article entitled, Why 'noncompete' means 'don't thrive ', making non-competes illegal in Massachusetts could greatly benefit the local economy:

The partners at Spark Capital, a Boston venture capital firm, began a campaign ... to get rid of noncompetes in Massachusetts. They sent a letter to Governor Deval L. Patrick in which they predicted that the result would be "more start-ups originating in the Commonwealth, a reduction in the exodus of talented people, and the ability for Massachusetts to better compete nationally and globally as a hub of innovation."

While businesses may oppose such a move, such a position could be short-sighted. Its not unreasonable to assume that IBM has found itself in Apple's shoes before, hoping to a hire a key employee whose talents and ideas could be fully realized. In the long run, promoting the free flow if ideas and labor is good for employees and employers alike. Some companies seem to be catching on. As reported in the same article, Google's Cambridge office does not require its employees to sign non-competes. Hopefully, this mindset will continue to gain traction.

The bottom line: If your employer asks you to sign a non-compete, YES it can be enforceable and YES you should have it reviewed beforehand to protect the career to which you have devoted countless late nights, early mornings, and weekends.