Suits In The WorkPlace

Faragher Refined

The legacy of the Faragher/Ellerth sexual harassment cases continues to play out in federal courts. One of the more draconian aspects of those decisions is that an employer cannot raise an affirmative defense to a charge of harassment in a situation where a supervisor is accused of harassing the plaintiff and there is a tangible adverse employment action linked to the harassment. In Ferraro v. Kellwood County, the 2nd Circuit recently clarified the circumstances that must link the tangible employment action and the harassment so as to defeat the employer's ability to defend itself . The employee in this case sued Kellwood under the New York City State and New York City human rights statutes, which are interpreted in a like manner with Title VII.

Although the district court precluded Kellwood's ability to raise the Faragher defenses, the 2nd Circuit disagreed. Specifically, the Court noted that the claimed adverse tangible employment action must be linked to the claimed harassment by the same supervisor. In Kellwood, the plaintiff was terminated from disability leave brought on by stress at work. The court found that plaintiff's supervisor, who was accused of berating and victimizing her by merging her division into another, was not alleged to have taken tangible employment action against her. The court noted that in situations where a supervisor takes no tangible employment action (an official company act) or the tangible action alleged was not part of the supervisor's discriminatory harassment, there is no bar to raising the affirmative Faragher defenses.

This is a common-sense reading of Faragher that is also followed in five other circuits. From a practical standpoint, it provides a way for employers to manage employees who are alleging sexual harassment and against whom some tangible employment action is being considered. Employers under these circumstances should think about moving the employee out from under the problem supervisor so that any tangible employment action that results cannot be linked to the harassment or the supervisor, thus preserving the affirmative defense.

A wafer by any other name . . .

Non-compete agreements generally have to be narrowly tailored to be enforceable. So when an employee of a silicon wafer manufacturer agrees not to go to work for another silicon wafer manufacturer, that’s pretty narrow, right? Nay, not so. Such was the lesson learned by an unlucky St. Louis employer. Pirooz v. MEMC Elec. Materials, Inc., E.D. Mo., No. 4:05MC521, 3/7/06. After terminating its VP of Corporate Technology (not exactly a low-level grunt position), MEMC tried to enforce its non-competition and confidentiality agreements when the former employee went to work for a “competitor.” The problem for the company, though, was that neither the arbitrator nor the reviewing court agreed that the former employee’s new employer was a competitor.

The court described MEMC as a “leading manufacturer and supplier of silicon wafers used to make semiconductors for the computer and electronics industries.” Similarly, the court found that the new employer also made “silicon wafers”—sounds the same, or at least very similar, to me. The former VP of Corporate Technology argued that he had not violated the agreements because his new employer did not have any product that was competitive with or similar to his former employer’s products during the five years prior to his termination. The court agreed, and found that there was nothing inconsistent with the arbitrator’s findings that both companies produce and sell “silicon wafers,” but that the new employer did not sell a product which was competitive with or similar to any product manufactured by the MEMC. The court upheld the arbitrator’s findings that the two employers had different products during the relevant time period, as well as different market segments. And to pour salt in the wounds, it was also slapped with the penalty of paying over $100,000 to cover the former employee’s attorneys’ fees.

So, while you may be sure who your competitors are, this case teaches that you’ve got to spell it out with crystal clarity in a non-compete agreement. Time, geography and scope of job limitations are a must, but broad terms (like “silicon wafer,” I guess) can be fatal if not properly qualified. So, while a “wafer” may be a “wafer” in terms of competition, the goal is to make that clear to the court, lest it begin to opine on the different flavors of “wafers”—chocolate or strawberry?

Suing Former Employees for Hacking (or "Man Bites Dog")

Losing Neverland

Next Time Send Pretzels and a Beer

Denying a hotel defendant’s motion for summary judgment, an Ohio court will require the defendant to face the music at trial on a plaintiff’s FMLA claim. Robinson v. Hilton Hospitality, Inc., S.D. Ohio, No. 04-00092, 2/28/06). In this case, after the plaintiff did not show up for work, another employee allegedly told the employer that the plaintiff had been hospitalized because of a “nervous breakdown.” After the plaintiff was transferred to the mental health unit of another hospital, her employer sent her flowers—a kind gesture your mom would be proud of.

However, the gesture did not serve this employer well. Notice under the FMLA is a tricky thing--the court found that the employer’s get-well gift raised a question of fact as to whether the employer had sufficient notice as to the plaintiff’s need for FMLA-qualifying leave. In other words, because the employer knew enough to send flowers to a hospital, there was an issue of the employer’s knowledge of the employee’s serious medical condition.

The moral of the court’s decision is clear--no good deed goes unpunished.  The other moral: when it comes to notice under the FMLA, there are no exact reporting rules. If an employer has enough information to know to send flowers (clearly indicating illness), chances are it’s on notice that the employee may require FMLA leave time.