“Remembered Information” Not Entitled to Trade Secret Protection

What happens when a former employee, who had signed a non-competition agreement with your company, starts calling on your customers?  Can you seek to enforce the agreement and prohibit the former employee from soliciting your customers?

Case law in Massachusetts has not been consistent or clear on if or when the identities of a company’s customers are considered “confidential” or a “trade secret” and entitled to protection under a non-competition agreement.

Judge Salinger of the Massachusetts Superior Court Business Litigation Session (“BLS”) recently issued an Order dismissing an employer’s case attempting to enforce a non-competition agreement, and the Order includes analysis that clarifies the issue. Specifically, in Oxford Global Resources, LLC v. Hernandez, the employer alleged that their former employee breached the non-competition agreement (which defined “trade secret information” to include the identity of the employer’s customers and prospective customers) by soliciting companies and individuals that “he knew” were customers of the employer.  In rejecting the employer’s argument, Judge Salinger stated:

An employee is free to carry away his own memory of customers’ names, needs, and habits and use that information, even to serve or solicit business from those very customers. Such “remembered information” is not confidential because the information itself, as distinguished from an employer’s compilation of such information into a list or database, is known to the customers and thus not kept secret by the employer.

There we have it: compilations of customer information are confidential and entitled to protection, but employers cannot prevent former employees from using “remembered information” regarding their customers – even if such information is defined as being “confidential” in an agreement.

While the decision is not binding on Massachusetts courts, we can expect that deference will be paid to Judge Salinger’s decision by state and federal Courts because he and the BLS are held in high regard.

Please feel free to call a member of Mirick O’Connell’s Labor and Employment Group if you have any questions about the decision or would like to discuss strategies for protecting your trade secret and confidential information.

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Department of Labor Withdraws Informal Guidance on Joint Employment and Independent Contractors

On June 7, 2017, the Department of Labor (“DOL”) announced the withdrawal of its 2015 and 2016 Administrator’s Interpretations on joint employment and independent contractors under the Fair Labor Standards Act (“FLSA”).

Administrator’s Interpretation No. 2015-1 (the “Independent Contractor AI”) narrowed the DOL’s interpretation of independent contractors and broadly declared that “most workers are employees under the FLSA’s broad definition.” The Independent Contractor AI advised employers to use a six-factor test to evaluate the “economic realities” of the relationship when classifying workers.

Administrator’s Interpretation No. 2016-1 (the “Joint Employment AI”) garnered a lot of attention because it introduced the concepts of “horizontal” and “vertical” joint employment and thereby expanded the types of business relationships that can give rise to liability under the FLSA. The overlay of these concepts onto the already complex “economic realities” joint employment analysis received a great deal of criticism.

With the withdrawal of the Joint Employment AI and Independent Contractor AI, it remains to be seen whether the DOL will resurrect its prior Opinion Letters on the topics, or issue new guidance. As a practical matter, the withdrawal of the Independent Contractor AI and Joint Employment AI may have implications for employers who relied on the informal guidance when classifying workers and/or determining its relationship with workers.  For employers involved in DOL enforcement actions involving these topics, strategies will likely considerably and rapidly shift.

Massachusetts employers, however, are still subject to the Massachusetts Independent Contractor Law, M.G.L. c. 149, § 148B, which establishes the standard for determining whether an individual performing services for another should be classified as an employee or independent contractor under state law.  The Massachusetts Independent Contractor Law provides that an individual who performs services will be deemed an employee for the purposes of the Commonwealth’s wage statutes – unless the employer can prove by a preponderance of the evidence all of the following:

  1. The individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact;
  2. The service is performed outside the usual course of business of the employer; and
  3. The individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.

If you have any questions about what the DOL’s withdrawal of its informal guidance means for your company, please do not hesitate to contact one of the members of Mirick O’Connell’s Labor and Employment Group.

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Can supervisors in Massachusetts be held individually liable for FMLA violations? Apparently so.

In a recent U.S. District Court case, Eichenholz v. Brink’s Inc., et al., Case 16-cv-11786-LTS (D. Mass., May 2017), the court found that the plaintiff-employee’s supervisor could be held individually liable for alleged violations of the employee’s rights under the Family and Medical Leave Act.

Plaintiff-employee filed suit against his employer and his supervisor, alleging that they had violated his rights under the FMLA. The supervisor moved to dismiss the FMLA claim against him, arguing that only an “employer” can be held liable under the FMLA and, therefore, he could not be named as an individual defendant under the statute.  The court rejected his argument.

The judge wrote that while the First Circuit Court of Appeals has not yet decided whether individuals may be held individually liable under the FMLA, it has held that individuals may be held individually liable under the Fair Labor Standards Act, whose definition of “employer” is “materially identical” to the FMLA’s. The judge stated, “[i]n large part because of this similarity, the majority of federal courts that have addressed the issue of private supervisor liability [under the FMLA] have concluded that such liability exists, a conclusion which this Court has implicitly adopted.”  While the ruling in Eichenholz is not binding precedent in the First Circuit, the reasoning will likely be relied upon by plaintiffs in future actions and, unless the First Circuit Court of Appeals rules otherwise, other District Courts in the First Circuit.

By establishing individual liability under the FMLA, Eichenholz highlights the importance of effective training of supervisors, managers, and HR personnel in the handling of medical leaves subject to the FMLA.

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Department of Labor Creates the HIRE Vets Medallion Program

Last week, the U.S. Department of Labor (“DOL”) announced that it is establishing the HIRE Vets Medallion Program to recognize small, medium, and large employers who recruit, retain, and employ veterans, and who offer charitable services in support of the veteran community.

The awards will be presented on an annual basis in celebration of Veterans Day.  To be eligible, employers must complete and submit an application to the DOL.  In granting the awards, the DOL will consider the:

  • Percentage of employees who are veterans;
  • Percentage of veteran employees who are retained;
  • Establishment of veterans’ assistance and training programs;
  • Employment of dedicated human resources professionals for veterans; and
  • Income and tuition support for veterans.

If you are interested in learning more about the HIRE Vets Medallion Award, please do not hesitate to contact us.

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Weingarten Rights Do Not Apply to Non-Union Employees

As union-organized private-sector employers are well aware, in 1975, the United States Supreme Court held that under the National Labor Relations Act, a union employee is entitled to have union representation at an investigatory interview if the employee reasonably believes the interview may result in disciplinary action.[1]  Such rights are known as “Weingarten rights.”

In its decision, the Supreme Court did not address whether Weingarten rights extended to non-union employees.  In 1982, however, the National Labor Relations Board (the “Board”) held that Weingarten rights do apply to non-union employees facing investigatory interviews that could result in discipline.

Since 1982, the Board’s position on this issue has repeatedly changed based on whether the Board was a Democratic or Republican-majority controlled Board. The Board’s most recent ruling on this issue came in 2004, during the Bush Administration, when it held that Weingarten rights do not apply to non-union employees. It was widely anticipated that the Board’s 2004 ruling would be reversed yet again during the Obama Administration, but it was not. Accordingly, employers can continue to confidently deny non-union employee requests for a representative to be present during investigatory interviews. Moreover, given that President Trump is almost certain to appoint two Republicans to fill the vacancies on the Board, and reappoint the current acting chairman, a Republican, it is likely that the 2004 decision will remain the law of the land for at least the next several years.

[1]     The case is NLRB v. J. Weingarten, Inc., 420 U.S. 251 (1975).

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EEOC Publishes Proposed Guidance on Unlawful Employee Harassment

The Equal Employment Opportunity Commission (“EEOC”) recently published proposed enforcement guidance regarding unlawful harassment in the workplace.  The proposed guidance, if adopted, would substantially update the EEOC’s current guidance, which only addresses sexual harassment (and which went into effect in 1990). To that end, the proposed guidance makes clear that, under Title VII, employee harassment based on an employee’s race and/or color, national origin, religion, sex (including stereotyping, pregnancy, childbirth or related medical conditions, gender identity, and sexual orientation), age, disability, and genetic information is unlawful.

The EEOC’s proposed guidance also describes the circumstances under which an employer – through the actions of a supervisor – may be liable for unlawful employee harassment under Title VII.  To establish an employer’s liability, the aggrieved employee must prove that:

  • The alleged harassment the employee suffered was based on his/her membership in a protected class (i.e., age, disability, race and/or color, etc.); and
  • The employee’s supervisor caused the employee to suffer an explicit change to the terms and conditions of his/her employment linked to the harassment (i.e., the employee was terminated, demoted, denied a promotion, prevented from using vacation time, etc.); or
  • The employee’s supervisor subjected the employee to conduct that was sufficiently severe or pervasive to alter the conditions of the employee’s employment and create an abusive hostile work environment.[1]

According to the EEOC’s proposed guidance, under Title VII, if “harassment by a supervisor creates a hostile work environment that has not resulted” in an explicit change to the terms or conditions of the employee’s employment, the employer may defend by arguing that (i) it exercised reasonable care to prevent and promptly correct any harassment, and (ii) the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer, or to take other steps to avoid harm from the harassment.  The foregoing defense, however, does not apply to harassment claims brought under Massachusetts law – G.L. c. 151B – because employers in Massachusetts are strictly liable for harassment committed by supervisors.

It is crucial that employers take the following steps to defend against employees filing claims of harassment:

  • Maintain an anti-harassment policy that prohibits harassment and affords employees the ability to file internal complaints with Human Resources and/or members of management;
  • Train employees on the employer’s anti-harassment policy to ensure they understand their rights and responsibilities under such policies;
  • Promptly respond to any complaints received and ensure supervisors respond to situations of inappropriate conduct regardless of whether a formal complaint is filed.

If you have any questions about the proposed EEOC guidance, Massachusetts law on harassment, or would like assistance drafting and/or implementing an anti-harassment policy, please contact any member of the Labor and Employment Group.

[1]   Here, the employee must prove the harassment to which her/she was subjected was subjectively and objectively severe or pervasive.

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The Moral of the Story: Playing Doctor is not a Human Resources’ Function

When an employee presents with an illness or injury and seeks leave or an accommodation, there is an unfortunate temptation for the manager or human resources professional to assume the guise of a medical practitioner and diagnose the legitimacy of that condition. A recent decision by the Massachusetts Appeals Court confirms the folly of giving in to the temptation to “play doctor.”

In Massasoit Industrial Corporation v. Massachusetts Commission Against Discrimination decided in late March, the custodial plaintiff-employee was hospitalized with pneumonia. Shortly after his discharge from the hospital, he was readmitted with chest pains and diagnosed as having had a heart attack. Two months later, he attempted to return to work with a doctor’s note clearing him to return without any restrictions. The employer then informed the employee that he had been fired because he was a “no show/no call.” A Hearing Officer of the Massachusetts Commission Against Discrimination determined that this firing was pretextual and that the employer knew of his conditions. Under Massachusetts “pretext-only” legal standard, because the employer lied about the reason, it lost.

On appeal, the Court affirmed the hearing officer’s decision. Noteworthy, however, was the discussion of the employer’s argument that the employee was not entitled to the protections of the disability discrimination laws in the first place. The employer claimed that the employee was not disabled in the eyes of the law. The employee asserted that he was because his condition substantially limited his major life activity of working. The employer countered that this assertion was wrong because (a) the employee’s condition didn’t preclude him from working in a broad category of jobs and (b) it was a temporary condition for which he apparently had fully recovered.

The Court disagreed for two primary reasons, both instructive lessons for employers. The first relates to the breadth with which the Court will find protections for individuals with medical conditions. Speaking to the issue of how broad the limitation on working must be and/or how long the condition must last, the Court stated

The primary object of attention in cases brought under the Americans with Disabilities Act should be whether covered entities have complied with their obligations and whether discrimination has occurred, not whether an individual’s impairment substantially limits a major life activity. Accordingly, the threshold issue of whether an impairment ‘substantially limits’ a major life activity should not demand extensive analysis.

Second, even if the Court were to agree that the employee’s condition did not constitute a disability, it was clear that the employer perceived that the employee was a health risk and regarded him as being substantially limited. This type of “regarded as” disability discrimination was as wrong as discrimination because the employee was, in fact, disabled.

The Moral of the Story? When an employee presents with some medical (or psychological) condition, the employer’s first response should be “how can we help?” not “Oh, really?”

And definitely, a careful analysis of the underlying reasons for any termination must be done before “you’re fired” comes into the picture.

Posted in 151B, Americans with Disabilities Act, Employment Discrimination | Tagged , , , | Leave a comment