September 15, 2011 -Recent Colorado Decision Reinforces Non-Compete Agreements
Although generally disfavored in Colorado, non-compete agreements that are reasonable in both their restrictions and duration have been enforced by the courts. A non-compete agreement generally restricts an employee from competing against his prior employer by using his former employer's sensitive information such as client lists, business practices or marketing plans, trade secrets and confidential information. An employer may ask an employee to sign a non-compete agreement at the time the employee is hired or sometime after the employment relationship has already commenced.
In Lucht's Concrete Pumping Inc. v. Horner, the Colorado Supreme Court addressed the issue of whether continued employment was sufficient consideration for a non-compete agreement when executed by an employee after the employee began working for the employer. Tracy Horner began working for Lucht's Concrete Pumping Inc. ("Lucht's Concrete") as a manager for its mountain division. About two years later, Lucht's Concrete asked Mr. Horner to sign an Employee Non-Disclosure and Confidentiality Agreement ("Agreement") which contained a one (1) year non-compete agreement. Mr. Horner did not receive anything, such as an increase in pay or a promotion, in exchange for signing the Agreement. About a year later, Mr. Horner resigned and began working for Everist, a competitor of Lucht's Concrete. Lucht's Concrete's business in the mountain region decreased significantly and eventually the Company filed for bankruptcy. Lucht's Concrete filed a lawsuit against Mr. Horner for breach of the Non-Disclosure and Confidentiality Agreement and other claims.
The trial court granted Mr. Horner's motion for summary judgment and dismissed the case against him because of the lack of consideration given to Mr. Horner in exchange for executing the Agreement. Lucht's Concrete appealed. The Colorado Court of Appeals affirmed the trial court's decision holding that Mr. Horner "did not receive anything in return for his promise not to compete."
Lucht's Concrete appealed again to the Colorado Supreme Court. The Colorado Supreme Court reversed the Court of Appeals and held that continued employment does constitute sufficient consideration to support a non-compete agreement. In a unanimous decision, the Court held that because employment in Colorado is at-will, the "employer's forbearance" of the right to terminate an existing at-will employee constitutes adequate consideration for a non-competition agreement." The Court therefore found no difference between the execution of a non-compete agreement at the commencement of employment or at some time later during the employment relationship.
The Court also reaffirmed that any agreements not to compete must be reasonable, which depends on the facts of each case. This inquiry typically includes a review of the geographic scope and duration of the non-compete. The Court also made clear, however, that the timing of when the employee executed the non-compete is also a question of reasonableness. The Court explained that "to the extent that an employer enters into a noncompetition agreement with an employee with the intention of terminating the employee immediately afterwards, the agreement may fail for lack of consideration."
August 31, 2011 - Arbitration Agreements Can Bar Class Action Lawsuits And Require Customers to Arbitrate Their Disputes Individually
The United States Supreme Court's recent decision in AT&T Mobility LLC v. Concepcion increases the likelihood that consumers and employees alike will see a rise in the enforcement of class action waivers in arbitration agreements.
In AT&T Mobility LLC v. Concepcion, the Concepcions signed a two-year contract for AT&T cellphone service. The Concepcions claimed that they were told the phones were free, but later were charged $30.22 by AT&T for "sales tax." They filed a lawsuit for false advertising and fraud against AT&T in federal court. The Concepcions' case and another similar case that had been filed against AT&T were consolidated as a class action.
AT&T filed a motion to compel arbitration under the Concepcions' contract. The service contract between the Concepcions and AT&T provided for arbitration of all disputes and prohibited class action arbitration.
Relying on a prior decision of the California Supreme Court, the California Federal District Court denied AT&T's motion to compel arbitration because it found the arbitration provision was unconscionable, based on the ban against arbitration of class actions in the service contract. The United States Court of Appeals for the Ninth Circuit agreed that the provision was unconscionable and affirmed the California District Court's decision. AT&T appealed the case to the United States Supreme Court.
The U. S. Supreme Court reversed the Ninth Circuit and held that the Federal Arbitration Act pre-empts state contract law in determining the enforceability of an arbitration agreement that includes a ban against class action arbitrations. The Court stated "courts must place arbitration agreements on an equal footing with other contracts, and enforce them according to their terms."
While this was not an employment case, its application to employment contracts cannot be overlooked. Many employment contracts today contain arbitration agreements, meaning that an employee agrees to arbitrate all disputes that may arise out of his or her employment.
July 30, 2011 - Final ADA Regulations Implementing the Americans With Disabilities Act
The Equal Employment Opportunity Commission ("EEOC") issued its final regulations implementing the Americans with Disabilities Act Amendments Act of 2008. ("ADAAA"). Those regulations took effect on May 14, 2011.
The Americans with Disabilities Act first took effect in 1992. The Americans with Disabilities Act prohibits discrimination against individuals with disabilities. The law requires employers to provide reasonable accommodations to disabled individuals, unless doing so would cause an undue hardship.
The ADAAA itself became effective on January 1, 2009 and makes it easier for an individual seeking protection under the Americans with Disabilities Act to establish that he or she has a "disability" within the meaning of the statute. Congress rejected several Supreme Court decisions that Congress determined had interpreted the definition of "disability" too narrowly.
The new EEOC regulations implement Congress's mandate that the definition of disability be construed broadly. The regulations do not change the definition of "disability" from being a physical or mental impairment that substantially limits one or more major life activities, a record of such an impairment, or being regarded as having a disability. However, the meaning of those individual terms have changed.
For example, the Americans with Disabilities Act defines a disability as "a physical or mental impairment that substantially limits one or more major life activities." The new regulations specifically reject the Supreme Court's interpretation of major life activities as being limited to activities of central importance to daily life. Instead, the regulations emphasize that "an impairment need not prevent, or significantly or severely restrict, the individual from performing a major life activity in order to be considered substantially limiting."
In addition, the determination of whether an impairment "substantially limits" a major life activity must now be made without regard to whether the individual mitigates the effect of the impairment, such as by taking medication or through the use of hearing aids. Instead, the impairment is to be evaluated without consideration of the mitigating measure.
The EEOC also made clear that even a temporary or episodic impairment can be substantially limiting. For example, epilepsy may qualify as a disability even though seizures occur infrequently.
EEOC's final regulations state that "major life activities" include the operation of major bodily functions, including functions of the immune system, special sense organs and skin, normal cell growth, digestive, genitourinary, bowel, bladder, neurological, brain, respiratory, circulatory, cardiovascular, endocrine, hemic, lymphatic, musculoskeletal, and reproductive functions, thereby significantly expanding the list of major life activities, even beyond the scope as Congress listed in the ADAAA.
The regulations also include a list of major life activities. The list, which is not exhaustive, includes 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.
EEOC's regulations also provide a list of impairments that will virtually always qualify as disabilities. The impairments include deafness, blindness, intellectual disability, partially or completely missing limbs, mobility impairments that require use of a wheelchair, autism, cancer, cerebral palsy, diabetes, epilepsy, HIV infection, multiple sclerosis, muscular dystrophy, major depressive disorder, bipolar disorder, post-traumatic stress disorder, obsessive-compulsive disorder, and schizophrenia.
The EEOC also changes the definition of "regarded as", within the definition of "disability", so that the definition no longer requires a showing that the employer believed the individual to be substantially limited in a major life activity. An employee claiming he or she was "regarded as" disabled must prove only that he or she has been subjected to an action prohibited by the ADA, such as a failure to hire or termination, because of an actual or perceived impairment that is not transitory or minor.
The EEOC has released Question and Answer documents about the Final Regulations to help understand the law and new regulations. The ADAAA regulations and Question and Answer documents are available at www.eeoc.gov/laws/regulations/ada_qa_final_rule.cfm
July 19, 2011 - Employee Protected From Retaliation for Oral Complaints About Violations of the Fair Labor Standards Act
The United States Supreme Court recently provided more protection for employees who complain to their
employers about violations of the Fair Labor Standards Act. On March 22, 2011, the Court issued its
opinion in Kasten v. Saint-Gobain Performance Plastics Corp., prohibiting discrimination against
employees who have orally complained to their employer about their wages.
Kasten, who worked for Saint-Gobain before being terminated, complained orally to his supervisors
that the area in which the Company's timeclocks were located prevented workers from being paid for
the time they spent putting on and taking off their work clothes – in violation of the Fair Labor
Standards Act ("FLSA"). According to Kasten, the timeclocks were placed between the area where Kasten
and other workers put on and take off their work-related protective gear and the area where they carried
out their job duties.
After he was terminated, Kasten filed a lawsuit against Saint-Gobain claiming that he had been
terminated in retaliation for orally complaining about the timeclocks and not being properly compensated
for the time worked. The FLSA's anti-retaliation provision prohibits an employer from discharging "any
employee because such employee has filed any complaint" alleging a violation of the FLSA. Saint-Gobain,
on the other hand, denied that Kasten had made any significant complaint about the timeclock location.
In addition, Saint-Gobain asserted that it dismissed Kasten simply because Kasten failed to record his
comings and goings on the timeclock, after being repeatedly warned.
The federal District Court granted summary judgment in favor of Saint-Gobain, holding that while
intra-company complaints could constitute protected activity within the meaning of the FLSA, oral objections
did not. The Seventh Circuit agreed with the District Court that FLSA's anti-retaliation provision does
not cover oral complaints.
The U.S. Supreme Court, reversed the Seventh Circuit and held that the meaning of the phrase "filed
any complaint" includes oral, as well as written, complaints. The Court relied in part on the objectives
of the FLSA which is to prohibit "labor conditions detrimental to the maintenance of the minimum standard
of living necessary for health, efficiency, and general well-being of workers." The Court also noted
that not protecting oral complaints would discourage the use of informal workplace grievance procedures.
The Supreme Court's decision may have implications beyond only the FLSA and could potentially impact other
federal statutes that have similar anti-retaliation provisions.
June 13, 2011 - National Labor Relations Board Rules That Venting on Facebook Is Not Grounds for Firing
The use of social networks (led by Facebook) has surpassed the usage of email, instant messaging and internet browser use. People write just about anything on Facebook from random thoughts, their travels or what happened to them that day. So it's no wonder then that one of the things people write about are their jobs and their bosses, never thinking that they will be fired because of what they posted.
Dawnmarie Souza certainly wasn't thinking she would be fired after she posted derogatory comments about her supervisor at American Medical Response, an ambulance service. Ms. Souza, an emergency medical technician, unhappy with her supervisor for denying her request for a union representative to be present during her investigatory interview , posted the comment "love how the company allows a 17 to become a supervisor" – 17 is the company's lingo for a psychiatric patient. Her co-workers wrote supportive responses to Ms. Souza's comments which led Ms. Souza to write further negative comments about her supervisor. American Medical then fired Ms. Souza.
The National Labor Relations Board ("NLRB"), a federal agency that protects employees rights to form a union and prevent unfair labor practices, filed a Complaint against American Medical Response for illegal terminating Souza and denying her access to union representation during an investigatory review. The NLRB alleged that Ms. Souza's discharge had violated federal labor law because the employee was engaged in protected activity when she posted the comments about her supervisor, and responded to her co-workers. employees are allowed to discuss the terms and conditions of their employment pursuant to the Labor Relations Act referred to by the NLRB.
American Medical Response denied the NLRB's allegations. The company claimed they had discharged Ms. Souza because of "multiple, serious complaints about her behavior" and for negative personal attacks against a co-worker posted publicly on Facebook.
Prior to the NLRB's conducting a hearing on the Complaint, the case settled. The NLRB issued a press release stating, that as part of the settlement, American Medical Response agreed to revise its policies to ensure that it does not improperly restrict employees from discussing their wages, hours and working conditions with co-workers and others while they are not at work and that it would not discipline or discharge employees for having such discussions.
According to Lafe Solomon, the NLRB's acting general counsel, "This is a fairly straightforward case under the National Labor Relations Act – whether it takes place on Facebook or at the water cooler, it was employees talking jointly about working conditions, in this case about their supervisor, and they have a right to do that."
Employees should beware, however, that not all comments regarding their jobs or bosses is protected activity. Derogatory comments about a supervisor not related to work, for example, might not be protected. Whether an employee's termination for a posting on Facebook is wrongful will have to be decided on a case by case basis.
May 16, 2011 - Termination May be Discriminatory Even if Decision Maker was Unbiased
An employee's termination by an unbiased decision maker may still be discriminatory if the decision maker relies on information supplied by a supervisor who has a discriminatory motive.
On March 1, 2011, the United States Supreme Court issued a unanimous opinion in Staub v. Proctor Hospital, finding that Proctor Hospital was not entitled to judgment as a matter of law simply because the employee who terminated employee Vincent Staub was not biased.
Vincent Staub, an angiography technologist at Proctor Hospital, was also a member of the U.S. Army Reserves. Mr. Staub's supervisors had accused him of violating the terms of a "Corrective Action" disciplinary warning they had given him. After receiving a copy of the report from Staub's supervisors that he had violated the Corrective Action, Linda Buck, vice president of human resources at Proctor Hospital terminated Mr. Staub, based on this report and her own review of Mr. Staub's personnel file.
Mr. Staub complained to Ms. Buck that his supervisors had discriminated against him because they did not like his absences for military duty. However, Ms. Buck did not investigate Mr. Staub's allegations and did not change her termination decision.
Mr. Staub sued Proctor Hospital under the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA") claiming that the reasons given for his termination were a pretext for discrimination based on his military service. USERRA forbids discrimination against an employee because of the individual's performance of military duties. He did not contend that Ms. Buck had discriminated against him, but rather that she was influenced by the discriminatory animus of his supervisors.
A jury found that Mr. Staub's "military status was a motivating factor" in Proctor Hospital's decision to discharge him and awarded him $57,640 in damages. Proctor Hospital appealed and the Seventh Circuit Court of Appeals found in favor of the Hospital because Ms. Buck on relied on more than just the supervisor's advice in making her decision to terminate Mr. Staub.
The Supreme Court reversed the Seventh Circuit and held that an employer can be held liable under USERRA if a supervisor performs an act motivated by discriminatory bias that the supervisor intends to cause an adverse employment action, and that act is the proximate cause of the ultimate employment action. The Court noted that Proctor Hospital could not insulate itself from liability by merely relying on Ms. Buck's independent investigation because she ultimately relied on the discriminatory input from the supervisors in arriving at her termination decision.
This theory of liability is often referred to as the "cats-paw" based on an Aesop fable about a monkey who induces a cat to extract roasting chestnuts from the fire. After the cat extracts the chestnuts, burning its paws, the monkey makes off with the chestnuts and leaves the cat with nothing. Under the Court's opinion, Ms. Buck is the cat – she gets burned as a result of trusting the monkey (the allegedly biased supervisor).
While the case arose under USERRA, the cat-paw theory of liability is likely to come up in Title VII race, color, sex, national original and religion cases and the Americans with Disabilities Act (ADA). In the Supreme Court's opinion, Justice Scalia expressly noted that USERRA is very similar to Title VII.
May 1, 2011 - EEOC Issues Final Regulations Prohibiting Genetic Information Discrimination
The Genetic Information Nondiscrimination Act (GINA) prohibits employers with 15 or more employees from
using an individual's genetic information as the basis for employment decisions. The law forbids the use
of genetic information in making decisions regarding hiring, firing, pay, job assignments, promotions,
layoffs, training, fringe benefits, or any other term or condition of employment. It is also illegal
under GINA to harass an employee because of his or her genetic information or to retaliate against
employees who oppose employment practices that GINA makes unlawful.
Genetic information includes an individual's own genetic tests, the genetic tests of an individual's
family members as well as information about an individual's family medical history which information
could be used to determine whether someone has an increased risk of getting a disease, disorder or
condition in the future.
An employer's request for or acquisition of genetic information is also generally illegal under GINA.
There are, however, a few exceptions to the prohibition against employers obtaining genetic information.
For example, the employer does not violate GINA if the employer obtains the genetic information
inadvertently. If, for example, an employer overhears someone talking about a family member's
illness or learns of the information from a social networking site, such as Facebook, the disclosure is
Another exception is the disclosure by an employee of genetic information as part of a bona fide
employer-sponsored wellness program. The wellness program must be voluntary and confidential and
there must be safeguards in place to ensure that the employer doesn't have access to individual health
However, the employer may never use the genetic information learned to make an employment decision
because genetic information does not tell an employer anything about that employee's present ability
GINA does not prohibit employers from offering financial incentives for participation in programs
that encourage healthy lifestyles, such as programs that provide coaching to employees attempting
to meet particular health goals such as losing weight, quitting smoking, etc.
In addition, an employer is permitted to request family medical history to comply with the Family
and Medical Leave Act (FMLA), state or local family and medical leave laws, or their own policies
permitting the use of leave to care for a sick family member.
Other exceptions are for genetic information acquired through commercially and publicly available
documents such as newspapers, genetic monitoring programs that monitor the biological effects of
toxic substances in the workplace where the monitoring is required by law or the program is voluntary
or by employers who engage in DNA testing for law enforcement purposes.
The EEOC's final regulations more fully explain GINA's prohibition against requesting genetic
information and provide model language employers can use when requesting medical information from
employees to avoid acquiring genetic information.
An employee who has been discriminated against by an employer on the basis of genetic information
may seek all remedies available under Title VII, including equitable and legal relief, back and front
pay, compensatory damages for emotional pain and suffering and punitive damages. GINA has the same
limitations on damages as Title VII, based on the size of the employer. Punitive damages are not
available in actions against the federal government, or against state or local government employers.
March 29, 2011 - Are Your Personal Text Messages and Emails Private?
Whether you are an employee who occasionally sends a quick email or text message to a friend during a lull at work or an
employer, the question of whether the law recognizes a right to privacy in those emails or text messages begins with the employer's
electronic resources policy.
The United States Supreme Court issued its first ruling on the issue of privacy of workplace texting in a case brought by a
police sergeant whose private text messages were read by his employer. In the City of Ontario v. Quon, the City of Ontario, California
issued pagers to City employees, including Quon. The City permitted the employees to use the pagers for personal matters. Although the
City's computer use policy stated that the City had a right to monitor employee email, it did not explicitly include text messages. The
City, however, had told employees that text messages would be treated the same as emails under its computer use policy. That policy
was confirmed in a subsequent memorandum sent to all City personnel, including Quon. The memorandum stated in relevant part, "This
means that [text] messages would fall under the City's policy as public information and [are] eligible for auditing."
Quon exceeded the monthly limit for his text messages, resulting in additional cost to the City. Although Quon paid the extra cost,
the City decided to look into the matter for the specific purpose of determining whether the character limit for text messages that was
part of the City's pager service plan was too low. In connection with that audit, the City reviewed two months of Quon's text messages
and discovered that many of them were not work related and, in fact, were sexually explicit. Quon was disciplined. Quon then sued the
City for violating his Fourth Amendment right against an unreasonable search or seizure and under the Stored Communications Act.
The United States Supreme Court unanimously decided that the City of Ontario did not violate Quon's Fourth Amendment privacy rights
by obtaining and reviewing the transcript of his text messages. The Court concluded that the City had a legitimate purpose of
determining whether the department's character restrictions on text messages were too low and had acted reasonably by reviewing only
a sampling of Quon's texts.
The Court recognized that "The judiciary risks error by elaborating too fully on the Fourth Amendment implications of emerging
technology before its role in society has become clear." The Court went on to add "Prudence counsels caution before the facts in the
instant case are used to establish far-reaching premises that define the existence, and extent of privacy expectations enjoyed by
employees when using employer-provided communication devices."
The Court emphasized the importance of an electronic resources policy that communicates to employees that their messages may be
audited. The Court also stressed that "[e]mployer policies concerning communications will of course shape the reasonable expectations
of their employees, especially to the extent that such policies are clearly communicated".
The Quon opinion answers at least two questions: Employers can be sued if they overstep their bounds in monitoring employees'
emails or text messages; and employees send personal emails or text messages from an employer provided device at their own risk.
Rosemary Orsini focuses her practice on employment issues, representing both employers and employees, in cases involving wrongful
termination, wage and overtime pay demands, State and Federal civil rights claims, the Americans with Disabilities Act (ADA),
discrimination, non-compete agreements and trade secrets.
March 10, 2011 - Protection from Retaliation Expands to Include Worker's Fiance', Family Members or Other Close Associates
The U.S. Supreme Court has expanded protections for employees who file discrimination claims. In a unanimous
opinion, the Court ruled that employers are prohibited from retaliating against that worker's family members and close
relationships, such as a fiancé.
In Thompson v. North American Stainless, Eric Thompson, a metallurgical engineer, claimed he was fired from
his job at North American Stainless because his fiancée filed a claim with the Equal Employment Opportunity Commission.
Miriam Regalado, Eric Thompson's finance, was one of very few female supervisors at North American Stainless. She
filed a sex discrimination claim contending that she was not receiving the same raises as her male counterparts.
Thompson was fired three weeks after the EEOC notified North American Stainless of the charge.
Eric Thompson sued North American, asserting he had been illegally fired to punish his fiancé for filing her
discrimination complaint and to discourage others from making discrimination claims.
The Supreme Court had little difficulty concluding that if the facts alleged by Thompson are true, then "Thompson is
not an accidental victim of retaliation" but – to the contrary – was injured as his (and Regalado's) employer's intended
means of harming Regalado. The Court found that Title VII's anti-retaliation provision prohibits "a broad range of employer
conduct" that could dissuade "a reasonable worker from making or supporting discrimination." "We think it obvious that a
reasonable worker might be dissuaded from engaging in protected activity if she knew that her fiancé would be fired", the
The Supreme Court did not specify what relationships qualify for protection. "We expect that firing a close family
member will almost always meet the test," the Court stated and inflicting "a milder reprisal on a mere acquaintance will
almost never do so."