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Author Archives: Brian F. Chandler

  1. Judge Rules FBI Physical Fitness Test Constitutes Illegal Gender Discrimination

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    Federal District Court Judge Rules that FBI Physical Fitness Test with differing standards for Men and Women Constitutes Illegal Gender Discrimination Under Title VII

    Virginia Federal District Court Judge T.S. Ellis granted a disappointed FBI candidate summary judgment in his lawsuit against the FBI for requiring that he pass a physical fitness test which required higher physical standards for men. See Bauer v. Holder, 2014 U.S. Dist. LEXIS 80130, Case No. 1:13-cv-93 (E.D. Va., June 10, 2014)

    Jay Bauer applied for a position as a special agent for the FBI. Among the requirements for admission into the FBI as a special agent is passing a physical fitness test measuring sit-ups, push-ups and two running tests. The test had separate gender-normed requirements, apparently to take into account “physiological differences” between men and women. According to the FBI, these physical requirements “serve as a foundation for his/her ability to effectively apply principles and non-deadly force alternatives being taught in the [defensive tactics] program.” Mr. Bauer repeatedly failed certain portions of this physical fitness test, yet his score was higher than what was required of women to pass the test. Ultimately, Mr. Bauer was given the choice to resign from the FBI or be ultimately terminated.

    Bauer sued the FBI, alleging that the FBI’s separate standards for men and women constituted illegal discrimination based on sex under Title VII of the Civil Rights Act. Although Judge Ellis indicated that such gender-normed physical fitness tests may be acceptable if the FBI intended to test the basic fitness of FBI cadets, Judge Ellis also agreed with the plaintiff in striking down this test because the physical fitness test was designed to assess the physical abilities of cadets to perform certain job related tasks, and both men and women were required to perform the same tasks. The fact that existing FBI agents are not required to pass any physical fitness tests also detracts from the FBI’s argument that the physical abilities measured in the test were required for serving as a special agent.

    Employers should be wary when requiring applicants to pass gender-normed physical fitness tests. Although such tests may be acceptable in some circumstances, requiring differing standards for men and women will not likely pass muster under Title VII if the test is intended to measure the performance of similar job tasks.

  2. Importance of Narrowly Tailoring Geographic Limitations in Agreements

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    Wings LLC, a company that specializes in vehicle interior repair, had its motion for Temporary Restraining Order and Preliminary Injunction denied on March 6th, 2014. Wings was attempting to enforce noncompete and nonsolicitation agreements signed by two of their ex-employees after they began working for Capitol Leather, LLC.

    The agreement stated that for 2 years after leaving Wings, the employees could not directly solicit any company that had been a customer of Wings in the last 12 months of their employment. The agreement also stated that the ex-employees could not hold a position that was the same or similar to their job at Wings at a company who produced anything in the last year that would compete with Wings, and would apply to any U.S. state or foreign country that Wings had done business with in that last year.

    The Fairfax Circuit judge ruled that the geographic restriction was too broad to enforce, as it would severely impact both ex-employees’ ability to obtain a new job in the area they live in.

    The key point to take away from this case is the importance of narrowly tailoring the geographic limitations of a noncompete. The majority of Wings’ customers are auto dealerships and collision centers who hire them to repair the interior of their cars from a local site. Wing’s customers have to be within a reasonable driving distance to a Wings location in order to use their services, which essentially confines their customer base to a smaller area.

    By dictating that ex-employees could not do business in any state that Wings had provided services to in the last year, it was barring them from working at a company that could possibly be 300 miles away in the same state, in an area that Wings does not have regular business. Wings did not have a legitimate business interest in restricting the ex-employees from working as technicians for 2 years in the entire states of Virginia, Maryland and West Virginia.

    The court’s ruling demonstrates the importance of employers narrowly tailoring the geographic restrictions of non-competes to regions in which the employer actually engages in business.  Employers are likely best served in reducing the geographic restrictions to the smallest possible radius or political unit (such as a county, town or city) in which the employer conducts its business.

    Click here to read the Court’s opinion.

  3. Virginia Supreme Court Allows Employer to Provide Evidence that a Non-compete was Not Overbroad

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    John Malyevac (the “Employee”) sold computer products for Assurance Data, Inc. (“ADI”). The two parties entered into an employment agreement which contained non-competition, non-disclosure, and non-solicitation provisions.

    According to ADI, after resigning from the company, the Employee breached the agreement “by performing work and services and selling products in direct competition with ADI, by engaging in other prohibited activities, and by failing to return confidential information.” Op. at 4. ADI brought a lawsuit against the Employee to enforce the employment agreement.

    The Employee filed a “demurrer” which tests the legal sufficiency of the facts in the complaint. The Employee argued that the agreement’s non-compete and non-solicitation provisions were overly broad restraints on competition. He claimed that the complaint should be dismissed for failure to state a claim upon which relief can be granted because the agreement’s vagueness and over-breadth made it unenforceable. The Employee, as an example, referred to a specific provision of the agreement that was vague. That paragraph provided that the Employee: “for a period of twelve (12) after the date of termination hereof, [he] will not, directly or indirectly, seek, engage in or solicit . . . any business which is competitive with [ADI’s] . . . .”

    The Employee argued that it is impossible to know whether the duration of “twelve (12)” refers to days, weeks, months or years.

    The Fairfax Circuit Court found that the employment contract was unenforceable, deciding that the lawsuit brought by ADI on the unenforceable contract must therefore be dismissed. The Court reasoned that there can be no cause of action for breach of contract if there is not an enforceable contract.

    The Virginia Supreme Court disagreed with the lower court’s holding. The Supreme Court stated that the Circuit Court overstepped its bounds by dismissing the case on demurrer because ADI should have been allowed to present evidence to prove that the restraints contained in the non-compete were reasonable under the particular circumstances.

    A “demurrer” tests the legal sufficiency of facts alleged in pleadings, not the strength of proof. Op. at 6 (citing Dunn, McCormack & MacPherson v. Connolly, 281 Va. 553, 557 (2011)). A complaint does not need to provide “details of proof” to overcome a challenge on demurrer. Op. at 7 (citing CaterCorp, Inc. v. Catering Concepts, Inc., 246 Va. 22, 24 (1993)). The complaint must merely show the nature of the claim. Id.

    The Supreme Court, therefore, decided that the lower court was not supposed to examine the agreement’s non-compete and non-solicitation provisions to determine their enforceability without permitting ADI to present evidence. ADI should have been permitted to demonstrate that the restraints were limited enough under the non-compete standard which dictates that they be “no greater than necessary to protect [ADI’s] legitimate business interests, . . . not unduly harsh or oppressive in curtailing [the Employee’s] ability to earn a livelihood, and . . . reasonable in light of sound public policy. Op. at 10 (citing Modern Environments, Inc. v. Stinnet, 263 Va. 491, 493 (2002)).

    This case shows that when an employer attempts to enforce an employment agreement by filing a law suit, the case will no longer be dismissed on demurrer in response to an argument that the employment agreement is overbroad and vague, as was frequently the case prior to this decision. A court will allow “[a]n employer [to] prove a seemingly overbroad restraint to be reasonable under the particular circumstances of the case” before it can be said that the agreement is unenforceable. Op. at 9 (citing Simmons v. Miller, 261 Va. 561, 581 (2001)). This case will likely give more leverage to employers when attempting to enforce restrictions, as a former employee will need to undergo the expense of an evidentiary hearing prior to determining whether the employee is subject to a broad non-compete.

    Click here to read the Court’s opinion.

  4. Virginia Employers Should Give Specific Reasons for Hiring and Promoting to Defend Against Harassment Claims

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    To the extent employers can, they should keep a record of objective criteria used when choosing one employee over another in the context hiring and promoting employees.  Keeping an accurate record of the reasons for employment-related decisions can be useful to protect employers against discrimination claims.

    A federal district court in Virginia recently found that an employer failed to present a sufficient nondiscriminatory reason for choosing a male interviewee for a promotion over the female plaintiff in order to dismiss a summary judgment motion.  The employer did not give enough explanation as to why it chose the male employee, providing only two brief interview summaries, one of which was prepared after the female employee filed this lawsuit, which reflects only one subjective hiring standard and did not defeat plaintiff’s allegations of pretext.

    Plaintiff, Pamela Hill, sued under Title VII of the Civil Rights Act of 1964 for sexual discrimination, saying her employer of more than 15 years failed to promote her because she is female.  Her employer, the Virginia Department of Transportation (VDOT), filed a motion for summary judgment in response.

    Hill is an engineer and worked at VDOT as a senior engineer.  She applied for the position of Assistant District Administrator for Construction & Preliminary Engineering in 2010.  She interviewed with a two-member panel.  VDOT hired Christopher Blevins, instead of Hill because, VDOT explains, Blevins performed better in the interview.

    The court decided that Hill met the preliminary test to show discrimination, and therefore VDOT was required to provide a “legitimate, nondiscriminatory reason for the adverse employment action.”  Op. at 3 (quoting Hill v. Lockheed Martin Logistics Mgmt., Inc., 354 F.3d 277, 285 (4th Cir. 2004).  The burden then shifted back to Plaintiff to show that the employer’s stated reasons were not true, but merely a pretext for discrimination, “by showing that she was better qualified or by amassing circumstantial evidence that otherwise undermines the credibility of the employer’s stated reasons.”  Op. at 4 (quoting Heiko v. Colombo Sav. Bank, 434 F.3d 249, 259 (4th Cir. 2006).

    VDOT claimed that its employment decision was based solely on the candidates’ responses during their interviews.  VDOT offered a three-sentence summary of Hill’s interview, which stated her answers to the interview questions failed to reveal her knowledge in construction, were vague and unclear, and failed to provide examples of leadership.

    Hill argued that the evidence was sufficient to support a finding that she was more qualified than Blevins.  The job posting required a college degree in civil engineering or a similar field.  Hill has an engineering degree, while Blevins does not possess a college degree.  Hill argued that she has more than 3 years of experience as Acting Area Construction Engineer, but Blevins has only 6 months of experience in that position.

    The court held that VDOT’s single, entirely subjective criterion for the hiring decision (Hill’s interview) failed to adequately support the defendant’s motion for summary judgment.  It found that Hill had sufficiently raised a genuine question of fact as to the veracity of VDOT’s justification.  “Hill’s discussion of her relevant qualifications is sufficient in this respect, particularly because VDOT’s explanation of its nondiscriminatory reason –that Blevins performed better in the interview –is both entirely subjective and meagerly explained.”  Op. at 7.

    The court pointed out that in other Circuits, the use of subjective criteria alone in the hiring process, such as interviews, may give rise to an inference of pretext.  However, within the Fourth Circuit, “cases condoning the use of subjective criteria as evidence of nondiscriminatory hiring justifications have also cited additional, objective explanations for the employers’ decisions.”  Op. at 8.  Specifically, in another Fourth Circuit case titled Hux v. City of Newport News, Virginia, the employer relied on the plaintiff’s poor interview performance as only one of many factors when it explained why it didn’t promote a particular candidate.  451 F.3d 311, 319 (4th Cir. 2006).  Other factors were poor work performance, lack of experience, and significant leave time usage.  Op. at 8 (citing Hux, 451 F.3d at 318-19).

    The presentation of two short interview summaries was insufficient in this case, due to their subjective nature.  It is very difficult to evaluate the truthfulness of subjective justifications.  Therefore, employers finding themselves in the Fourth Circuit, which includes Virginia, should be prepared to thoroughly explain how its employment decisions are made.  In providing this explanation, employers should give enough justification for their employment decisions by presenting more than a single, subjective hiring criterion (i.e., more than an interview), and support for their criteria, such as, for example, an explanation of how the interview was indicative of job performance.

  5. Supreme Court Limits Employer Liability for Supervisor Actions

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    Since 1998, it has been held that an employer is liable for workplace harassment by an employee who is a supervisor.  However, the question that remained unclear until now was who exactly qualifies as a “supervisor?”

    In a recent decision, the Supreme Court limited an employer’s liability in Title VII situations, holding that an employer is only liable for discrimination by a supervisor if that supervisor has authority to effect tangible changes in employment status, such as hire, fire, demote, promote, transfer or discipline the employee who suffers the discrimination.

    This case came about after an African-American woman named Maetta Vance sued her employer, Ball State University, alleging that Saundra Davis, another employee, created a racially hostile work environment.  After a lengthy discussion about the meaning of “supervisor” and recognition that many modern businesses no longer have a hierarchical management structures, the court decided that an employee is a supervisor only if he or she is empowered by the employer to take tangible employment actions against the victim.

    As a result, employers may now be able to avoid liability for hostile work environments by giving direct supervisors all powers except the hiring, firing, disciplining, and the like powers, and reserving those powers with other more-distant bosses.  In response to this idea, the court insisted that the new standard will not leave employees unprotected against harassment by co-workers who possess some authority to assign daily tasks, because the victims can prevail by merely showing that the employer was negligent in permitting the harassment to occur.  The court further stated that in these cases, the jury should be instructed that the nature and degree of authority of the harasser is an important factor in determining negligence.

    Virginia employers should keep in mind that despite this ruling that could potentially limit liability, employers can still be held accountable in a harassment situation under the negligence standard.  Clear company policies and training regarding proper conduct in the workplace are essential.

    Click here to read the full opinion.

  6. Former Employee Didn’t Show “Substantial Impairment” for Insufficient Sleep Disability, and Her Retaliation Claim was Defeated by the Former Employer’s Legitimate Reason for Termination

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    In a recent Fourth Circuit case, the court decided against a former employee because the employer provided a legitimate reason for firing the employee, and the employer’s actions and statements regarding the reasons for firing her remained consistent.

    Victoria Anderson sued her former employer in the U.S. District Court for the District of Maryland for failure to accommodate her claimed disability of insufficient sleep.  Her complaint, brought under the Americans with Disabilities Act (“ADA”) and the Montgomery County, Maryland, Human Rights Act (“MCHRA”), included a claim for retaliation, as well as a claim of interference of rights under the Family medical Leave Act (“FMLA”).  Upon appeal to the U.S. Court of Appeals for the Fourth Circuit, the court agreed with the district court that Anderson was not “substantially impaired” by her lack of sleep and that Discovery’s reasons for terminating Anderson were not a pretext.  Click here for the opinion.

    From August 2004 to January 2007, Anderson worked as an attorney for Discovery Communications, LLC (“Discovery”).  While Discovery recognized her for her legal skills, Anderson’s annual performance reviews consistently highlighted her lack of organization and prioritization and poor interpersonal skills with colleagues and clients.

    In fall 2006, during a period of leave from employment after experiencing difficulty sleeping and getting less than 4 hours of sleep on an average night, tests by her regular doctor and a sleep specialist suggested she likely suffered from fatigue, sleep deprivation, and insomnia.  Anderson’s regular doctor recommended that she return to working full time, but no more than 8 hours per day.

    Anderson requested work days limited to 8 hours but only agreed to working in the office between 11 a.m. and 4 p.m.  She also refused to agree to track her personal, break or lunch time or account for her specific workload.  In response, Anderson’s supervisors at Discovery denied her request, stating that her job required her to be in the office from 9 a.m. to 6 p.m. each weekday, work a minimum of 40 hours per week, and remain flexible to work outside 9 a.m. to 6 p.m. when international transactions required.  In January 2007, Discovery terminated Anderson.

    The District Court granted summary judgment to Discovery, stating that Anderson failed to show (1) a prima facie case of failure to accommodate, (2) that Discovery’s legitimate non-discriminatory reasons for firing her were a pretext; and (3) that she had a serious medical condition entitling her to FMLA leave.  Anderson appealed the case to the Fourth Circuit.

    ADA Claims

    The ADA prohibits discrimination in employment decisions against individuals on the basis of disability.  42 U.S.C. § 12112(a).  A disability is defined as a physical or mental impairment that substantially limits one or more major life activities.

    The Fourth Circuit court agreed with the lower court that the evidence did not support the conclusion that Anderson was “substantially impaired” by her amount of sleep at the time Discovery terminated her employment.  This court applied the Supreme Court precedent case that held that the term “substantially” is to be interpreted strictly to create a demanding standard for qualifying as disabled: the impairment must prevent or severely restrict the individual from doing activities that are of central importance to most people’s daily lives.  The impairment must also be permanent or long term.

    (Despite Congress’ amendment of the ADA considerably in 2008, thus broadening the Supreme Court’s narrow reading of the statute, the court applied the Supreme Court precedent case because Anderson was terminated prior to the amendment.)

    Anderson’s doctors testified that during appointments in November and December of 2006, Anderson told them that her condition had improved since her time off and that she was not feeling any functional impairment as a result of getting less sleep.  The court concluded that Anderson failed to present evidence creating a genuine issue of material fact as to whether she was substantially impaired in December 2006.

    As for her ADA retaliation claim, Anderson had to show she engaged in conduct protected by the ADA, that she suffered an adverse employment action subsequent to engaging in the protected conduct, and a causal link existed between the protected activity and the adverse action.  To show the causal link, she had to show that Discovery’s reason for the termination was a pretext for discrimination or retaliation.  See Op. at 14, citing Laber v. Harvey, 438 F.3d 404, 432 (4th Cir. 2006).

    Anderson claimed that at the time of termination, her supervisor told her that the only reason she was being let go was her failure to update her time records, but that since litigation began, Discovery manufactured additional reasons to support its decision.  The Fourth Circuit court has held in the past that an employer’s changing explanations for its employment decision gives rise to an inference of pretext, but the court noted that this was not the case here.  Since the time of Anderson’s actual discharge through litigation, Discovery’s explanation for its decision had been consistent:  Anderson’s untrustworthiness and poor communication skills.  The court stated that in the absence of such evidence of pretext, it is not their province to decide whether Discovery’s reason was wise, fair, or even correct, so long as it truly was the reason for Anderson’s termination.  Therefore, the Fourth Circuit court concluded that the district court rightfully granted summary judgment to Discovery.

    FMLA claim

    The FMLA allows certain employees to take a total of 12 work weeks of leave during a twelve-month period for a serious health condition that makes the employee unable to perform the functions of her job.  Anderson claimed that Discovery violated the FMLA by unlawfully interfering with her right to take a reduced work schedule upon her return to work in November.  To establish her FMLA claim, she had to prove interference and also that the violation prejudiced her in some way- which can be shown by lost compensation or benefits due to the violation, or a loss in employment status remediable through appropriate equitable relief, such as reinstatement or promotion.

    The only prejudice Anderson claimed as a result of Discovery’s alleged unlawful denial of her request for a reduced work schedule was that she was not permitted to work a reduced schedule.  She did not claim lost compensation, benefits, employment status, or the like due to the interference.  The court noted that her termination was an unrelated event.  Therefore, the court held that her interference claim failed.

    In this case, Discovery was able to show that there were other grounds for Anderson’s termination and that her disability was not the reason they fired her.  Most importantly, Discovery did not change its position on what those grounds were.  Consistency is key to avoiding an inference of pretext.  So long as an employer’s provided reasons for a termination remain unchanging and other evidence showing pretext is absent, fired employees should be unsuccessful on a retaliation claim in the Fourth Circuit.

  7. What Employers Should Know About Criminal Background Checks

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    With increasing frequency, employers are using criminal background checks as one tool in screening potential candidates for employment. Employers should understand, however, that the use of such background checks come with some complexity relating to Title VII racial discrimination prohibitions.

    Although there are certainly circumstances where a criminal background check provides valuable information about potential employees, the Equal Employment Opportunities Commission (“EEOC”) has determined that the reliance on conviction records by employers may result in a disparate impact upon certain racial groups. The EEOC has noted in a recent report that “African Americans and Hispanics are arrested at a rate that is 2 to 3 times their proportion of the general population.” As such, the EEOC has warned that blanket employer refusals to hire applicants with any past criminal convictions may create a disparate impact on minorities and therefore constitute a violation of Title VII.

    The EEOC, and some courts, have concluded that excluding an employment applicant on the basis of a criminal conviction must be both job-related and consistent with business necessity. The determination of excluding a candidate on the basis of past criminal convictions is best accomplished on an individual case-by-case basis. Among the factors the EEOC recommends employers consider in making this determination include:

    • The nature and gravity of the offense or conduct;
    • The time that has passed since the offense, conduct and/or completion of the sentence; and
    • The nature of the job held or sought.

    Special attention is perhaps best spent on the last factor- the nature of the job held and sought. Employers should know that in the event where a prior conviction would have some bearing or create some risk in the event the candidate filled the position applied for, the employer may consider the past conviction in determining whether the candidate is a good fit for the job. For example, if a candidate was applying for a job as a comptroller, a prior conviction for embezzlement is likely a valid consideration in considering a candidate. However, if a candidate is applying for a job as a truck driver and was convicted of shoplifting 25 years ago, the employer would likely be best served from not immediately excluding that candidate on that basis alone.

    Criminal background checks can be a valuable tool for mitigating risk in employment decisions. Nevertheless, employers are best served to evaluate each candidate’s criminal background on an individual basis and to consider whether a prior conviction would hinder an employee in performing the duties in the position being offered.

  8. Supervisors Can Now be Sued Individually for Wrongful Discharge

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    The Supreme Court of Virginia found that an individual supervisor can be sued for wrongful discharge in VanBuren v. Grubb (click here for opinion). The Court held that Virginia law recognizes a common law tort claim of wrongful discharge in violation of public policy against an individual who committed the wrongful act(s) that violated public policy and who participated in the wrongful firing, but who was not the plaintiff’s actual employer.

    In creating this new standard of liability, the Court decided that the tortious act is not solely the act of firing itself but includes the wrongful reasons behind it. The discharge becomes tortious due to the wrongful reasons behind it. Thus, it is appropriate to hold the supervisors who committed the wrongful acts liable. The court reasoned that holding the supervisors personally liable is the only way to punish those supervisors who leave their employment the minute their employer business is sued.

    Angela VanBuren was a nurse at Virginia Highlands Orthopedic Spine Center, LLC. Her supervisor, Dr. Stephen Grubb, allegedly sexually harassed her for a period of three years, despite her telling Grubb that his advances were unwelcome. After VanBuren refused to leave her husband for Grubb, Grubb fired her, without providing any other reason for the termination. Grubb provided VanBuren with one month’s severance pay to keep quiet about the harassment.

    VanBuren sued Grubb and Virginia Highlands for wrongful discharge. She also sued just Virginia Highlands for gender discrimination under Title VII. After the suit was filed, Grubb left the practice he started and joined another practice.

    Virginia follows the employment-at-will doctrine. However, in Bowman v. State Bank of Keysville, it was held that termination of an employee in violation of the policy underlying a statute will, in narrow instances, give rise to a common law cause of action for wrongful discharge. 229 Va. 534 (1985). According to the Court, VanBuren’s claim fell under one such narrow exception previously recognized by the Court: discharge based on the employee’s refusal to engage in a criminal act, the criminal act here, according to VanBuren, being adultery (which is still illegal in Virginia).

    VanBuren alleged that she was fired because she would not give in to Grubb’s unlawful demands. The Court held that because Grubb was an owner of the company as well as her supervisor, if what VanBuren alleged Grubb did was true, then Grubb should be held liable like he would if he had committed any other tort.

    If the individual who committed the tort leaves his place of employment as soon as a lawsuit is filed, as Grubb did here, then “[e]mployer-only liability would be insufficient to deter wrongful discharges . . . . The purpose of the wrongful discharge tort –namely, the deterrence of discharge in violation of public policy– is best served if individual employees in a position of power are held personally liable for their tortious conduct.” Op. at 11.

    This case is important for Virginia employers because it means that owner-supervisors cannot always be shielded by a limited liability entity, such as a corporation.

  9. Are Unpaid Internships Legal?

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    For many college students, summer is a time for them to build skills through summer internships. Employers are also frequently attracted to the use of unpaid interns, especially in this era of budget tightening. Many employers, however, are not aware of the legal ramifications of using unpaid internships.
    The minimum wage requirements of the Fair Labor Standards Act apply to any person an employer “suffers or permits to work”. Generally, an unpaid internship is permissible only if the internship program meets all of the following six criteria:

    1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
    2. The internship experience is for the benefit of the intern;
    3. The intern does not displace regular employees, but works under close supervision of existing staff;
    4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operation may actually be impeded;
    5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
    6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

    As can be seen by this criteria, the use of unpaid interns for work that an employer would generally assign to an employee is generally not permitted. An employer usually cannot use interns to augment an employer’s workforce. If the employer would have hired additional employees or require existing staff to work additional hours had the intern not performed the work, the intern will be considered an employee and entitled to compensation, including overtime compensation to the extent the intern works more than a forty hour week.

    Virginia employers should use care in establishing internship programs. Unless the interns are paid a minimum wage, it is essential an employer meet all six criteria set out by the Department of Labor in order to ensure compliance with the Fair Labor Standards Act.

  10. A Federal Judge in Virginia Applies a Different State’s Law to a Non-Compete Through a Choice of Law Clause

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    In Western Industries-North, LLP v. Lessard, et al., 2012 U.S. Dist. LEXIS 33683, United States District Judge James Cacheris, a U.S. District Court Judge in Alexandria, Virginia, recently granted a plaintiff’s motion for a temporary restraining order based on a non-compete and non-solicitation agreement containing a New Jersey choice of law provision. In this case, plaintiff, which provided bed-bug control and detection services through the use of specially trained bedbug detection dogs, filed suit and sought a temporary restraining order against a former employee who left with one of the bedbug detection dogs and started his own bedbug detection business.

    The non-compete at issue likely would not have withstood the scrutiny of a Virginia court under the Virginia Supreme Court’s recent Home Paramount case. This non-compete barred the former employee from being a “ ‘stockholder of any corporation’ in any county or counties in the state in which [the employee] worked” during his previous employment with his former employer.  Such a broad bar to passive investment in a competing business would likely not survive scrutiny under Home Paramount.  Judge Cacheris, however, held that under New Jersey law, a court possesses the authority to limit the application of an overly-broad non-compete.This case again shows the usefulness of choice of law clauses in non-compete agreements. It is likely that the non-compete at issue would not have survived if Virginia non-compete law was applied to this case. By including a valid forum selection clause choosing a different state’s law, the plaintiff was able to enforce the non-compete clause