The United States Court of Appeals for the Fourth Circuit re-affirmed the importance of employers promptly undertaking remedial measures calculated to eliminate discrimination in order to insulate themselves from liability under Title VII discrimination cases.
In this case, the EEOC filed a class action in federal court alleging a discriminatory and hostile work environment at a fiberglass tank plant located in Maryland over a two year period. Among the actions contributing to the hostile environment included the use of racial slurs, threats of KKK actions, and, on at least one occasion, the use of a picture of a person hanging by a noose in order to threaten one or more black employees.
In EEOC v. Xerxes Corp., 2011 U.S. App. LEXIS 8481 (4th Cir. April 26, 2011), the Fourth Circuit sustained a trial courtâs grant of summary judgment on the basis that, after February 3, 2006, the employerâs response to each reported incident was reasonably calculated to end the discrimination. Among other measures, the employer used counseling, written reprimands, suspensions, and even reported some of the more egregious instances of harassment to the local police. On the other hand, the Court of Appeals held that, prior to February 3, 2006, a genuine issue of material fact existed as to whether the employer had notice of racial harassment prior to February 3, 2006 but failed to take appropriate remedial action during that period.
This case shows the importance of taking prompt remedial action when a potential incident of harassment is brought to the attention of management. By promptly responding to reported harassment with appropriate remedial action, an employer may be able to protect itself from Title VII liability. An employer would be best served to establish clear policies of reporting and addressing reported harassment and carefully following these established policies.
The U.S. Court of Appeals for the Fourth Circuit recently held that a school safety officer who also served as a golf coach for a public high schoolâs golf team is a volunteer and not entitled to overtime pay under the Fair Labor Standards Act. In Purdham v. Fairfax County School Board, 2011 U.S. App. LEXIS 4644 (4th Cir. March 10, 2011) a security and safety assistant for the Fairfax County, Virginia public schools claimed that he spent approximately an additional 300 hours per year serving as a golf coach for one of the school boardâs high schools and should be paid overtime to the extent his duties as a golf coach extended his weekly number of hours worked beyond forty. Â
The School Board asserted that Mr. Purdham volunteered his time as a golf coach and is therefore exempt from the FLSA overtime requirements. The U.S. District Court agreed with the school board and this decision was upheld by the Fourth Circuit.
In the Courtâs opinion, the Court held that a volunteer is â â an individual who, without promise or expectation of compensation, but solely for his personal purpose or pleasure, work[s] in activities carried on by other persons either for their pleasure or profit.ââ (quoting Alamo Foundation v. Secretary of Labor, 471 U.S. 290, 295 (1985)). The Fourth Circuit, however, found that this definition does not necessarily require that an employee be motivated solely by civic, charitable, or humanitarian reasons in order to be classified as a volunteer. In this case, although Mr. Purdham may have been somewhat motivated by a modest stipend the school board provided to him, the Court found that he was primarily motivated by the satisfaction of coaching high school students in golf.   Also, the fact that the school board, for a brief period, decided to pay overtime to coaches as a result the boardâs uncertainty as to whether the FLSA overtime provisions applied to coaches did not bind the school board to a determination that athletic coaches were subject to FLSA overtime provisions.
This case likely has implications for governmental agencies and non-profit organizations in the Fourth Circuit. Of note, the Court found that reimbursing expenses or providing a stipend (as long as the stipend is not connected with productivity) does not necessarily jeopardize an individualâs status as a volunteer for overtime purposes.
In EEOC v. Cromer Food Services Inc., 2011 U.S. App. LEXIS 4279 (4th Cir. March 3, 2011), found here, a recent unpublished opinion by the U.S. Court of Appeals for the Fourth Circuit, it was decided that an employer may at times be liable for third-party harassment if the employer knew or should have known of the harassment and failed to take appropriate steps. The Court vacated the district courtâs grant of summary judgment for the employer, Cromer Food Services, Inc. (âCFSâ), and remanded for trial.
Homer Ray Howard was an employee of CFS, a food-stocking company that sells snacks in vending machines that it places on its clientsâ premises. Howard claimed he was harassed repeatedly while stocking vending machines at a hospital, one of CFSâ biggest clients. According to Howard, his problems began when two male hospital employees began harassing him with unwanted sexual comments. Howard also claims one employee left him a note calling him gay. Howard asserts that he was harassed on a daily basis and that the men continually referred to him using sexually graphic names.
Howard claims that he told his supervisor of the harassment, but Adams told Howard to âlet it go, that the men were just joking.â Howard also reported the harassment to the head of the company and to his direct supervisor, who replied that was âit was just a joke.â Op. at 5. Howard claims that when he told the chairman of the Board of Directors about the harassment, the chairman was visibly upset and exclaimed âdo you not realize this could cost me everything?â Op. at 6. CFS told Howard there was nothing they could do because the harassers werenât under their control. After months of complaints to superiors, CFS finally offered Howard a different shift which included longer hours, less pay, and interference with his childcare responsibilities. When Howard turned down the offer, he was terminated.
The EEOC filed suit on behalf of Howard claiming sexual harassment in violation of Title VII of the Civil Rights Act of 1964. For the Fourth Circuit, this was the first consideration as to whether an employer may be liable for the activities of non-employees in a claim for sexual harassment. The court looked at other Circuits, which have found that an employer can be liable if it took no steps to protect its employees and if it had actual or constructive knowledge of the situation. The EEOC regulations echo this principle. The Court decided to adopt a negligence standard, commensurate with the case law of the Tenth and Eleventh Circuits.
The Court found that Howard tried to communicate the nature and extent of the harassment and was effectively ignored by all levels of CFS management who scoffed at him and told him to quit being such a âcrybaby.â CFS failed to ask Howard follow-up questions or ask him the names of those who were harassing him. CFS had a duty to investigate or take other measures to combat the harassment but did not act accordingly.
CFS argued that Howard failed to follow company policy, which required him to report harassment incidents to the President of the company. The Court replied that despite this fact, âa reasonable person would have known about the harassment given Howardâs vocal and vociferous complaints to practically anyone who would listen.â Op. at 15. The Court highlighted the inadequacy of the companyâs policy of requiring the employees of a 100-person company to report harassment incidents directly to the president.  âEvidence of repeated complaints to supervisors and managers creates a triable issue as to whether the employer had notice of the harassment.â Op. at 16, quoting EEOC v. Sunbelt Rentals, Inc., 521 F.3d 306, 320 (4th Cir. 2008). Summary judgment was improper.
This case is instructive for Virginia employers.  Employers in Virginia would be well advised to make prompt remedial measures in the event an employee complains of sexual harassment by a client or independent contractor. Failure to take remedial measures to protect the employee may, as in the instant case, lead to liability under Title VII. In addition, just because a company has a written policy concerning the reporting of harassment, courts may still, depending on the facts of each case, find that actual notice is sufficient to impose liability.
In EEOC v. Cromer Food Services Inc., 2011 U.S. App. LEXIS 4279 (4th Cir. March 3, 2011), found here, a recent unpublished opinion by the U.S. Court of Appeals for the Fourth Circuit, it was decided that an employer may at times be liable for third-party harassment if the employer knew or should have known of the harassment and failed to take appropriate steps. The Court vacated the district courtâs grant of summary judgment for the employer, Cromer Food Services, Inc. (âCFSâ), and remanded for trial.
Homer Ray Howard was an employee of CFS, a food-stocking company that sells snacks in vending machines that it places on its clientsâ premises. Howard claimed he was harassed repeatedly while stocking vending machines at a hospital, one of CFSâ biggest clients. According to Howard, his problems began when two male hospital employees began harassing him with unwanted sexual comments. Howard also claims one employee left him a note calling him gay. Howard asserts that he was harassed on a daily basis and that the men continually referred to him using sexually graphic names.
Howard claims that he told his supervisor of the harassment, but Adams told Howard to âlet it go, that the men were just joking.â Howard also reported the harassment to the head of the company and to his direct supervisor, who replied that was âit was just a joke.â Op. at 5. Howard claims that when he told the chairman of the Board of Directors about the harassment, the chairman was visibly upset and exclaimed âdo you not realize this could cost me everything?â Op. at 6. CFS told Howard there was nothing they could do because the harassers werenât under their control. After months of complaints to superiors, CFS finally offered Howard a different shift which included longer hours, less pay, and interference with his childcare responsibilities. When Howard turned down the offer, he was terminated.
The EEOC filed suit on behalf of Howard claiming sexual harassment in violation of Title VII of the Civil Rights Act of 1964. For the Fourth Circuit, this was the first consideration as to whether an employer may be liable for the activities of non-employees in a claim for sexual harassment. The court looked at other Circuits, which have found that an employer can be liable if it took no steps to protect its employees and if it had actual or constructive knowledge of the situation. The EEOC regulations echo this principle. The Court decided to adopt a negligence standard, commensurate with the case law of the Tenth and Eleventh Circuits.
The Court found that Howard tried to communicate the nature and extent of the harassment and was effectively ignored by all levels of CFS management who scoffed at him and told him to quit being such a âcrybaby.â CFS failed to ask Howard follow-up questions or ask him the names of those who were harassing him. CFS had a duty to investigate or take other measures to combat the harassment but did not act accordingly.
CFS argued that Howard failed to follow company policy, which required him to report harassment incidents to the President of the company. The Court replied that despite this fact, âa reasonable person would have known about the harassment given Howardâs vocal and vociferous complaints to practically anyone who would listen.â Op. at 15. The Court highlighted the inadequacy of the companyâs policy of requiring the employees of a 100-person company to report harassment incidents directly to the president. âEvidence of repeated complaints to supervisors and managers creates a triable issue as to whether the employer had notice of the harassment.â Op. at 16, quoting EEOC v. Sunbelt Rentals, Inc., 521 F.3d 306, 320 (4th Cir. 2008). Summary judgment was improper.
This case is instructive for Virginia employers. Employers in Virginia would be well advised to make prompt remedial measures in the event an employee complains of sexual harassment by a client or independent contractor. Failure to take remedial measures to protect the employee may, as in the instant case, lead to liability under Title VII. In addition, just because a company has a written policy concerning the reporting of harassment, courts may still, depending on the facts of each case, find that actual notice is sufficient to impose liability.
n a recent opinion, the U.S. District Court for the Eastern District of Virginia describes the critical difference between an employment action that is adverse and one that is not in a case involving disparate severance packages. The central determination is if the severance package is âpart and parcel of the employment relationship.â
Karla Gerner, a human resources director for the County of Chesterfield, Virginia, was terminated after her position was eliminated as part of a budget-driven reorganization. After she was told that her position no longer existed, she was offered the opportunity to sign a separation agreement which included a voluntary resignation and three monthsâ severance pay with health benefits. She refused the deal. She quickly brought a claim under Title VII of the Civil Rights Act of 1984 after discovering that male colleagues who were also terminated were receiving sweeter severance offers.   This case, Gerner v. County of Chesterfield, Virginia,  2011 U.S. Dist. LEXIS 15685 (E.D. Va. Feb. 16, 2011), was recently dismissed by Judge Henry Hudson.
The court held that Gerner failed to set forth facts sufficient to allege each element of her claim. To bring a claim of racial or gender discrimination under Title VII, one must show adverse employment action, which she neglected to do.
The court distinguished this case from McGuinness v. Lincoln Hall, where the plaintiff was offered a less desirable severance package then her male colleague. The court held that the plaintiff had successfully stated a prima facie case under Title VII, because she had been entitled by pre-existing agreement with her employer to a layoff package. 263 F.3d 49 (2nd Cir. 2001).
The difference in the present case is that the offer of the severance package was made after Plaintiff had been terminated, not as a term or condition of separation, and there were no pre-existing terms of a severance package before she was terminated. Therefore, Gerner was not entitled to any severance benefits. Where severance benefits are a contractual entitlement, disparate treatment may constitute an adverse job action. But this is not the case when an employer offers them as a voluntary benefit.
The court went on to clarify that âa benefit that is part and parcel of the employment relationship may not be doled out in a discriminatory fashion, even if the employer would be free under the employment contract simply not to provide the benefit at all.â Op. at 7, quoting Hishon v. King & Spalding, 467 U.S. 69, 75 (1984). A negotiation of the terms of a release from employment under a contract providing for severance benefits is an example of a benefit that is part and parcel of the employment relationship. See EEOC v. Lockheed Martin Corp., 444 F. Supp. 2d 414 (D. Md. 2006). Gernerâs benefit was not part and parcel of the employment relationship because it was offered voluntarily after her position was eliminated. âWhen an employer gives severance pay or related benefits to employees as part of a plant closing, no relationship exists between the value of the job given up and the value of the benefit.â Op. at 7, quoting Britt v. E.I. Du Pont de Nemours & Co., 786 F.2d 593, 595 (4th Cir. 1985).
Because the offer of a less-favorable severance package did not constitute an adverse employment action, plaintiffâs claim failed. The court noted that plaintiffâs complaint lacked the basic pleading requirement â a factual basis for the adverse employment element â because it merely cited the benefits received by four male directors also terminated, and does not provide facts describing the circumstances under which they were terminated, the time of such action, the County personnel involved in the decision to terminate them, or the economic climate at the time.
Although the question of whether a severance package should be considered a type of employment action is still an open question, employers may mitigate potential disparate treatment claims by offering severance packages only after employees are terminated. It is also a good idea for Employers to avoid defining a company policy toward severance plans in an employee handbook or any other firm publication.
Showing up to work with a Mardi Gras King Cake, which for some is a symbol of Christian faith, and sending an email to coworkers about its religious significance can have bigger consequences than one may think. That was the case for Teresa Ratledge, an engineer employed by GH Engineering, Inc. who was assigned to work at the CIA on a government subcontract held by Science Applications International Corporation (SAIC). A coworker had already told Ratledge that she did not want to hear about the cake, but Ratledge nevertheless sent out the email. For Ratledgeâs coworker, who was already angered by Ratledgeâs frequent naps during meetings, it was the last straw. Shortly after, the annoyed coworker contacted SAIC about the naps and cake issue.
Teresa Ratledge suffers from a sleep disorder, which causes her to sometimes fall asleep while at work. Despite her efforts to stay awake and enlisting others to wake her when she dozed off during meetings, SAIC took her off the subcontract. Ratledge sued SAIC alleging violations of her rights under the Americans with Disabilities Act of 1990 and the Civil Rights Act of 1991.
In Ratledge v. Science Applications International Corporation, 2011 U.S. Dist. LEXIS 13799 (E.D. Va. Feb. 10, 2011), a case decided in February 2011, U.S. District Judge Claude M. Hilton held that Ratledge could not sue under these Acts because she was not an employee of SAIC. She was found to be an independent contractor for multiple reasons. Among them was the fact that GH Engineering, not SAIC, paid her for work performed. The failure of SAIC to extend employment benefits or to pay any payroll taxes was a significant factor considered by the court.  Ratledge also failed to provide evidence that she was under the direct control of any SAIC supervisor- it was the CIA who gave her direct assignments, provided her with a desk and supplies, and oversaw her daily tasks. In addition, the Court also emphasized that a clearly defined subcontract between GH Engineering and SAIC evidenced that SAIC had no intention to treat GH Engineering personnel as SAIC employees.  Consequently, Judge Hilton granted SAICâs motion for summary judgment.
This case provides some important lessons for businesses involved in subcontracting work. A clearly defined subcontract with a third-party may help establish that you intend to treat those assisting your company with projects not as employees, but as  independent contractors . Your argument that project assistants are independent contractors may also be bolstered by ensuring that project assistants are paid solely through a third party, as was the situation in the Ratledge case.
Recently, a Virginia Circuit Court Judge in Virginia Beach, Virginia held that a non-competition agreement was overbroad and unenforceable because the non-compete barred indirect involvement by the employee as a shareholder in potentially non-competing businesses.
           In Richmond Medical Group, LLC v. Ameanthea Rica Blanco, Docket No.: CL10-6211 (Circuit for City of Virginia Beach 2011), click here, the defendant, a former Family Nurse Practitioner for the Richmond Medical Group, entered into an employment agreement containing both non-compete and non-solicitation provisions. The non-compete, in this case, barred the defendant from performing medical services âof the type performed forâ the plaintiff during the twelve months preceding the termination of employment. The non-compete also barred the defendant from performing urgent medical care services, within 15 miles of any of plaintiffâs medical centers.
Of special importance, the non-compete and non-solicitation provisions prohibited the defendant from competing or soliciting in virtually any capacity, including for herself âas an agent, officer, director, member, partner, shareholder, independent contractor, owner, or employee.â
Here, the Court found that the non-compete and non-solicitation provisions fail because âit leave[s] uncertain exactly what services the defendant could or could not provide without violating the covenant not to compete.â The Court appeared to give weight to the fact that the non-compete barred the defendant from competing as an âagent, officer, director, member, partner, shareholder, independent contractor, owner or employeeâ, thereby barring the defendant from even âowning stock in a publically traded company if some part of that company provided the same medical services as the defendant. . .â The judge found that barring one from being a stockholder in a publically traded company âis virtually inherently overbroad.â
This recent decision is yet another example of the restrictive treatment Virginia courts frequently apply to non-competes. In drafting these restrictions, employers would be well-served not to prohibit employees from passive investment activity. Employers are advised to restrict the language of non-competes to activity which directly competes with the employerâs business.
The Supreme Court ruled that public sector employers do not need to obtain a search warrant in order to review employee text messages sent by government issued cell phones. Although this case is most directly applicable to public sector employees, this decision has ramifications concerning whether employees should have an expectation of privacy in connection with employer issued technology.
The United States Supreme Court recently held that the City of Ontario, California was permitted to monitor and review cell phone text messages sent using cell phones owned by the police force. In City of Ontario, California, et al. v. Quon, et al., 130 S. Ct. 2619 (2010), a police officer challenged the police departmentâs review of the text messages he sent using his department-issued phone, claiming he had an expectation that his text messages would remain private. Mr. Quon claimed that the police department violated his Fourth Amendment right against unreasonable searches and seizure, as well as protections provided under the Stored Communications Act.
The City of Ontario police department issued their police officers cell phones. Mr. Quon regularly exceeded the number of text messages provided under the cell phone plan. Eventually the department requested and received the Mr. Quonâs text message records. The department claimed that it requested the text message records in order to determine whether the existing text message plan was sufficient for necessary work-related text messages. The police department compared Mr. Quonâs text message records to his time sheets and only reviewed those texts composed by Mr. Quon during his working hours. For the month the department conducted this review, the department found that Mr. Quon sent or received 456 messages, only 57 of which were work related. Many of these messages were also sexually graphic and Mr. Quon was disciplined for sending these personal messages during work hours.
The Ninth Circuit Court of Appeals concluded that Mr. Quon had an expectation that his text messages would remain private. Although the Ninth Circuit did not go so far as to hold that the department could never review text messages for work-related purposes, it held that the particular search in this case was not reasonable in scope.
The Supreme Court reversed the Ninth Circuit ruling. Although the Supreme Court agreed that âindividuals do not lose their Fourth Amendment rights merely because they work for the government instead of a private employer,â the Court held that it was necessary to determine an employeeâs expectation of privacy in his electronic communications on a case-by-case basis.
In this particular case, the Supreme Court declined to rule on whether Mr. Quon had a reasonable expectation of privacy in relation to his text messages. The Supreme Court opted not to rule on this issue even though the departmentâs computer policy specifically stated that â[u]sers should have no expectation of privacy or confidentiality when usingâ the departmentâs computers. Subsequent memos circulated by the department and statements by department officials informed employees that the computer policy also applied to text messages sent using the departmentâs cell phones.
Instead, the Supreme Court decided to decide this case on narrower grounds- holding that this particular search did not violate the Fourth Amendment. Although, in prior cases, the Supreme Court held that warrantless searches are per se unreasonable, the Supreme Court also recognized âestablished and well-delineated exceptionsâ to this general rule. One such exception includes searches undertaken due to âspecial needsâ of the workplace. In this particular case, the search was undertaken in order to determine whether the departmentâs cell phone plan was sufficient to meet the departmentâs needs. Since the main reason behind the search was a non-investigatory work-related purpose, the Supreme Court held that the department did not violate Mr. Quonâs Fourth Amendment Rights.
This case is limited in its holding. First, the Fourth Amendment only applies to government actors, so private employers do not need to undergo the same âexpectation of privacyâ analysis undertaken by the Supreme Court in this case. Nevertheless, this case is still relevant for private sector employers.
Private sector employers should publish a comprehensive policy concerning the use of company computers, phones, cell phones, and other technology. This policy should remind employees that all computers, cell phones, and technology issued by the company are company property and that the employer has the right to monitor and review the employeeâs use.  Although private sector employers are not subject to Fourth Amendment restrictions on conducting searches, an employer is better off reminding employees that employer issued technology, including communications made using this technology, remain the property of the employer.
A case with significant implications affecting the enforcement of arbitration provisions in employment agreements is currently being weighed by the U.S. Supreme Court.
The United States Supreme Court recently held oral arguments in Rent-A-Center West, Inc. v. Jackson, No. 09-497 (U.S. argued April 26, 2010), a case on appeal from the United States Court of Appeals for the Ninth Circuit. In Rent-A-Center, an employee signed an employment agreement requiring all disputes, including discrimination claims, to be resolved through arbitration.  The employee alleged a discrimination claim, and asserted that the arbitration provision contained in his employment agreement was unconscionable. Nevertheless, the district court found that the arbitrator, not the court, had the exclusive authority to determine whether or not the arbitration provision was enforceable.
The Ninth Circuit reversed the lower court decision in part, holding that, although the enforceability of an arbitration provision in an employment agreement is usually a question for the arbitrator and not the court, the situation is different when a plaintiff claims the arbitration agreement or employment agreement is unconscionable. If a plaintiff alleges that an arbitration provision is unconscionable, the Ninth Circuit held that the threashold question of unconscionablity must still be determined by the court.
It will be interesting to see how the U.S. Supreme Court comes down on this issue. Although I usually discourage the use of arbitration provisions in commercial contracts, in some circumstances it makes sense to include arbitration clauses in employment agreements. For example, it is easier to keep arbitration proceedings private (after all, what employer wants public press about it being sued by a former employee). This decision could have a significant influence on the privacy afforded by arbitration provisions because a plaintiff could allege that the employment agreement is unconscionable and obtain a public hearing on the matter if the Supreme Court upholds the Ninth Circuit decision.
A ruling by a federal district court judge in the United States District Court for the Eastern District of Virginia may provide a basis to âblue pencilâ noncompetition agreements in Virginia. âBlue pencilingâ allows a judge to modify an overly-broad non-competition agreement by striking through the portions that violate Virginia law. Thus, in theory, the agreement would reflect the partiesâ agreement minus the portions that do not conform to the law. So rather than courts grading on a pass/fail basis, they can award partial credit.
In Senture, LLC v. Dietrich, et al., 575 F. Supp.2d 724 (E.D. Va. 2008), Judge Doumar rejected a former employeeâs argument that the application of Kentucky law to the non-competition agreement was contrary to Virginia public policy.  In this case, the non-competition agreement included a Kentucky choice of law provision. Judge Doumar held that there was no public policy preventing the application of Kentucky law.  Under the Senture ruling, it may be possible for an employer to adopt the law of a state other than Virginiaâsuch as the law of a state which expressly permits âblue pencilingâ non-competition agreements.
It is well-known to practitioners in Virginia that the courts in the Commonwealth have taken an increasingly strict construction of non-competition agreements. Consequently, it has become more challenging for employers to enforce such agreements unless the non-compete is carefully tailored. Employers are also challenged because overly broad noncompete clauses are thrown out by the courts.
Although the Virginia Supreme Court has never expressly rejected the âblue pencilâ doctrine, the Commonwealthâs courts have routinely refused to blue pencil non-competition agreements.
Although Judge Doumarâs decision did not deal directly with whether a Virginia court would apply another stateâs âblue pencilâ policy in the event the choice of law jurisdiction permits âblue penciling,â employers in Virginia may consider including a choice of law clause designating the application of another stateâs law to their non-competes. Just remember, it is usually required that the parties have some relationship with the state designated in the choice of law provision. For companies that do business in multiple states, the Senture decision may all those companies to choose which state law to apply to their employee agreements.
