Future Hire and Employment Restraints in Settlement Agreements - Valid?

          Settlement agreements in Ohio employment lawsuits often include a provision restricting the employee from applying or working for the defendant in the future. These provisions further often provide that the defendant has the right to terminate the plaintiff if it ever acquires a future employer of the plaintiff.  

          The U.S. Ninth Circuit Court of Appeals addressed such provisions under California law in Golden v. Cal. Emergency Physicians, No. 12-16514 (9th Cir., Apr. 8, 2015). The parties reached a settlement agreement in open court by which the plaintiff waived his right to employment with the defendant or at any facility that the defendant owned or with which it might provide physician services in the future.  A written agreement was prepared but the plaintiff refused to sign. Plaintiff argued that the agreement was void under Section 16600 of the California Business and Professions Code. That section provides that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” In other words, employee non-compete agreements are void in California. The district court ordered enforcement of the agreement, reasoning that the settlement agreement did not prevent the plaintiff from working as a physician and, therefore, was not a non-compete prohibited under Section 16600.

          After addressing a jurisdictional question, the appellate court decided that the district court had abused its discretion by limiting the reach of Section 16600 to non-compete agreements. The court decided that Section 16600 is much broader and most likely prohibits agreements whereby a plaintiff waives future employment opportunities. The court remanded the case to the district court for further factual development and consideration.

          Unfortunately Ohio does not have a statute on the books akin to California's Section 16600. In Ohio non-compete agreements are valid if reasonable in geographic and temporal proximity. This means that if the non-compete limits the employee within a reasonable geographic area and only for a reasonable period of time then it is enforceable. One can argue that settlement agreement provisions like the one in Golden are illegal in Ohio if unreasonable. Is there a per se unreasonableness argument to be made? Of course. That is something I will consider doing when the right case comes along.

Plaintiff Wins Based On Only Prima Facie Case in Reverse Discrimination Failure to Promote Case

      When an appellate court sums up plaintiff’s evidence as presenting a “fumbling, bumbling case of determined efforts to deny a promotion,” it’s a good day at the office for the plaintiff. That’s how the U.S. Fifth Circuit Court of Appeals described the evidence in McMullin v. Mississippi Department of Public Safety, No. 14-60366 (Apr. 6, 2015).

          This was a rather basic case of discrimination in the failure to promote context involving a law enforcement position. The case illustrates what happens when an employer prevaricates and is unprepared for questioning by an astute plaintiff’s lawyer. The plaintiff was white and the successful candidate was black. In employment discrimination cases that makes no difference – it’s all about equal protection of the law, right? – so the case goes in the books as a reverse race discrimination case.

          The plaintiff easily made her plaintiff’s prima facie under the McDonnell Douglas standard, as modified for failure to promote cases: (1) she is a member of the protected class; (2) she sought and was qualified for a position for which applicants were being sought; (3) she was rejected for the position; (4) the employer hired a person outside of the plaintiff’s protected class or continued to seek applicants with the plaintiff’s qualifications. This burden is very light. The real test for plaintiffs in these cases is responding to the employer’s evidence of a legitimate, nondiscriminatory reason for its promotion decision.

       In McMullin, though, the defendant employer offered no evidence of the reason for its decision. It “perfunctorily state[d] that it ‘has provided a legitimate, non-discriminatory reason for its decision ***.’ Beyond this statement, the Department provide[d] no discussion, explanation, or elaboration of its purported legitimate reason(s) for its promotion decision. This will not do. The Department’s burden was light. It needed only to produce or point to evidence of a non-race-based reason for its employment decision; yet, it wholly failed to do this.”

          What this meant is that plaintiff’s simple prima facie case, all by its lonesome, was enough to survive summary judgment and get the case to a jury. And getting a case to a jury is what it is all about.

        Not to mention, it probably didn’t hurt that the person who received the promotion had been fired twice by the employer, once for having sex with a confidential informant and later for not accounting to cash seized from a suspect and engaging in sexually explicit behavior during a vacation, among other antics. He was reinstated both times. Plaintiff’s record was clean.

         If the employer has any brains it will get this case settled. The Mississippi Department of Public Safety doesn’t need the publicity – taxpayer dollars at work once again for the citizens of the state.

Failure to Accommodate in Disparate Treatment Discrimination Cases -- Young v. UPS

            I’ve been meaning to share my thoughts about the U.S. Supreme Court’s decision in Young v. United Parcel Service, 575 U.S. ___ (Mar. 25, 2015). Work sometimes gets in the way, of course. But passage of time allowed me to jot down the following thoughts about what the decision means and its impact on discrimination law.

          Young addresses pregnancy discrimination and how plaintiffs can prove it in a slightly different context than your typical pregnancy discrimination case. Let’s first take a look at a district court decision filed on the same day as the Supreme Court’s decision in Young. In Rogers v. Southeast Psychiatric Services, Inc., 1:14-cv-354 (M.D. Ala., Mar. 25, 2015). Plaintiff Kimberly Rogers worked as a psychologist for the defendants’ psychiatric medical practice. Defendants designed and built a new office building, which included a space specifically for Rogers’ practice. Within weeks of the move defendants put Rogers’ nameplate on the door of her new office. Later that same day, Rogers announced she was pregnant. Defendants’ executive committee met one or two days later and decided to terminate Rogers’ employment.  

          The district court recited the basic McDonnell Douglas framework of analysis:

[T]he plaintiff first has the burden of establishing a prima facie case of discrimination, which creates a rebuttable presumption that the employer acted illegally. "To set out a prima facie case, the plaintiff may show that: (1) [s]he is a member of a protected class; (2) [s]he was qualified for the position; (3) [s]he suffered an adverse employment action; and (4) [s]he *** was treated less favorably than a similarly-situated individual outside h[er] protected class." (Citations omitted.)

          The parties did little in the way of arguing the fourth element; however, the court noted that “a plaintiff does not have to show a comparator if she *** presents a convincing mosaic of circumstantial evidence that would allow a jury to infer intentional discrimination.” (Citations omitted.)

          The court reviewed the evidence and decided that Rogers presented a prima facie case, there was evidence that defendants' proffered reasons were pretextual and that summary judgment should be denied.

          The evidence in Rogers can be categorized as a typical pregnancy discrimination case under Title VII. The same cannot be said of the record before the Supreme Court in Young.  Young worked for UPS as a part-time driver. UPS required drivers like Young to be able to lift parcels weighing up to 70 pounds. When Young became pregnant her doctor imposed a lifting restriction of 20 pounds.  UPS told Young she could not work while under a lifting restriction. Young consequently stayed home without pay during most of the time she was pregnant and eventually lost her employee medical coverage.

          Young sued under Title VII’s pregnancy protections claiming that UPS acted unlawfully in refusing to accommodate her pregnancy-related lifting restriction. She relied upon Title VII’s requirement that “women affected by pregnancy *** shall be treated the same for all employment-related purposes *** as other persons not so affected but similar in their ability or inability to work ***.” Young argued that UPS accommodated non-pregnant drivers by providing light duty assignments. UPS argued in response that Young was not similar to the other drivers because they had become disabled on the job, had lost their Department Transportation certifications, or suffered from a disability covered by the Americans with Disabilities Act.  UPS’s point was that there were plenty of other non-pregnant drivers who did not receive light duty assignments because they, like Young, did not fall into one of these three categories.

          The plaintiff’s dilemma in Young was that (1) she had been treated the same as a subset of other persons not so affected [by pregnancy] but similar in their ability or inability to work as she was; while at the same time (2) she had not been treated the same as another subset of other persons similar in their ability or inability to work, but for whom UPS had granted an accommodation (i.e., other employees with physical limitations). Young, of course, argued that not having been treated the same as one of the subsets ended the matter. She posited in her Brief that pregnant workers who are similar in the ability to work must receive the same treatment even if another subset of nonpregnant workers do not receive accommodations. The Court paraphrased her argument thusly: because pregnant and nonpregnant workers were treated differently, “that is the end of the matter, she must win; there is no need to refer to McDonnell Douglas."

          The Court rejected Young’s argument:

The problem with Young’s approach is that it proves too much. It seems to say that the statute grants pregnant workers a “most-favored-nation” status. As long as an employer provides one or two workers with an accommodation—say, those with particularly hazardous jobs, or those whose workplace presence is particularly needed, or those who have worked at the company for many years, or those who are over the age of 55—then it must provide similar accommodations to all pregnant workers (with comparable physical limitations), irrespective of the nature of their jobs, the employer’s need to keep them working, their ages, or any other criteria. *** We doubt that Congress intended to grant pregnant workers an unconditional most-favored-nation status.

          The Court solved the dilemma presented by the record by returning to the tried and true McDonnell Douglas framework, modifying it to fit plaintiff’s failure to accommodate case:

Thus, a plaintiff alleging that the denial of an accommodation constituted disparate treatment under the Pregnancy Discrimination Act’s second clause may make out a prima facie case by showing, as in McDonnell Douglas, that [1] she belongs to the protected class, [2] that she sought accommodation, [3] that the employer did not accommodate her, and [4] that the employer did accommodate others “similar in their ability or inability to work.”

          Under this analysis it is unnecessary for a plaintiff to prove she was qualified because in the context of a failure to accommodate disparate treatment case qualification is irrelevant. Likewise, the Court’s modified prima facie test dispenses with a showing of an adverse employment action and replaces it with the requirements of seeking an accommodation and failure to accommodate, which is in essence the adverse employment action. The employer can then offer a legitimate, nondiscriminatory reason for its failure to accommodate. If the employer does so, then the plaintiff must show that the employer’s proffered reasons are in fact pretextual.

          The critical part of the test is and remains what it has always been in a disparate treatment case – whether the plaintiff’s evidence demonstrates she was treated less favorably than similarly-situated other employees because of the protected trait. This, when combined with evidence of pretext, raises an inference of intentional discrimination and gets a case to the jury.

          The Court’s suggestions about how a plaintiff can show pretext gave rise to the crux of the Justice Scalia’s dissenting opinion.  It would have been better if the majority had made explicit that it was merely suggesting how plaintiff could establish her case on remand, much as when explicating the four factors in Daubert (“Many factors will bear on the inquiry, and we do not presume to set out a definitive checklist or test.”) The Court wrote:

We believe that the plaintiff may reach a jury on this issue by providing sufficient evidence that the employer’s policies impose a significant burden on pregnant workers, and that the employer’s “legitimate, nondiscriminatory” reasons are not sufficiently strong to justify the burden, but rather—when considered along with the burden imposed—give rise to an inference of intentional discrimination.

          The plaintiff can create a genuine issue of material fact as to whether a significant burden exists by providing evidence that the employer accommodates a large percentage of nonpregnant workers while failing to accommodate a large percentage of pregnant workers. (Emphasis supplied.)

          In my mind the majority was simply suggesting a way for plaintiff to prove her case. The majority was not creating a rule that must be satisfied in all cases.

          Justice Scalia, joined by Justices Kennedy and Thomas, agreed with the majority that the key consideration is whether the plaintiff was treated less favorably than similarly-situated other employees:

[T]he right reading of the same-treatment clause prohibits practices that discriminate against pregnant women relative to workers of similar ability or inability.

          The dissenters, however, viewed what I believe were only suggestions as instead written-in-stone rules emanating from the statute. Justice Scalia wrote:

It takes only a couple of waves of the Supreme Wand to produce the desired result. Poof!: The same-treatment clause means that a neutral reason for refusing to accommodate a pregnant woman is pretextual if “the employer’s policies impose a significant burden on pregnant workers.” Poof!: This is so only when the employer’s reasons “are not sufficiently strong to justify the burden.” How we got here from the same-treatment clause is anyone’s guess.

          Justice Scalia took further exception because the majority proceeded “to bungle the dichotomy between claims of disparate treatment and claims of disparate impact.”

In the topsy-turvy world created by today’s decision, however, a pregnant woman can establish disparate treatment by showing that the effects of her employer’s policy fall more harshly on pregnant women than on others (the policies “impose a significant burden on pregnant workers,”) and are inadequately justified (the “reasons are not sufficiently strong to justify the burden,”.). (Citations omitted.)

          To be fair, the majority’s decision did not create such a “topsy-turvy world.” The focus of the majority’s analysis remains on whether the plaintiff was treated less favorably than nonpregnant employees similar in their ability or inability to work. Plaintiff on remand still has to convince the district court judge that a reasonable jury could infer discriminatory motive.

          Justice Scalia would have held that “because Young has not established that UPS’s accommodations policy discriminates against pregnant women relative to others of similar ability or inability, she has not shown a violation of the Act’s same treatment requirement.” Justice Scalia’s reference to UPS’s policy stems from an unjustified revision of plaintiff’s claim into one of disparate impact.  While UPS did have a policy, plaintiff did not challenge the policy. Her complaint was that she was not treated the same as other similarly-situated employees who were not pregnant. Justice’s Scalia conjured a strawman argument by focusing on an employment policy not under attack. The ultimate issue of intentional discrimination remains and, therefore, it is entirely possible that plaintiff will on remand lose by way of summary judgment.

          The Court’s decision in Young does not effect a sea-change in discrimination law. I believe many courts will recognize that any type of evidence which has a tendency to prove pretext, be it “significant burden” and “insufficiently strong reasons” evidence or otherwise, can be used to establish intentional discrimination.

Tyson Foods Responds to My Letter of Concern Regarding Arkansas' New Religious Freedom Law

I am boycotting Tyson Foods products in protest over Arkansas' new "religious freedom" law. That law sanctions discrimination against the LGBT community. I contacted Tyson's public relations director yesterday to advise that I will not purchase Tyson products until Arkansas repeals its detestable legislation. The company responded quickly. I assume that Tyson used a carefully drafted boilerplate response being sent to other persons of conscience who have lodged similar protests. That's OK, because at least it indicates the company is receiving many communications in protest. 

Here is the letter:

"Mr. Neel - Thanks for your message. We appreciate the efforts of Governor Hutchinson, Senate President Pro Tem Dismang and House Speaker Gillam to resolve the controversy over HB 1228 by agreeing to reshape this bill. We implore the members of the Arkansas State Legislature to ensure that the final bill protects and preserves our religious freedom, will not allow discriminatory practices in the workplace and does not create further damage to our state's reputation."

My Letter to the Editor of the Indianapolis Star

"Indiana's so-called "Religious Freedom" law is an abomination. No matter what your Governor says, the State of Indiana now sanctions discrimination against a minority of its citizens. It is now legal in Indiana for businesses to refuse service based on sexual orientation in the name of "God." What's next -- legalization of discrimination against Jews and Muslims based on "religious freedom."? Way to go Indiana!"

David W. Neel, Esq.

More Unionization, More Employee Rights Coming

Hallelujah! On April 14, 2015 the National Labor Relation Board's new union election rules take effect. While some management lawyers call them “ambush election” rules, these rules provide important safeguards of employees’ rights to organize and bargain collectively – just as Congress intended when it passed the National Labor Relations Act.

The new rules streamline the union election process. Starting next month, most union representation elections must be held ten (10) to twenty-one (21) days after an election petition has been filed. This will curb abuses by zealous employers trying to railroad the election process in order to interfere with employees’ freedom of choice. The new rules also put off disputes over voter eligibility until after the election, expedite pre-election hearings, and require employers to provide greater union access to employee contact information.

Watch for more unions across the country engaging in greater organizing efforts. The new rules should result in sizeable increases in union participation. I’ve said it before and I’ll say it again, apart from the benefits of wage and benefit bargaining, perhaps the best result for employees who gain union protection is job security. Newly unionized employees will shed their employment-at-will status, which translates into greater protection of their livelihoods.

You can learn more about changes implemented by the NLRB in its Fact Sheet on the subject.

Summary Judgment and Trial in an Employment Discrimination Case

            A jury decided that the Diocese of Fort Wayne-South Bend Indiana refused to renew Emily Herx’s contract as an elementary school teacher because she was undergoing in vitro fertilization.  I like the court’s decision for what it says about overcoming summary judgment in an employment discrimination case:

            First, Mrs. Herx didn’t need to show prima facie case-quality comparators at the summary judgment stage because she made an adequate showing under the direct method of proof. See Docket No. 135, at 16-19. The direct method of proof can include circumstantial evidence, Whitfield v. International Truck and Engine Corp., 755 F.3d 438, 443 (7th Cir. 2014) (“A plaintiff may prevail by ‘constructing a convincing mosaic of circumstantial evidence that allows a [factfinder] to infer intentional discrimination by the decision maker.’”) (quoting Phelan v. Cook County, 643 F.3d 773, 779 (7th Cir. 2006)); Harper v. Fulton County, Ill., 748 F.3d 761, 765 (7th Cir. 2014) (“Should the plaintiff lack direct evidence, she may also point to circumstantial evidence that allows a jury to infer intentional discrimination by the decision-maker.”), and doesn’t always require a showing of better treatment of a similarly situated co-employee.

         Second, once a Title VII case proceeds to trial, the indirect method of proof - including the showing of comparators - doesn’t matter. The jury isn’t asked to evaluate whether the plaintiff has shown the prima facie required by McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), or even instructed on that test. Once the case gets to trial, the only issue the jury decides is whether, based on all the evidence in the case, it’s more likely than not that things would have been different had the plaintiff not been in the protected class and everything else remained the same.

Herx v. Diocese of Fort Wayne-South Bend, Inc., 1:12-CV-122 (N.D. Ind., Mar. 9, 2015).