In Georgia, a lawsuit is pending against a school district for giving a positive reference to a teacher who had been convicted of a sex crime and went on to teach in a district where he was later charged with raping a student.  In New Jersey a man is suing Best Buy Company, Inc. alleging that a human resources manager wrote a defamatory email about him to a prospective employer, thus costing him the job. 

Many employers believe that the potential liability in the employment arena ends when an employee terminates his or her employment with the company.  This clearly is not the case.  In fact, if an employee does not get a job, that employee will often times draw the conclusion that a negative reference was given by the former employer. 

As a result, many companies have adopted policies that specifically state to new hires that they will not give them any kind of reference when they leave.  Some employers will only give dates of employment, nothing else.  However, limiting reference information can also lead to trouble. Several lawsuits are currently pending against employers who said nothing when asked for an employee reference.  This creates a problem in that many employees do have issues that should be disclosed to the prospective employer.  For instance, does this employee have dangerous propensities?  Has this employee been charged with employment-related discrimination issues?  How this employee been dishonest?  If an employer hides behind a neutral-reference policy, that policy may reward the bad employee, and open the former employer up to liability.

Although many states have qualified immunity laws that allow employers to speak about employees’ job performance, the condition is that the statements must be made without malice.  Many plaintiffs will argue that there was malice, which will allow the employee to potentially move forward through the Court system.  Although there is no perfect answer for the employer, the typical rule of thumb is only to give “name, rank and serial number.”  By limiting the information given to dates of hire, salary and position, an objective reference is given, which should protect the employer as much as reasonably possible.  Although this may not completely protect the former employer from a potential lawsuit, it probably is the best and most protective policy to utilize.

The article discusses a decision in the New Jersey Supreme Court Case of Totaro, Duffy, Cannova and Company, L.L.C. v. Lane, Middletown & Company, which established new factors in assessing breaches of nonsolitication agreements.

You can read the full article here.

After the trial court entered summary judgment, the Defendant moved for counsel fees and costs, relying on the Frivolous Lawsuit Statute and on the Law Against Discrimination.  The Law Against Discrimination provides that reasonable attorney fees may be awarded to the prevailing party where there is a determination that the complainant brought the charge in “bad faith”.

The Appellate Division held in Michael that the determination of the term “bad faith” must be viewed within the context of the particular matter being considered.  The Appellate Division equated “bad faith” with a reckless disregard or purposeful obliviousness of the known facts.
   

The Michael Appellate Court remanded the matter back to the trial court to determine if the complaint was filed in “bad faith” and if it was, what constituted a reasonable award of counsel fees taking into account the Plaintiff’s ability to pay and the extent to which the Plaintiff relied on the advice of counsel.
   

Conclusion
 

This case is instructive as reasonable counsel fees and costs may be awarded  to a successful Defendant who prevails in an action under the New Jersey Law Against Discrimination if it is found that Plaintiff’s complaint was brought in “bad faith” and that Plaintiff had the economic circumstances to pay an attorney fee award.  This decision permits a trial judge to consider the award of counsel fees to a prevailing Defendant if it is determined that the discrimination lawsuit was brought in “bad faith”.  Although the “bad faith” standard will be difficult for a Defendant to prove, it will give pause to the Plaintiff who files a frivolous lawsuit.

You can read the full article here.

The facts of the case are as follows:  In 1997, Merritt Lane and David Middleton formed an accounting firm known as Lane, Middleton & Company, LLC.  In connection with his employment, Lane signed a restrictive covenant barring him from soliciting clients of the Company for a period of four years should he depart from the Company.  In 2001, Lane started his own accounting practice.  Lane sent solicitation packages to clients for whom he had previously performed services, including clients of Lane, Middleton & Company.  Numerous clients left to join Lane in his new accounting practice. 

During trial, several clients testified that they had a relationship with Lane and they were dissatisfied with the Company, and they would not have remained clients of the Company following Mr. Lane’s departure regardless of any solicitation.

The Trial Court found that Lane breached the non-solicitation agreement and calculated losses to the Plaintiff for loss of business following the first year after the departure of Lane.  The Trial Court then multiplied the first year’s losses by three to account for the remaining three years on the four-year restrictive covenant.  The majority of the Appellate Division affirmed the Trial Court’s Decision.

The New Jersey Supreme Court considered the appeal and reversed the judgment on the amount awarded.  The Supreme Court agreed that the Plaintiff’s loss of compliance work for the first year following Lane’s breach was a reasonable consequence of his action.  According to the Court, his breach of the agreement precipitated the clients’ departure. 

However, the Supreme Court disagreed with the Trial Court’s quantification attributable to the breach and reasoned that the damages must also reflect that Lane’s clients would have eventually left the Plaintiff.  The New Jersey Supreme Court found that the evidence did not support the Trial Court’s Decision to triple the damages to account for the three remaining years left on the restrictive covenant.

Conclusion.

If there is a breach of a non-solicitation covenant for a term in excess of one year, the Court will scrutinize the potential damages and may limit damages to a reasonable time period immediately following the employee’s departure. 

The importance of this bill is that it goes beyond protecting an employee from being discriminated against because of their religion, and specifically protects them from discrimination based on “religious practice.”  Given the lack of opposition to this Bill, it is likely that the Governor will sign it into law shortly. 

Additionally, time off can be taken under the FMLA to care for a wounded service member for up to 26 weeks paid leave (which must be taken within a single 12-month period).  It is anticipated that President Bush will sign the Bill into law within the next few weeks.  Once the Bill is signed, employers will need to notify their employees of this change in their FMLA rights.

For example, if an employee leaves a voice mail message on the Human Resource's voice mail requesting FMLA leave, is that sufficient to put the company on notice?  This question will need to be answered in subsequent cases.

His argument was that he had been a very successful manager of another dealership, and by asking him to take on the management of a non-profitable dealership, the franchisee in effect “owed” him employment for a certain period of time.  This claim had been dismissed by the trial judge prior to the trial of the case, and was never heard by a jury.  While there appears to have been some factual merit to the Plaintiffs’ argument, the Appellate Division relied on traditional notions of “at-will” employment and determined that the Court had been correct in dismissing the claim for Promissory Estoppel as they did not find that there was enough evidence that the parties had intended to enter a long-term commitment.  Specifically, the Court was looking for “assurances of employment” that were “clear, specific and definite.”  The franchisee in this case avoided any liability on the “promissory estoppel” claim (though there was a jury verdict against it for discrimination). 

This case highlights the potential for confusion between the franchisee who owns several locations and employees who are “specially assigned” to trouble-shoot certain kinds of jobs.  To avoid this confusion, a franchisee should notify an employee clearly and in writing that their “at-will” employment relationship continues despite the new assignment and that there is no guarantee of continued employment.  Such a written assurance would have most likely avoided litigation in this case and would have saved the franchisee from having to defend such a claim.

The chapter discusses issues and challenges employers will face when initiating changes in the relationship to protect the company, even though legal protections may be in place.

You can read the full chapter here.

A discussion with a potential candidate regarding employment contracts, including restrictive covenants, that they may have previously entered into with their employer is an essential first step to protecting the interests of the client and in defending against claims that a client has intentionally interfered with an existing restrictive covenant between an employee and his/her former employer. Other practical steps can be taken to help protect the recruiter and the candidate from being entangled in unnecessary litigation with former employers over restrictive covenants.

The case involved Edward Whelan, an employee of Teledyne Metalworking Products, who informed his employer that he had a degenerative eye disease.  As an accommodation for the eye disease, Mr. Whelan requested and received a transfer to an outside sales job.  Later, his vision worsened and he was no longer able to work in outside sales.  Therefore, Mr. Whelan notified the company that he was only able to work as a marketing coordinator out of his home.

Several years later, Teledyne consolidated its operations in Alabama.  Teledyne advised Mr. Whelan that he was required to transfer to Alabama and requested information about the accommodation Mr. Whelan would need to perform his essential job functions.  Mr. Whelan proposed only one accommodation–that Teledyne permit him to work out of his house in Pittsburgh.  Teledyne could not agree to have Mr. Whelan work out of his house in Pittsburgh and fired Mr. Whelan for not transferring to Alabama.

Mr. Whelan filed a lawsuit against Teledyne claiming it had violated the ADA by failing to provide him with a reasonable accommodation.  The 3rd Circuit supported and affirmed the jury’s finding that Teledyne had accommodated Mr. Whelan and would continue to accommodate him if he transferred to Alabama.  However, Mr. Whelan’s singular accommodation request to continue working from his home in Pittsburgh was unreasonable.  The 3rd Circuit further admonished Mr. Whelan as he requested a single, unreasonable accommodation and failed to provide appropriate information needed to devise an appropriate accommodation.

When an employee requests an accommodation, the employer must engage in the interactive process to determine what type of reasonable accommodation can be made for that employee.  However, an employer may not be required to provide the employee’s first choice of accommodation if that request is deemed to be unreasonable.  The employer must engage in good faith discussions and attempt to understand and work out whatever type of limitation or accommodation could be made for the employee.  However, the employee cannot hold the employer hostage with unreasonable requests.

You can read the full article here.

Further, most employers these days are familiar with getting nothing more than “name, rank, and serial number,” so you will not be discrediting former employees by severely limiting information. Carefully limit what you say, and you won’t live to regret it. 

This week's New Jersey Legal Update podcast is presented by John MacDonald, Shareholder of Stark & Stark's Employment Litigation Group.

You can download the New Jersey Legal Update Podcast # 69 here. (2.95 MB)

You can read the full article here.

This week's New Jersey Legal Update podcast is presented by Jason Storipan, member of Stark & Stark's Employment Group.

You can download the New Jersey Legal Update Podcast # 67 here. (6 MB)

You can read the full chapter here.

You can read the full story here.