EEOC Releases Report Addressing Workplace Harassment

June 2016

Thirty years after sexual harassment was recognized as a form of illegal sex discrimination in Meritor Savings Bank v. Vinson, workplace harassment remains a persistent problem: in fiscal year 2015, approximately one-third of charges of discrimination filed with the EEOC included an allegation of harassment, and likely most instances of harassment are not reported, either internally or to a government agency.  To address this issue, the EEOC released a report on harassment in the workplace, stating the business case for preventing and stopping harassment—including legal costs; employee morale, health, and productivity; turnover; and reputational harm—and provides some recommendations for doing so. 

The report addressed a number of issues relating to harassment prevention and correction, including trainings, policies, leadership and accountability.  It is important to both clearly define prohibited behavior, and create an environment in which employees feel comfortable coming forward to report any harassment before it gets to the point where legal action may be taken.  According to the report, harassment trainings that focus too much on avoiding legal liability have not been effective in preventing and stopping harassment, but suggested new and different approaches to training, such as bystander intervention and general respect and civility trainings, which may prove more successful.  Of course, any training should take into account the specific workforce and workplace, as what may be effective for one employer, may not be for another.

The report goes on to identify environmental risk factors that may lead to harassment.  Of course, every workplace will have at least some of these characteristics, but if a company has several, it might want to focus on minimizing the risk that these situations can create.  The identified risk factors include:

·         Homogenous workforces;

·         Workplaces where some workers do not conform to workplace norms;

·         Cultural and language differences in the workplace;

·         Coarsened social discourse outside the workplace;

·         Workforces with many young workers;

·         Workplaces with “high value” employees;

·         Workplaces with significant power disparities;

·         Workplaces that rely on customer service or client satisfaction;

·         Workplaces where work is monotonous or consists of low-intensity tasks;

·         Isolated workplaces;

·         Workplace cultures that tolerate or encourage alcohol consumption; and

·         Decentralized workplaces.

For assistance in preventing and stopping workplace harassment, including reviewing policies and procedures, conducting trainings, or minimizing risk factors,  contact James B. Sherman at jasherman@wesselssherman.com or by phone at 952-746-1700.

8th Circuit Clarifies Definition of a “Report” Protected under Sarbanes-Oxley Act

June 2016

Employees of publicly traded companies are protected from retaliation for reporting “any conduct which the employee reasonably believes constitutes a violation of” rules or laws regarding fraud against shareholders.  This includes internal reports made to a supervisor or another individual with investigative authority in a company.  Because of this, employers are often afraid to touch an employee who has made a complaint or report.  However, not all reports or complaints qualify for protection; the employee’s belief must be both subjectively reasonable (i.e. the employee sincerely believes the law is being violated) and objectively reasonable beyond what the employee may think.   Recently, the Eighth Circuit Court of Appeals clarified what constitutes a protected, “objectively reasonable” report, to support a claim under Sarbanes-Oxley. The court held that a plaintiff employee must prove that “a reasonable person in the same factual circumstances with the same training and experience would believe the employer violated securities laws.”  Applying this standard to the facts of the case, the court affirmed the dismissal of the employee’s complaint. 

In this particular case, the employee complained that the company had repeatedly overstated its sales revenue projections by several million dollars.  However, the court found this to be a mere drop in the bucket compared to the overall revenues of the defendant company.  The court reasoned that under these circumstances it was not reasonable for the plaintiff—a salesperson and shareholder of the company—to believe that these relatively inconsequential misstatements constituted shareholder fraud.  Because the courts in Minnesota and neighboring states require that employee whistleblowing needs to meet both a subjective and an objective “reasonableness” standard in order to be protected under the Sarbanes-Oxley Act, not every report or allegation of illegal activity will support such law suits.  This is good for employers. However, Minnesota employers must also be concerned with the Minnesota’s Whistleblower Act, which protects all good faith reports of violations, suspected violations, or planned violations of any law. 

Because employees may be protected from retaliation on any number of grounds under federal and state law, and because retaliation claims are among the fastest growing in all areas of employment law, employers should seek experienced legal counsel before disciplining or discharging any employee that has asserted any claims or made allegations against the company.  An ounce of prevention may be worth much more than a pound of proverbial cure.

EEOC, Department of Justice Make Transgender Equality a Priority

June 2016

Discrimination against transgender individuals in their workplaces, as well as in the public, is an issue many companies are currently dealing with.  Especially with the issue of bathroom access, many employers struggle to balance the privacy concerns of cisgender employees, some of whom may be wary about sharing restrooms, with the rights of transgender employees, for whom using a restroom that conforms with their gender identity is an important aspect of their transition.  Although Title VII of the Civil Rights Act of 1964 does not explicitly outlaw discrimination on the basis of gender identity, both the EEOC and the Department of Justice have taken the position that companies and laws that restrict transgender individuals’ access to public restrooms such as North Carolina’s controversial bathroom law, violate the law.  North Carolina and the Department of Justice have both filed federal lawsuits to determine whether the law is discriminatory. 

The EEOC has been actively seeking to protect lesbian, gay, bisexual, and transgender employees under federal anti-discrimination law’s sex discrimination provisions, as part of the its 2013-2016 Strategic Enforcement Plan.  Recent actions include extracting a $140,000 settlement from a Minnesota employer for allegedly complying with a client’s request to remove an employee from the client’s account on the basis of the employee’s gender identity, as well as publishing a new fact sheet reminding employers of its position that it is a form of sex discrimination to deny an employee equal access to a common restroom corresponding to the employee’s gender identity, under Title VII. 

The fact sheet clarifies that a person does not need to undergo any sort of medical procedure in order to be considered a transgender man or a transgender woman.  It also explicitly states that contrary state law, such as North Carolina’s bathroom law, will not be a defense to a discrimination case under Title VII.  The Minnesota Supreme Court has previously held in Goins v. West Group that the Minnesota Human Rights Act—which specifically prohibits discrimination on the basis of “having or being perceived as having a self-image or identity not traditionally associated with one’s biological maleness or femaleness”—does not require or prohibit restroom designation according to self-image of gender.  However, the legal landscape has changed considerably since the Goins decision, and employers wishing to avoid the wrath of the EEOC are well advised to allow employees to use the facilities that correspond with their gender identity.  The EEOC would not find it acceptable for employers to restrict transgender employees to a single-occupancy restroom instead of common restrooms available to other employees, but an employer may certainly provide a single-occupancy restroom for any employee who might choose to use it.

For assistance in dealing with this emerging area of workplace law, contact James B. Sherman at jasherman@wesselssherman.com or by phone at 952-746-1700.

Employers Beware: If You Make Your Employees Sign Noncompetition Agreements You Could Wind Up In Court These Days... As a Defendant in a Government Lawsuit!

June 2016

James B. Sherman, Esq.

Employment agreements that restrict employees from working for a competitor after they leave or are fired, have become increasingly common.  Indeed, these agreements have become so prevalent in today’s workforce that they are coming under fire from an unlikely source - state attorneys general, through lawsuits!  Perhaps this new (and disturbing) trend should not come as such a surprise.  With so many employees being required to sign restrictive covenants as a condition of employment, it is getting harder and harder for them to leave their jobs for another in their chosen field.  Similarly, employers looking to hire are seeing the pool of qualified applicants diminished by the fact that many are saddled with post-employment restrictions from an agreement with their prior employer.  In the past year, states have begun suing employers in court over their alleged unreasonable use/overuse of non-compete agreements.  Illinois became the most recent state to join this trend when Attorney General Lisa Madigan, filed a lawsuit against sandwich maker Jimmy Johns, in Illinois state court on June 8th.  Employers should take notice of these government lawsuits because the legal theories relied on in Jimmy Johns’ and other cases recently filed around the country, could just as easily apply in Minnesota, Wisconsin and most other states!

The case against Jimmy Johns alleges that the company is violating Illinois state law by requiring unskilled sandwich makers and delivery drivers to sign a non-compete agreement banning them from other, similar jobs during and for a specified period following their employment.  The government’s lawsuit asserts that Jimmy Johns has no legitimate business interest that would justify such restrictions on employees in these sorts of jobs. However, what is unique about this case is that Attorney General Madigan is alleging that using a non-compete agreement for employees who essentially pose no threat to the employer if they should leave and go to work for a competitor, constitutes a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. This raises the stakes, since this law could allow for the recovery of damages as well as punitive damages and attorney fees against the defendant.  The complaint asserts that unless an employer has a legitimate, protectable business interest that cannot be secured by means other than a narrowly drafted noncompetition agreement applicable to each employee who is required to sign one, such an agreement harms the employees as well as the general public by decreasing employee mobility, stagnating wages and diminishing the pool of available workers.

Employers outside Illinois should not feel they are immune to similar lawsuits.  Just this month, another employer defendant, Employment 360, which is owned by Lexis Nexis Legal & Professional, settled a lawsuit brought last year by New York’s Attorney General. The suit challenged 360’s use of non-compete agreements for its editorial employees, on grounds that the restrictive covenants were too broad and therefore, constituted an unlawful restraint of trade. The settlement effectively calls for 360 to notify its former employees that their non-compete agreements are no longer in effect and they are free to work wherever they please.

Minnesota and other nearby states (such as Wisconsin) have their own Deceptive Trade Practices Acts similar to that of Illinois, and the courts in these and every state recognize that unreasonable restraints of trade are illegal. Therefore, it is likely only a matter of time before Minnesota and other nearby states begin to see unsuspecting employers dragged into court in lawsuits by the attorneys general in their state, over their use of non-compete agreements if alleged to be unreasonable.   

So what are Minnesota and employers elsewhere to do in light of this growing assault on noncompetition agreements? First, don’t overreact by starting to shred all non-compete agreements.  Used properly, noncompetition and other restrictive covenants can save an employer’s business from unfair competition, poaching by competitors and loss of highly confidential information and trade secrets.  However, simply assuming that your agreements will pass muster if challenged in court, ignores the growing hostility toward restrictive employment agreements and the many new legal theories being used to challenge them.  Not only must the agreement itself be narrowly drafted to secure only clearly protectable business interests, but it must also be required only of employees who would pose a clear danger to those interests if they were to go and work for a competitor.  Therefore, the sensible approach is to have all restrictive agreements evaluated by an experienced attorney who is knowledgeable in this highly specialized area of the law.  Only then can an employer determine whether to: (1) keep its existing agreements unchanged; (2) modify existing agreements and/or pare down which employees are required to sign them; or (3) shred unreasonable agreements before being ordered to do so by a court in a lawsuit brought by the government.

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James B. Sherman has nearly 30 years of experience drafting non-compete and other restrictive employment agreements, as well as litigating their enforceability in state and federal courts in Minnesota, Wisconsin, Illinois and numerous other states.  He is licensed to practice in the state and federal courts of Minnesota, Wisconsin and Illinois and he has represented employers in many other states by special permission or with the assistance of local counsel in those states in which he is not licensed.  For questions about this article, or to discuss how Mr. Sherman can assist your company in evaluating the enforceability and use of its noncompetition, non-solicitation, or confidentiality agreements, as well as related restrictive covenants, please contact his legal assistant: Tyler Birschbach, by email, at tybirschbach@wesselssherman.com or by calling (952) 746-1700 .

Legislative Update: Wisconsin Organ Donor Leave

June 2016
By Alan E. Seneczko, Esq.

On July 1, 2016 a new form of leave will become a right under Wisconsin law: Bone Marrow and Organ Donation. Under the new law, enacted without much fanfare on April 1, 2016, employees have the right to up to six weeks of unpaid leave "for the purpose of serving as a bone marrow or organ donor if the employee provides his/her employer with written verification." Although the law is not formally a part of the Wisconsin Family Leave Act, the rights and remedies under the law are essentially the same, including eligibility requirements.

For more information, see 2015 Wis. Act 345 or contact Attorney Alan E. Seneczko at (262) 560-9696, or alseneczko@wesselssherman.com.

"Substantial Fault" Clarified

June 2016

By:  Alan E. Seneczko, Esq.

You may recall that in January 2014, a completely novel concept, "substantial fault," was introduced to the Wisconsin Unemployment Compensation system. (See, Changes to Wisconsin Unemployment Insurance Coming Soon, Sept. 2013). Under the new law, in addition to the established "misconduct" standard for disqualifying terminated employees from benefits (a fairly high standard), employees terminated for "substantial fault" are now also ineligible for benefits. 

"Substantial fault" is defined to include "those acts or omissions . . . over which the employee exercised reasonable control and which violate reasonable requirements of the employer." It does not include: 1) one or more minor infractions of rules unless an infraction is repeated after the employer warns the employee about the infraction; 2) one or more inadvertent errors made by the employee; and, 3) any failure to perform work because of insufficient skill, ability, or equipment. Wis. Stat. § 108.04(5g)(a). In other words, employees terminated for committing minor rule infractions without prior warnings and inadvertent errors are eligible for benefits. 

What is the difference between a "minor infraction of a rule," which constitutes "substantial fault" if repeated after warning, and an "inadvertent error," which does not? Good question. In Operton v. LIRC, 2015 AP1055 (Wis. Ct. App. 2016), a case of first impression, the Wisconsin Court of Appeals set out to answer this question. 

Walgreens terminated Operton for continuing to make cash handling violations after receiving multiple warnings for her conduct (eight violations over 20 months), and contended that her repeated mistakes amounted to "substantial fault" for purposes of her UC eligibility. The ALJ agreed, and the Commission upheld the decision. The court of appeals did not. 

The court first noted the difference between an "infraction," which generally relates to a violation of an established rule, and an "error," which it described as an "unintentional act or omission." The court found no evidence that the employee had committed any infraction of a rule, but rather, that all of her multiple violations amounted mistakes and unintentional errors. Therefore, since they constituted "errors" and not "infractions," it did not matter how many she made, because "one or more 'inadvertent errors,' even if warnings are given, are not 'substantial fault' under the statute." In response to Walgreen's contention that the repeated, cumulative effect of the employee's mistakes had crossed the line into disqualifying conduct, the court held: "Repeated inadvertent errors do not statutorily morph into 'infractions' if warnings have been given. Inadvertent errors, warnings or no warnings, never meet the definition of substantial fault." 

At the end of the day, what this means is that "substantial fault" is essentially just a lesser degree of "misconduct." That is, in order to prove a violation, you still need to establish the existence of a rule, the employee's knowledge of the rule, prior warnings and another violation. (Sound familiar?) Mistakes, poor performance, lapses in judgment, and similar such errors are still no basis for the denial of benefits, no matter how frequent. 

Questions? Please contact Attorney Alan E. Seneczko at (262) 560-9696, or email alseneczko@wesselssherman.com.