Jottings By An Employer's Lawyer

Thursday, December 22, 2011

One Prediction That Had Some Legs

Forecasting is an art not a science, and truth be known luck is probably the most single important factor if one gets it right, still I could not help but think back to one of my first posts of this year, 2011 --- the Year of the Non-minority? where I thought that we might see
more cases where what might be thought to be "non-minority" employees are claiming that they have been treated differently because of their race.
Now a few days before year's end the 5th Circuit decides Vaughan v. Woodforest Bank (5th Cir. 12/21/11). Ms. Vaughan, a white bank manager who managed a work force that was almost all black was terminated for what was described as "inappropriate comments in the presence of employees and customers that created a perception of racial discrimination and uncomfortable environment due to lack confidentiality."

The Court reversing a summary judgment in favor of the employer discussed the three comments that were said to underlie this conclusion. Without really saying so, the Court seemed to be saying that the comments did not seem to them to set a racial tone. Although its unclear how much it influenced the decision, it did note that the manager who made the decision to terminate Vaughan had a view that any discussions of race were problematic: "we cannot talk about race in the workplace" and "if you talk about race in the workplace it's racial discrimination."

Probably pushing my luck, but I sense that this particular type of case may have more than a one year run.


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Tuesday, December 20, 2011

Why Employers Don't Like Statutes Creating Causes of Action

One of the responses by the employer community to almost any proposed statutory cause of action is not that it supports employers who engage in whatever conduct is going to be prohibited, but that by adding yet another statutory cause of action, there is yet one more way for a lawsuit to be brought.

If you accept my basic premise, when a a lawsuit has been filed, the employer has lost, and from that point on, the only question is how much, then that argument makes sense. The issue is finding the balance, and I would argue that we have plenty of such legislation and could have a "holiday" to use a phrase currently in the political discussion from any additional new statutory causes of action. Particularly since causes of action never go away.

What brought about this particular post was a decision last week by the 7th Circuit which is a true head scratcher,  DeGuelle v. Camilli (7th Cir. 12/15/11) [pdf].

Among other things you had a
  • A Sarbanes Oxley complaint filed against a privately held company, so there was no coverage;
  • A RICO action predicated on the actions related to tax accounting that the terminated employee had been raising for years, and where
  • the Court relied on the provision in SOX that prohibits termination of a whistleblowing employee, because it is a listed statute for a predicate act for RICO purposes.
But I think what got me even more than the unusual legal aspect of the case was the account of the type of situation that anyone who has been doing this long enough has seen before. An irreconcilable difference of opinion develops between an employee feels who feels there is serious wrongdoing, an allegation that the company does take seriously, but disagrees with, and the inevitable bad outcome that occurs.

Because it is a review of summary judgment in favor of the employer, which was reversed, the Court had to accept all the allegations as true, and by doing so you have to assume egregious conduct including intentional tax violations and cover up.

But what is also true is that the employer had already sued the employee in state court for disclosing confidential information and obtained a judgement of $50,000 against him. To be fair, that is on appeal.

I obviously have no knowledge of who is right and who is wrong, but I do know that we have created in a relatively short period of time a very complex web of legal arguments for employees who are fired to say their termination was illegal. This decision points out how such statutes interact to create even more ways. 

Whether that is good or bad is a legitimate question, but we really are reaching the point where a weighing of the good and bad is in order.  Not just an automatic more is better.

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Friday, December 16, 2011

The 9th Circuit Does Their Part On Oracle Case, Extending California Labor Laws

One of the issues that I think has the potential to cause a lot of trouble for employers is the application of one state's labor and employment laws to employee who travel to work in another state.  In today's mobile world that is a lot of folks, especially employees located near state borders.

Basically, what happened is that Colorado based trainers who work for California based Oracle, brought a suit claiming that they should be paid in accordance with California wage and hour laws for the days they did training in California. The District Court rejected the claim. A 9th Circuit panel reversed. After a request for en banc hearing, the question was certified to the California Supreme Court. The Supreme Court basically gave the same answer the 9th Circuit had -- California law is applicable for the days the instructors worked more than a full day in California. See, Sullivan v. Oracle Corp. (Cal. S.Ct 6/30/11).

This week, the 9th Circuit completed the round trip (and engaged in a little mutual back patting), allowing as how, just like they did in their original opinion, the California Supreme Court got it right. They threw out some constitutional arguments on the part of Oracle and remanded the case for further proceedings. Sullivan v. Oracle Corp. (12/13/11).

How much training did they do? Not all that much.  One plaintiff did 150 days in Colorado, 32 in California and 52 days in other states. The next year, 150 in Colorado, 12 days in California and 20 days in other states and the third year of the period, 150 in Colorado, 30 days in California and at least 19 days in other states.   The other two plaintiffs had even less time in California.

The only thing that prevents this decison from being a total disaster is the following paragraph:
The contacts creating California interests are clearly sufficient to permit the application of California’s Labor Code in this case. The employer, Oracle, has its headquarters and principal place of business in California; the decision to classify Plaintiffs as teachers and to deny them overtime pay was made in California; and the work in question was performed in California.
Which keeps alive an argument that the case is only applicable to California based employers, although I am sure that cases are already in the works to challenge that aspect of the case.

Ultimately, I think this is an issue that the Supreme Court has to take up. From my prior experience there is precious little law on how we deal with state laws on "traveling" employees. 

Talk about an impact on commerce. 

Hopefully I am wrong, but I would not be surprised if this were one of the hot new things in 2012. And after enough are filed, maybe we will start to get some answers. Hopefully better ones than this weeks ruling.


Over 20 years ago my company, Woolworth, which had POB's in all 50 states, was faced with a claim that an employee, based in Colorado, whose duties took her to 5 states, none of which was CA, had a duty to deduct CA income tax because her named appeared on a payroll in the regional office, based in Burlingame. I told them no way, and said if they wished to pursue that asinine claim, we'd defend it. They folded. Today, I'm not so sure they would. CA's broke and clutching at straws.
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