The Employer E-Letter: Labor and Employment Law News
from the Duluth, Minnesota law firm of
Hanft Fride, A Professional Association.
Co-Editors, Scott A. Witty, saw@hanftlaw.com and Richard R. Burns, rrb@hanftlaw.com, or 218.722.4766. Please feel free to forward this e-mail or share it with others. If there are other topics of interest to you or any other suggestions concerning this newsletter, please let us know.
This Month’s Topics:
- EIGHTH CIRCUIT RULES IN FAVOR OF RAILROAD ON USERRA CLAIM
- NEW EXECUTIVE ORDER ON NON-COMPETE AGREEMENTS
- EMPLOYER MUST HAVE OPPORTUNITY TO INVESTIGATE
- MISCLASSIFYING WORKERS BEARS RISK
- Tip Of The Month
EIGHTH CIRCUIT RULES IN FAVOR OF RAILROAD ON USERRA CLAIM
The Eighth Circuit Court of Appeals recently reversed a Federal District Court’s decision and ruled in favor of a railroad company in a case involving a former employee who alleged the company violated the Uniformed Services Employment and Reemployment Rights Act (“USERRA”) when he returned to work from a voluntary deployment.
Rodolfa A. Quiles began working as a general manager for Union Pacific Railroad Company in February 2014. He was paid as a “D-band” employee, based on a scale of A through E, with E being the highest. Quiles left in May 2015 for a voluntary deployment with the Marine Corps.
During Quiles’s deployment, Union Pacific underwent a reduction in force, and another employee was hired to serve as the general director of safety analysis, whom Quiles believed was hired to replace him. When Quiles returned from deployment, he was employed as a director of safety analysis and his compensation and benefits remained at the same “D-band” level, but he reported to another “D-band” employee rather than the “E-band” employee to whom he previously reported. Quiles viewed this as a demotion. After unsuccessfully attempting to resolve his dispute with Union Pacific, he became insubordinate and was terminated in March 2016.
Quiles sued Union Pacific asserting several claims, including that the company violated USERRA, which generally requires employers to reemploy military service members upon return from deployment to a position reflecting the pay, benefits, seniority, and other job prerequisites the service member would have attained if not for the deployment.
Before the case was submitted to a jury, the District Court granted Quiles’s motion for judgment as a matter of law on his failure to reemploy claim. The jury returned a verdict in favor of Union Pacific on the remaining claims and did not award Quiles any damages.
Upon appeal, the Eighth Circuit determined “a reasonable jury could find Union Pacific attempted to fit Quiles into an appropriate job within the corporation’s reorganized structure upon his return from deployment,” noting that the “jury could consider Union Pacific’s reorganization and elimination of all general manager titles, Union Pacific taking steps to protect Quiles’s pay grade, and the five-year field experience requirement for the General Director position.” Accordingly, the Eighth Circuit reversed the lower court’s USERRA ruling. Quiles v. Union Pacific R.R. Co., Inc., No. 19-3489/20-1605, __ F.4th __ (8th Cir. July 6, 2021).
NEW EXECUTIVE ORDER ON NON-COMPETE AGREEMENTS
Non-compete agreements typically exist to protect employers from departing employees who may use what they learned at their previous job to compete against their former employer. Such agreements are intended to shield employers from unfair competition, but employers sometimes use them to unreasonably control their employees and hinder their ability to change jobs. On July 9, 2021, President Biden signed an Executive Order on Promoting Competition in the American Economy. The Executive Order (E.O.) directs the Federal Trade Commission (FTC) to ban or limit non-compete agreements. While the E.O. itself does not create new rules or prohibit or limit non-compete agreements, it strongly encourages the FTC to “curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” Currently, there is no federal non-compete law because states traditionally regulate this area. Non-competition agreements are currently enforceable under Minnesota law, but a few states already limit the application or refuse to enforce non-compete agreements against employees. More states are likely to restrict or prohibit use of non-compete agreements in response to the E.O., but it remains unclear whether the FTC has the authority to dictate non-compete law across the country. Employers do not need to make drastic changes to their non-compete agreements yet, but employers should make sure the restrictive covenants in their non-compete agreements are narrowly tailored to meet legitimate interests, and not so broad that they prevent employees from working in an entire industry. Employers and employees should take notice of any rules implemented by the FTC and updates to state law regarding non-competition.
Employer Must Have Opportunity to Investigate
In a recent 8th Circuit case, the Court looked at whether or not an employer was given a reasonable opportunity to investigate a claim of harassment. As this was a co-worker and not a supervisor, the standard is whether the employer knew or should have known of the conduct and took no action to investigate and determine appropriate discipline, if any. Although the employee claimed there had been inappropriate touching, it was not reported originally to HR, a supervisor, or even her Union. There were subsequent disputes involving performance, and ultimately the employee resigned without even then mentioning the harassment. Ultimately, the Court found that her subsequent claims for sexual harassment and retaliation were to be dismissed as she had deprived the employer of a reasonable opportunity to investigate and reasonable opportunity to take corrective action. This case also involved an issue as far as sanctions, which the Court approved as the plaintiff’s attorney had failed to appropriately respond to discovery requests. Lopez v. Whirlpool Corp., No. 19-2357 (8th Cir. 2021).
MISCLASSIFYING WORKERS BEARS RISK
A recently filed case in California points out the risks an employer has for potentially misclassifying a worker. At issue was a person who worked as a recruiter for Taco Bell for 20 years. Although classified as an independent contractor, Taco Bell created calendars, pillows, socks and drink holders with his name. In his suit, the plaintiff argues that under the California test he was clearly an employee as one is considered an employee unless the employer can show (1) the worker does not answer to a supervisor or the company that hired the worker, (2) does work outside the scope of the company’s business and (3) can take on the same kind of work independently. Of course here the central theme would be the fact that he is certainly doing work within the scope of the company. His business claims were under the Employment Retirement Income Security Act (ERISA) and claim that he was denied access to benefits, such as bonuses, paid time off and access to the employer’s pension plan. In addition, he claims he should be entitled to be reimbursed for his out-of-pocket expenses (such as cell phone costs) that he otherwise would not have incurred, including self-employment taxes. Obviously, these amounts can add up. Alders v. Young Brands, Inc., et al, Case No. 8:21-cv-01191 (DCCD California 2021).
TIP OF THE MONTH: As employers establish a timetable for return to work, they should be aware of some practical rules.
- Give prior notice of the termination of the work at home option and any opportunities for a “hybrid” arrangement.
- Specifically identify those duties that were not required to be performed during a work at home situation, which are “essential duties” under the ADA and must now be performed.
- Request employees to indicate any concerns about returning and recognize discretion likely will need to be exercised for many positions. Studies show that employers believe only 4% of employees want to return full-time and 71% believe most would prefer a hybrid mix.
If we are dealing with something beyond normal COVID anxiety, such as a physical or mental condition, employer must engage in an interactive process under the ADA to determine an appropriate accommodation. As we indicated earlier, employers have hopefully documented situations where the work at home has not been as productive as it should be.
Hanft Fride’s business and trial lawyers are located at 1000 U.S. Bank Place, in Duluth, Minnesota. Visit our website at www.hanftlaw.com for general information on the firm and our attorneys. Our employment lawyers include Tom Torgerson, Rob Merritt and Scott Witty. Richard Burns is now of Counsel.
The information provided in this E-letter is general in nature and should not be used as a substitute for professional services and advice. The communication and receipt of this information is not intended to create an attorney-client relationship. Readers should consult with their legal counsel before taking any action on matters covered in this E‑letter.
To subscribe or unsubscribe to Employer E-Letter, e-mail your request to jaw@hanftlaw.com or call Scott Witty at 218.722.4766. Copyright 2021 by Hanft Fride, P.A. All rights reserved. Hanft Fride, A Professional Association, 1000 U.S. Bank Place, 130 W. Superior Street, Duluth, MN 55802. Phone 218.722.4766; Fax 218.529.2401.