FedEx Ground has settled a case with the Attorney General of Massachusetts for misclassifying its delivery drivers. FedEx Ground classifies its drivers as independent contractors, instead of employees, which results in substantial cost-savings to FedEx Ground because under such an arrangement its drivers bear FedEx Ground’s overhead costs, among other things.
Articles Posted in Employment Agreements
U.S. Supreme Court Accepts Mandatory Arbitration of Discrimination Claims for Unionized Employees
The United States Supreme Court recently ruled that a union could contract away a union member’s rights to pursue a statutory discrimination claim in court. In 14 Penn Plaza L.L.C. v. Pyett, the Supreme Court considered whether a union member with an age discrimination claim under the Age Discrimination Employment Act (“ADEA”) could be required to privately arbitrate the claim rather then pursue it in court. Surprisingly, a divided Supreme Court concluded that a union member could be mandated by a collective bargaining agreement (“CBA”) to arbitrate a statutory discrimination claim.
Broadcasters Can Work for the Competition in New York
New York Governor Paterson recently signed the Broadcast Employees Freedom Work Act which restricts employers in the broadcasting industry from conditioning employment on the signing of noncompete agreements.
Noncompete agreements restrict an employee’s ability to work for a competitor for a specified period of time following termination of employment. In New York, such agreements are upheld provided that they are reasonable in scope, time, and no more restrictive than necessary to protect an employer’s legitimate interest– such as confidential information. Such agreements in the broadcasting industry had the effect of either requiring broadcasters to move out of their geographical areas or ending their careers.
The Broadcasting Freedom Work Act alleviates this problem by providing that “a broadcasting industry employer shall not require as a condition of employment, whether in an employment contract or otherwise, that a broadcast employee or prospective employee refrain from obtaining employment: (a) in any specified geographic area; (b) for a specific period of time; or (c) with a particular employer” following termination of employment. This protection cannot be waived and would apply to all broadcasting industry on-air and off-air employees excluding those holding management positions.
One Size Does not Fit All: Employee Handbooks May Lead to Employer Liability without Careful Review
In Peters v. Gilead Securities Inc., the 7th Circuit sent out a warning to employers using employee handbooks, that their provisions may be held legally binding due to the contract liability theory of promissory estoppel. Specifically, the court ruled that although a company may not be subject to the Family Medical Leave Act they may still be liable if their Employee Handbook states employees are eligible for such a leave.
Gilead’s Employee Handbooks discussed a “Family and Medical Care Leave” policy that would be provided to all employees. This policy set forth that employees, who had worked for Gilead for at least 12 months and 1,250 hours in the last 12 months, were entitled to take up to a 12 week leave of absence to care for ill family members or themselves in which their position at the company would be secure. The provision in the handbook tracked the language that governed the eligibility of an employee to receive a similar leave under the Family Medical Leave Act (FMLA). However, the handbook in disclosing the eligibility for the leave did not include an exception referred to as the 50/75 provision that applied to FMLA leave. Under the FMLA 50/75 provision, employees who are employed at worksites where their employer employs less than 50 employees in a 75 mile radius are not eligible for FMLA leave. 29 U.S.C. § 2611 (B)(ii).
Peters involved an employee of Gilead who suffered a shoulder injury. On December 5, 2002, Peters took what he thought was FMLA leave in order to undergo corrective surgery. The day after he left for his leave he received a letter from his employer discussing both that the Family Medical Leave Act went into effect on August 5, 1993 and how an employee was eligible to take FMLA leave. This letter, like the employee handbook, mentioned nothing regarding a 50/75 exception. The letter informed Peter that if he returned to work before “[his] FMLA” leave was expired he would get back his position. The letter stated that he would have to return to work by February 28, 2003. Peter returned to work on December 16, 2002 but had to take another leave when his medical treatment changed. Again he received a letter from his employer calculating when he would have to return to work from his FMLA leave to keep his position- this time subtracting the time he already took off during his first leave. Peters was prepared to return to work before his 12 weeks expired but was informed that his position was given to another employee. Peters was offered another position but refused it and was ultimately terminated, this suit was brought in response to his termination.
Change in Executive’s Reporting Relationship Considered a Breach of Contract by Employer
Many executive employment agreements provide that an executive can only be terminated “for cause.” In addition, those agreements sometimes provide that the executive can terminate the employment relationship for “good reason.” A resignation for “good reason” results in it being treated as a termination without cause by the employer. This is significant, because the employee will then be entitled to damages, i.e., whatever the employee would have received under the agreement had he or she either remained employed or terminated without cause.