Employment Law Matters : Employment Lawyer & Attorney : Ogletree Deakins Law Firm : Labor Law, Human Resources

The 4th U.S. Circuit Court of Appeals has determined that an alleged harasser who makes gender-specific slurs and comments can create a hostile work environment for a female employee, even though the harasser is an “Equal Opportunity Harasser” who makes sexually offensive remarks to “anybody, any time.” EEOC v. Fairbrook Medical Clinic, P.A., 4th Circ., No. 09-1610, June 18, 2010.

Dr. Deborah Waechter was employed at Fairbrook Medical Clinic, which is owned and run by Dr. John Kessel. During her employment, Waechter was the target of a number of remarks by Kessel having to do with her body, her sexual relationship with her husband, and Kessler’s self-label as a “breast man.” In addition, Kessler made crude jokes to both the men and the women in the office, and reveled in being a “shock jock” who made outrageous remarks to both male and female employees. Waechter ultimately resigned her position and filed a lawsuit against Fairbrook. The lower court granted summary judgment for Fairbrook, dismissing Waechter’s claims with a finding that Kessler’s conduct was not based on Waechter’s gender and was not “severe,” and that it was not uncommon in a medical setting to use off-color jokes to “ease the tension.” The Fourth Circuit disagreed with and reversed that determination.

Title VII of the Civil Rights Act prohibits discrimination “because of sex.” The purpose of this prohibition, according to the U.S. Supreme Court, is to “strike at the entire spectrum of disparate treatment of men and women in employment.” In order to establish a violation of Title VII, an employee must show that the complained-of conduct was unwelcome, was based on her sex, was sufficiently “severe and pervasive” to alter the conditions of her employment and create an “abusive work environment” that was attributable to the employer.

In this case, Fairbrook argued that Kessel did not make the inappropriate remarks to Waechter because of her sex, and argued that Kessel was a generally crude person who made vulgar comments to men and women alike. The Fourth Circuit dismissed that contention, stating that although Kessel made offensive remarks to both men and women, his use of sex-specific and derogatory terms indicated that he intended to demean women. Further, the Court pointed out that Kessel’s proposals of sexual activity were not of the type that would have been made to someone of the same sex, as they involved breast pumping and “wild” sex after pregnancy. Based on these remarks, a jury could reasonably conclude that the purpose of Kessel’s comments was to embarrass and discomfit a woman in his employ.

The Court then addressed the issue of whether Kessler’s comments created an objectively hostile environment. In response to Fairbrook’s argument that employees in a medical clinic deal with human bodies every day and therefore have a more casual response to anatomical references and jokes, the Court responded that Kessel’s remarks went beyond merely crude behavior when they “ventured into highly personal territory,” including Waechter’s pregnancy, her body, and her personal life with her husband. The Court refused to accept the argument that because a medical setting deals with human anatomy on a regular basis, it is somehow “liberated from professional norms.” The Court determined that a jury could find that Kessel’s behavior was sufficiently severe and pervasive to establish an objectively hostile work environment.

While Fairbrook attempted to assert the affirmative defense available to employers since the Supreme Court’s decisions in Faragher and Ellerth in 2008, it was unable to show that it “exercised reasonable care to prevent and correct promptly any sexually harassing behavior.” The clinic never conducted an investigation or took any other corrective actions, in spite of the fact that Waechter complained to Kessel – the owner – on several occasions, and to at least one other manager.

This case raises a number of issues of which employers should be aware. First, the “Equal Opportunity Harasser” defense is not applicable if the remarks made by such a person are gender-based and could be interpreted to shock, intimidate, or alienate an individual of that gender. Second, the casual nature of a workplace is not sufficient to support an argument that harassing and humiliating behavior against one gender is okay. Third, with absolutely no attempt to investigate or otherwise exercise reasonable care to stop the harassment, an employer will be unable to provide the affirmative defense available under the prevailing Supreme Court cases. Antidiscrimination training and policies should be developed and implemented to assist employers in dealing with these issues and in avoiding legal liability for claims of hostile work environment.
 

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The Family and Medical Leave Act (FMLA) establishes protected leave for specific circumstances, including the birth or placement of a son or daughter, care of a newborn or newly placed son or daughter, and care for a son or daughter with a serious health condition. On June 22, 2010, the Wage and Hour Division of the Department of Labor issued Administrator’s Interpretation No. 2010-3 in response to requests for guidance regarding whether employees who do not have a biological or legal relationship with a child may take FMLA leave for birth, bonding, and to care for the child.

Under the FMLA, the definition of “son or daughter” includes not only a biological or adopted child, but also a “foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis.” According to the DOL, Congress intended the definition of “son or daughter” to “reflect the reality that many children in the United States today do not live in traditional ‘nuclear’ families with their biological father and mother.” One purpose of the FMLA is to ensure that an employee who has actual day-to-day child-care responsibilities is entitled to leave, even if that employee has no biological or legal relationship to the child.

The regulations associated with the FMLA define in loco parentis to include individuals with day-to-day responsibilities to care for and financially support a child. Whether an employee stands in loco parentis to a child is a fact issue dependent upon the specifics of the relationship and – according to the DOL – depends upon a variety of factors, including the age of the child, the amount of support provided, and the extent to which duties commonly associated with parenting are present. The DOL’s guidance goes one step further, and states that “the regulations do not require an employee who intends to assume the responsibilities of a parent to establish that he or she provides both day-to-day care and financial support in order to be found to stand in loco parentis to a child.” Therefore, an employee who provides day-to-day care for an unmarried partner’s child or a spouse’s child from a previous marriage, but does not financially support that child, may still be entitled to FMLA leave to care for the child should that child develop a serious health condition. Further, an employee who will share equally in child care responsibilities with a same sex partner would be entitled to FMLA leave for the birth or placement of that child, even without a biological or specific legal relationship with that child.

The DOL points out that “Neither the [FMLA] nor the regulations restrict the number of parents a child may have under the FMLA.” Therefore, the fact that a child has two biological parents does not prevent a finding that the same child is a “son or daughter” of an employee who provides day-to-day care or financial support to the child. For example, if the biological parents of a child divorce and remarry, it is possible (under the interpretation of the FMLA set forth in the DOL’s opinion letter) that there may be four individuals who may have equal rights to FMLA leave, should the child become seriously ill.

Employers should recognize that no specific legal relationship is required to establish in loco parentis status. However, there are limitations on this designation. For instance, an employee who cares for a child (even on a day-to-day basis) while the child’s parents are vacationing would not be considered to be acting in loco parentis to that child. However, if an employee intends to assume financial or day-to-day parental responsibility for a child on some continuing basis, and requests FMLA leave for that child’s care, the employer should look carefully at the facts before assuming that the employee is not entitled to such leave.

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[With thanks to Hera Arsen, J.D., Ph.D., in our Client Services group - her more detailed explanation of this case can be found on the firm's website at www.ogletreedeakins.com.]

The U.S. Supreme Court has held that a city police department's search of an employee/police officer’s text messages was reasonable, and did not violate the individual’s Fourth Amendment (“search and seizure”) rights. City of Ontario v. Quon, No. 08-1332, U.S. Supreme Court (June 17, 2010). While employers have been anticipating the high court’s opinion on whether employees have a reasonable expectation of privacy related to electronic messages, the Supreme Court did not tackle that issue. Instead, the Court assumed that the officer did have a reasonable expectation of privacy in his personal text messages. However, the Court also found that the search was motivated by a legitimate work-related purpose, and was not excessive in scope. Based upon those factors, the Court held that the city's review of the officer's text messages was reasonable and did not violate the employee’s Constitutional Rights. City of Ontario v. Quon, No. 08-1332, U.S. Supreme Court (June 17, 2010).

Jeff Quon was a police sergeant with the Ontario Police Department (OPD). In 2001, the city of Ontario acquired 20 alphanumeric pagers capable of sending and receiving text messages and contracted with an outside vendor to provide wireless services. Under the agreement with the city, the vendor charged an overage fee if messages exceeded 25,000 characters in a single month.

Before acquiring the pagers, the city adopted a “Computer Usage, Internet and E-mail Policy,” which was applicable to all employees. The policy set forth that the city “reserves the right to monitor and log all network activity including e-mail and Internet use, with or without notice.” The policy further stated that “users should have no expectation of privacy or confidentiality when using these resources” and that the use of inappropriate language in the e-mail system would not be tolerated. Although the policy did not specifically refer to text messaging, the city issued a written memo to employees that it would treat text messages the same way as it treated e-mails, and that text messages would be “eligible for auditing.” Quon signed a statement acknowledging that he had read and understood the city’s policy.

After Quon began to regularly exceed the 25,000-character limit, he was reminded that text messages were “considered e-mail and could be audited.” In October 2002, in an attempt to determine whether the 25,000 character limit was too low for work-related messages, the police department asked its vendor to provide the transcripts of Quon’s last two months of messages to determine if the overages were for work-related or personal messages. The transcripts revealed that many of the messages were personal in nature and that some were sexually explicit. That triggered an investigation of whether Quon was violating Ontario Police Department (OPD) rules by pursuing personal matters while on-duty. It was determined that in August, Quon sent or received 456 messages during work hours, and that less than 60 of those were work-related. The report concluded that Quon had violated OPD rules, for which he could be disciplined.

Quon filed suit in the U.S. District Court for the Central District of California claiming, in part, violation of his Fourth Amendment rights, and arguing that the privacy of personal text messages is protected by the ban on “unreasonable searches and seizures” found in the Fourth Amendment to the U.S. Constitution. The trial judge agreed that Quon had a reasonable expectation of privacy in the text messages, but held a jury trial to determine the intent of OPD’s search. The jury determined that the original purpose of investigation of the text messages was to determine the efficacy of the character limit, and not to determine whether Quon was wasting time while on-duty. Thus, the search was reasonable.

Quon appealed to the Ninth Circuit Court of Appeals, which agreed with the trial judge that the employees had a reasonable expectation of privacy. However, the Ninth Circuit rejected the trial judge’s finding on the reasonableness of the search overall, stating that, while the purpose of the search was to verify the efficacy of the 25,000 character limit, the purpose of the investigation could have been achieved by less-intrusive means (i.e., warning Quon, asking him to count the characters himself, or asking him to redact personal messages and grant permission to the department to review the redacted transcript).

The Supreme Court declined to address the issue of privacy of personal messages on company equipment, opting to dispose of the case on “narrower grounds.” Instead, the Court assumed that Quon had a reasonable expectation of privacy in the text messages, that the city’s review of the transcript constituted a search within the meaning of the Fourth Amendment, and that the principles applicable to a government employer’s search of an employee’s physical office apply to an electronic intrusion of privacy as well.

The Court then turned to the reasonableness of the search, finding that when conducted for a non-investigatory, work-related purpose or for the investigation of work-related misconduct, a government employer’s warrantless search is reasonable if: (1) it is “justified at its inception” and (2) if “the measures adopted are reasonably related to the objectives of the search and not excessively intrusive in light of” the circumstances giving rise to the search. Noting that OPD initiated the search to determine whether the vendor’s character limit was meeting the city’s needs, the Court concluded that the search was justified at its inception. The City and OPD had a legitimate interest in ensuring that officers were not paying for work-related expenses and alternatively, that the city was not paying for officers’ personal communications.

The Court next found that reviewing Quon’s messages was an “efficient and expedient way” to determine if his regular overages were work-related or personal. The Court noted that the review was not “excessively intrusive” since it covered only two months of messages and was limited to on-duty messaging. In addition, given that Quon was told that his messages were subject to auditing, the Court concluded that it would not have been reasonable for Quon to assume that his messages were “immune from scrutiny.” Thus, the Supreme Court held that the search was reasonable and the city did not violate Quon’s Fourth Amendment rights.

Although this case deals specifically with a public employer, private employers should use a similar approach when faced with an issue regarding the privacy of electronic correspondence on company computers and handheld devices, balancing privacy guarantees (based in state law or company policy) against the reasonableness of the employer's search and its purpose.
 

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Non-competition, confidentiality, and non-solicitation agreements all are examples of restrictive covenants that are used to preclude an employee from taking certain proprietary information or customers and using it (or them) in a way that may adversely affect the individual’s previous employer. When a company determines that a former employee may be prepared to violate such an agreement, it often will ask the court for injunctive relief that can include ordering the individual to refrain from taking certain actions over the period of time during which the validity of the restrictive covenant is determined. The 3d U.S. Circuit Court of Appeals recently vacated a district court’s preliminary injunction, finding that the lower court insufficiently evaluated and supported its decision to enforce a noncompetition agreement. PharMethod Inc. v. Caserta, 3d Cir., No. 10-1388, unpublished opinion, 6/2/10.

In that case, Michael Caserta had entered into restrictive covenants with his employer, Rentacom. He then became employed with that company’s successor, PharMethod. He was terminated by PharMethod in 2009 and became involved in activity viewed by PharMethod as competitive with its services. PharMethod filed a lawsuit, asking the federal court for a preliminary injunction to stop Caserta from competing against it until a full analysis of Caserta’s employment activities could be completed. The court granted the injunction, and Caserta appealed to the Third Circuit.

The Third Circuit reversed and remanded, stating that while the applicable federal rule requires a district court to make specific findings of fact and conclusions of law to assist in “meaningful appellate review,” the lower court here simply stated ultimate facts and conclusions without foundation. The appellate court vacated the preliminary injunction and remanded the lawsuit back to the district court with specific instructions on how to properly evaluate the request for injunctive relief.

First, it said, the lower court should evaluate the relationship between Caserta’s original employer, Rentacom, and its successor, PharMethod, to assure that PharMethod can enforce a restrictive covenant in an agreement made between Caserta and Rentacom. Next, the specific restrictions within that agreement must be reviewed to determine whether they are enforceable. In Pennsylvania, post-employment restrictive covenants are enforceable if: (1) they are incident to an employment relationship between the parties; (2) the restrictions are reasonably necessary for the protection of the employer; and (3) the restrictions are reasonably limited in duration and geographic extent. The Court also pointed out that restrictive covenants are “not favored in Pennsylvania and have been historically viewed as a trade restraint that prevents a former employer from earning a living.”

While a restrictive covenant may legitimately protect certain business-related interests, the Third Circuit specifically held that eliminating competition or gaining an economic advantage is not a legitimate business interest. Further, while the courts have discretion to “blue pencil” an agreement by limiting restrictive covenants to terms that are reasonably necessary for the protection of the employer’s business interest, the Third Circuit also pointed out that over-broad restrictions suggest an “intent to oppress the employee and/or foster a monopoly, either of which is an illegitimate purpose,” and could lead a court to invalidate an entire agreement. The Court also pointed out that because some Pennsylvania courts have shown a reluctance to enforce restrictive covenants against an employee who leaves employment involuntarily, the lower court here should have determined whether enforcement of a restrictive covenant against Caserta is appropriate under the specific circumstances of his termination.

The in-depth inquiry directed by the Third Circuit provides a checklist of elements that employers should incorporate into the drafting of restrictive covenants. A covenant-not-to-compete should be limited to the protection of the legitimate business interest of the employer, and should not be overly-broad in either a temporal or geographic respect; a confidentiality agreement should protect proprietary information, including trade secrets, and should not be extended in an attempt to protect information that is otherwise publically available; and non-solicitation covenants should preclude a former employee’s solicitation only of actual or probable customers, and not speculative ones. Because an appropriate court review should include all of these factors, employers should recognize that restrictive covenants that extend beyond those boundaries may be subject to revision or non-enforcement by the courts.
 

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