Thursday,
August 31, 2006
Statutes such as Title VII of the Civil Rights Act of 1964, the Americans With Disabilities Act (ADA), the Age Discrimination in Employment Act (ADEA), the Family and Medical Leave Act (FMLA), and the Sarbanes-Oxley Act (SOX) contain anti-retaliation provisions. These provisions prohibit an employer from retaliating against an employee because he has opposed any practice prohibited by the law or participated in any investigation into an alleged violation of the law. For example, Title VII prohibits an employer from terminating a female employee because she complained about sex discrimination.
Until this summer, employers in Louisiana, Texas and Mississippi, who operate within the jurisdiction of the United States Fifth Circuit Court of Appeals, were protected by a retaliation standard that was difficult for employees to meet. The Fifth Circuit ruled that employers could only be held liable for retaliation if their action against the employee amounted to an “ultimate employment decision.” Examples of such decisions include decisions to hire or discharge, promote or demote, adjust compensation, and grant or deny leave. The Fifth Circuit had ruled that actions such as transfers, reassignments and shift changes without a change in pay were not severe enough to support liability for retaliation.
However, the United States Supreme Court has recently repudiated the “ultimate employment decision” standard. Now retaliation claimants need only show a retaliatory motive and employer action that might have dissuaded a reasonable worker from making or supporting a charge of discrimination. Burlington Northern and Santa Fe Railway Co. v. White.
The New Standard Announced In Burlington Northern
The Supreme Court ruled that the anti-retaliation provision in Title VII is not limited to actions relating to employment or occurring at the workplace, if the actions would have been materially adverse to a reasonable employee or applicant. As the Court explained, "the employer's actions must be harmful to the point that they could well dissuade a reasonable worker from making or supporting a charge of discrimination.” The Court noted also that whether conduct “would have been materially adverse to a reasonable employee or job applicant” depends on the context of the particular circumstances involved, citing as an example a change in work schedule for a young mother with school age children.
What Does The New Standard Mean To Employers?
While the Burlington Northern decision addresses only Title VII, its holding is expected to be applied to anti-retaliation provisions in other employment law statutes. According to EEOC statistics, the number of retaliation charges filed in the United States in 2005 was almost twice the number filed in 1992. The new employee-friendly standard announced in Burlington Northern can only add to the rate of growth in such filings and subsequent lawsuits. And because the new standard will make it more difficult to obtain summary judgment on retaliation claims in Louisiana, Texas and Mississippi, employers in these states will face jury trials of such claims more often than in the past.
What Can Employers Do?
Recent employment law cases show that employers sued for both discrimination and retaliation are often winning on the discrimination claim and losing on the retaliation claim. As a result, employers need to be mindful of the increased risks involved with retaliation claims. Revise anti-retaliation policies to reflect the new standard announced in Burlington Northern. Educate supervisors that conduct outside the workplace or that is not related to the terms and conditions of employment may now be held to constitute unlawful retaliation, and that there are no one-size-fits-all rules. The Supreme Court suggested, for example, that changing an employee’s schedule or not including the employee in business lunches might or might not amount to retaliation, depending on the circumstances.
Employees who have complained of discrimination are not thereafter free to ignore work rules. Nor are they immune from justified discipline. However, they must be handled carefully to prevent liability for retaliation. Involve Human Resources and your attorneys whenever a complaint of discrimination or harassment is made; do not delay until an EEOC charge is filed, because conduct alleged to be retaliation often occurs after a complaint is made but before a charge is filed. Getting guidance on how to handle an employee who has engaged in protected activity could save you a great deal of disruption and expense.
Many employers require employees to sign non-compete agreements that restrict the employees from working for competitors or soliciting customers after termination. Louisiana has a statute establishing rigid guidelines for such agreements, and the Louisiana courts historically have been hostile toward them. Legislative and judicial pronouncements over the last three years have changed the law regarding non-compete agreements, and employers should review their agreements to make sure they remain enforceable and provide maximum protection.
In its 2001 decision in the Swat 24 case, the Louisiana Supreme Court surprised many by ruling that employers could prohibit employees from starting their own competing business, but not from going to work for another competitor. The Louisiana legislature subsequently revised the non-compete statute. Effective August 15, 2003, employers may prohibit employees from engaging in any competing business, regardless of who owns the competing business, for a period of two years after termination and within specified parishes or cities. The courts have held that this statutory amendment applies only to agreements signed after August 15, 2003. Thus, non-compete agreements signed prior to that date may provide your business with little or no protection.
On the other hand, Louisiana courts have become more receptive to enforcing an otherwise overbroad non-compete agreement if the agreement contains a severability clause authorizing the court to reform provisions that exceed the limits imposed by the non-compete statute. For example, if an agreement prohibits competition in 10 parishes when the employer only does business in 5 of those parishes, the agreement is overbroad and could be ruled void and unenforceable. But if the agreement contains a severability provision, the court may effectively delete the 5 parishes where the employer does not do business and enforce the ban on competition in the remaining 5 parishes. Louisiana’s Fifth Circuit Court of Appeal recently affirmed a trial court decision nullifying a non-compete agreement because the lack of a severability clause precluded the court from “fixing” an overbroad geographical restriction. The employer lost the critical protection its agreement was designed to provide by failing to include a severability clause.
If you want to maximize your ability to protect customer relationships you have developed over many years, you cannot rely on an “off-the-shelf” non-compete agreement, which is not tailored to Louisiana law. And you definitely need a severability clause in your non-compete agreements. Consult your attorneys to determine the best type of agreement for your business and the key components that will ensure enforceability.
For more information, please contact Thomas J. McGoey II at tjmcgoey@liskow.com or Andrew Wooley at awooley@liskow.com or go to www.liskow.com.
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