Are your noncompetes enforceable? Government contractors face fresh scrutiny

by M. Jarrad Wright
DiMuroGinsberg, PC

Noncompete agreements can be an effective way to protect your business if former employees or independent contractors are working for a rival business and using the skills, information, and contacts they acquired while working for you. A recent Virginia Circuit Court decision, however, highlights the need for companies that do government contracting to reevaluate the legality of their existing noncompetes. In the case, Fairfax County Circuit Judge John M. Tran invalidated a government contractor’s noncompete for being unduly restrictive and overbroad in violation of public policy. The decision offers a number of lessons to help you avoid seeing your noncompetes meet a similar fate.

Facts

The Metis Group was one of several government contractors receiving a blanket purchase agreement to provide psychological services to the U.S. Army. The agreement allowed the Army to enter into various types of task orders to the contractors, which competed to provide the services.

The Metis Group had been awarded several task orders. To service the orders, the company entered into independent contractor agreements with several doctors and/or their practices. The independent contractor arrangements contained a noncompete providing that upon termination of the agreement by either party, the contractor would not seek to perform psychological services for the Army for 24 months. After the Metis Group’s task orders ended, the Army didn’t renew them. Nevertheless, the company’s independent contractor agreements with the doctors remained in force.

Approximately a year and a half later, the Metis Group discovered the doctors with whom it had contracted were providing psychological services to the Army for a competitor that had been assigned a task order. The Metis Group sued the doctors claiming they were violating their noncompetes. The doctors responded by asking the court to dismiss the lawsuit because the agreements they had signed were unenforceable.

Noncompetes ‘perpetuate a monopoly’

The court granted the doctors’ request and invalidated the noncompetes. Why? Judge Tran explained the agreements weren’t limited to preventing the doctors from seeking to provide psychological services in competition with the Metis Group. Instead, they prevented the doctors “from engaging in any professional services with the United States Army anywhere in the world for any purpose, whether or not such purposes compete with [Metis’] business model.”
Accordingly, Judge Tran found the noncompetes were “designed to perpetuate a monopoly” so that the Metis Group would be “the only contractor able to provide such services.” Consequently, the judge said the restrictive covenants violated public policy, explaining a “contract that prohibits a party from seeking employment at the time the employer had no work for the contractor and did not offer to subsidize the contractor’s livelihood is almost unconscionable.” The Metis Group, Inc. v. Allison, 2020 Va. Cir. LEXIS 6.

Lessons to be learned

The case presents a cautionary tale if you are engaged in government contracting and rely on independent contractors to fill positions and do the work. To gain a competitive advantage, government contractors often team together and attempt to lock in key independent contractors (who have specialized knowledge or skills) through covenants not to compete. After Metis Group, that strategy may not be worth the risk your noncompete will be struck down.

  • Instead, you should follow two principles in drafting enforceable noncompetes:
  • Limit the covenants to the specific programs or contracts at issue.Tailor the employee nonsolicitation provisions to cover services that actually compete with your company.

In Metis Group, the restrictive covenants ran afoul of both principles.

Bottom line

Take immediate steps to consult with experienced employment counsel to review the restrictive covenant language in your agreements with independent contractors working on a government contract. In consultation with counsel, make sure:
The restrictions aren’t overbroad;
The contract language actually fits the task at hand; and
The restrictions don’t unduly limit the independent contractor’s livelihood after the work for you is completed.

Following the above rules should allow you to put noncompete agreements in place that are enforceable and will protect your legitimate business needs.

Editor’s note: For more information about the law governing noncompete agreements, please see the following Virginia Employment Law Letter articles: “Noncompete void if employee misclassified as independent contractor” (December 2016), “Virginia court voids employer’s noncompete” (June 2017), “Alexandria court upholds VA employer’s noncompete, nonsolicitation agreements” (August 2018), and “Court enforces drone company’s nonsolicitation agreement” (December 2018).

M. Jarrad Wright is an attorney with DiMuroGinsberg PC and a contributor to Virginia Employment Law Letter. He may be reached at mjwright@dimuro.com.

Be careful when outsourcing your background checks

by M. Jarrad Wright
DiMuroGinsberg, PC

The potential pitfalls of using a consumer reporting agency and maintaining compliance with the federal Fair Credit Reporting Act (FCRA) were highlighted in a recent decision by the federal district court in Richmond, Virginia. In the case, job applicants filed a class action lawsuit against Wells Fargo Bank and the First Advantage Background Services, a consumer reporting agency the bank retained to perform background checks.

Facts

According to the class action suit, the language of the disclosure authorization form used by First Advantage failed to comply with the FCRA’s disclosure requirements. Among other things, the applicants argued the form, which contained a release of FCRA rights, was effectively hidden in Wells Fargo’s lengthy job application form. As a result, the applicants said First Advantage had no legal right to run a background check or provide a background report to the bank.

Court’s decision

Central to the federal court’s assessment of the applicants’ claims was whether they could establish an actual injury as required by the U.S. Supreme Court’s 2016 decision in Spokeo v. Robins. In that case, the Supreme Court said anyone pursuing an FCRA claim must show “an invasion of a ‘legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent,’ not conjectural or hypothetical.”

In this case, the federal court concluded the applicants had failed the Spokeo test. It reasoned they “knowingly and actively consented to the dissemination of their information to Wells Fargo” when, as part of the application process, they went to a website controlled by First Advantage and entered their private information for the explicit purpose of having a background check run. According to the court, “because [they] consented to this disclosure, they have not alleged a sufficient FCRA violation.” Frazier v. First Advantage Background Servs. Corp., Civil Action No. 3:17cv30.

Steps to compliance

Although Wells Fargo was successful in fending off the class action lawsuit, the case represents a cautionary tale for all employers that conduct background checks. Had the applicants not “actively and independently” used First Advantage’s website to provide their information, the outcome could have been much different. Accordingly, to avoid being the target of an FCRA lawsuit, it’s important to fully vet the company you use to conduct background checks and to thoroughly understand the processes used for satisfying the FCRA requirements. Questions you should ask include:

  • What warnings are given to applicants during the background check process?
  • Is there a separate website where applicants enter their information, or is another process used?
  • Are the disclosure forms for applicants fully vetted, and are they in compliance with the disclosure requirements of the FCRA?
  • Is your company using a standalone disclosure authorization form that has been properly vetted? (Using a standalone form is preferable to one that is combined with other information and will reduce the possibility of an FCRA violation.)

Bottom line

Background checks are an increasingly useful hiring tool, but there remain pitfalls with FCRA compliance. Having a formal policy on the use of background checks and the methods for instituting them can help ensure you don’t run afoul of the law. When in doubt, you should have experienced employment counsel review your policies and procedures to ensure FCRA compliance. When dealing with the FCRA, an ounce of prevention is worth even more than a pound of cure.

Editor’s note: For additional information on the requirements of the FCRA and the Supreme Court’s Spokeo decision, please see the following two articles in Virginia Employment Law Letter: “Know the rules before conducting background checks,” Vol. 28, Issue 1, February 2016, and “U.S. Supreme Court clarifies FCRA liability,” Vol. 28, Issue 5, June 2016.

M. Jarrad Wright is an attorney with DiMuroGinsberg PC and a contributor to Virginia Employment Law Letter. He may be reached at mjwright@dimuro.com.

CBD in the workplace: What does it mean for you?

by Jonathan R. Mook and Bethany Coan
DiMuroGinsberg, PC

With Virginia’s new medical cannabis laws taking effect, there are a lot of questions about the impact the use of medical cannabis products may have in the workplace. At present, Virginia’s cannabis laws are limited to CBD (cannabidiol) oils and other products with low amounts of THC (tetrahydrocannabinol, the active ingredient in marijuana). But that doesn’t mean issues won’t arise from your employees who may be using such products.

CBD oil is extracted from the marijuana plant and has made an appearance in the news recently due to its pharmaceutical properties, void of the “high” typically associated with THC. Presently, Virginia law permits cannabis oils with at least 15 percent CBD oil or THC-A and no more than five percent THC.

New Virginia laws

Addressing medical cannabis last year, Governor Ralph Northam signed into law House Bill (HB) 1251, which expanded legislation to allow Virginia doctors greater flexibility in deciding the medical conditions they deem appropriate for prescribing medical cannabis. Previously, the law limited the medical use of cannabis to intractable epilepsy.

As of July 1, 2019, Virginia law “allows capsules, lozenges, and patches, and a limit of 10 milligrams of THC per dose.” The adjusted dosage puts Virginia on the same level allowed in California and Washington state for medical marijuana use.

Despite the growing number of laws in Virginia pertaining to medical cannabis use, CBD oils, and their medicinal properties, there remains an anomaly in the state’s criminal laws. As it stands now, the laws do not legalize medical cannabis use or CBD oil. They simply provide what is called an affirmative defense to its use. Through this affirmative defense, individuals can lessen or avoid the legal penalties if they are caught and charged for illegal possession of cannabis or its lowgrade oil. So, although CBD oil doesn’t contain any of the psychoactive components associated with THC and can be found at health stores and state-instituted dispensaries, under Virginia law, it’s still considered illegal.

Impact on the workplace

What do these changes in the law mean for Virginia employers? According to the National Conference of State Legislatures, only a few states are working on addressing “the possibility of employees being under the influence of medical cannabis during the course of their employment.” Unfortunately, Virginia isn’t one of the states, so Virginia employers are left in the unenviable position of facing great uncertainty. As a result, policies regarding the medical use by your employees of CBD oil and other types of medical cannabis are basically left up to you.

With doctors having the ability to prescribe cannabis for a wider range of medical conditions to their patients, the lines become increasingly blurred for handling issues involving cannabis (in all its various forms) in your workplace. This is particularly a difficult situation since medical cannabis and CBD oil still live in a gray, but illegal, area of Virginia law. Additional legislation is being considered to address the growing field of medicinal and recreational marijuana uses more directly. But for now, there are no hard and fast rules for you to follow.

Bottom line: Proceed with care

At this point, probably the best advice is to stick with your existing policies and procedures for dealing with drug use in your workplace. First, there’s no question you can prohibit your employees from being under the influence of any drugs (as well as alcohol) that would negatively affect their abilities to do their jobs safely.

Second, if you conduct drug testing of your job applicants or employees, you can continue to do so. The level of THC in the cannabinoid oils or other products Virginia physicians may prescribe for medical use should be lower than the level that would yield a positive result in any drug testing you institute.

If for some reason an applicant or employee who is using medicinal CBD tests positive for THC, you can still verify she has been legally prescribed CBD and assess whether CBD use would prevent her from safely performing her job functions. In making such an assessment, it’s important for you to consult with an experienced healthcare provider who can advise you of the job-related impact of an employee’s CBD use. You also should contact experienced employment counsel who can ensure the steps you may take pass legal muster under the various laws affecting the workplace, including the Americans with Disabilities Act (ADA). Given the present legal uncertainty, it’s wise to make sure that before you take any job action, you have a strong factual and legal basis for your decision.

Jonathan R. Mook is a founding partner with DiMuroGinsberg, PC and an editor of Virginia Employment Law Letter. He may be reached at jmook@dimuro.com or 703-684-4333. Bethany Coan is a legal assistant who provided much valued research assistance in preparing this article.

New Virginia laws: Now’s the time to comply

by M. Jarrad Wright
DiMuroGinsberg, PC

Now that fall is here, it’s a good time for you to make sure you are in compliance with newly effective Commonwealth of Virginia laws affecting the workplace. This year, there are two such laws of which you need to be aware. One affects the scope of nondisclosure agreements, and the other requires you to provide certain personnel records to your employees.

Nondisclosure limitations

The #MeToo movement has highlighted the common practice in the resolution of sexual harassment claims to require employees to keep completely confidential any information regarding the complaint that was made. This practice has come under increased criticism for covering up the wrongdoing of corporate executives and enabling them to continue their harassing and untoward behavior.

Some advocates have gone so far as to call for the ban of such agreements based on public policy grounds. Indeed, in this year alone, proposed legislation relating to limiting or prohibiting nondisclosure agreements has been introduced in 16 states.

New requirements

One of those states is Virginia, where the general assembly passed a law limiting the confidentiality requirements an employer may impose on an employee. At the beginning of this year’s general assembly session, Delegate Karrie Delaney (D-Centreville) introduced House Bill (HB) 1820. The bill prohibits an employer from requiring a current or prospective employee—as a condition of employment—to sign confidentiality agreements or nondisclosure agreements that have the purpose of concealing the details relating to sexual assault claims, including rape, forcible sodomy, sexual battery, and aggravated sexual battery.
The legislation says such a nondisclosure provision is against the Commonwealth’s public policy and is void and unenforceable. The general assembly unanimously passed HB 1820, and Governor Ralph Northam signed it. The new law became effective on July 1, 2019.

Steps to take

The law applies to new confidentiality provisions being executed and renewals of nondisclosure agreements. Nonetheless, courts interpreting the new statute are likely to prohibit the enforcement of any provision in a current agreement that doesn’t conform to the new legal requirements. Accordingly, you should review your current nondisclosure agreements, including those that may be in your employee handbook, to make sure the language could not be read as running afoul of the new law.

Also, when drafting new agreements for your employees to sign, keep the new law’s limitations in mind. Given the importance of this issue, especially in the wake of mounting criticism of—and hostility to—nondisclosure restrictions, it’s advisable to consult with knowledgeable employment counsel to make certain your agreements won’t be struck down as against public policy.

Personnel records

In the past, private-sector Virginia employers haven’t needed to provide either current or former employees with access to their personnel files or other records, nor were employees or former employees entitled to copies of their records. That was then. In July, a new legal requirement took effect. Now, under new Virginia Code § 8.01-43.1, you must provide the following records to current and former employees:

  • Dates of employment with your company;
  • Their wages or salary during their employment;
  • Their job description and job title; and
  • Any injuries sustained during the course of employment.

Upon receipt of a written request, you will need to provide the records within 30 days. The law allows you to charge a reasonable fee per page for copying the records if they are kept in paper format and a reasonable fee for providing electronic records. If you need more than 30 days, you must provide a written notice of the delay. Such written notice will give you another 30 days to comply.

Narrow exceptions

The only statutory exception to producing the required records is if the employee’s treating physician or clinical psychologist, in the exercise of professional judgment, has determined that releasing the records is reasonably likely to endanger the life or physical safety of the employee or another person. In this limited circumstance, you still must provide the records if they are to go to the employee’s attorney or authorized insurer, rather than directly to the employee. Of course, this exception is very narrow, so in most cases you will need to comply with the new law’s disclosure and production requirements.

Penalties/compliance

Failure to abide by the new legal requirement can have serious consequences. Employees can enforce the new law by subpoenaing the documents from you. If you then intentionally refuse to comply with the subpoena, you may end up in court. If the court finds you failed to follow the law, it may award damages, costs, and attorneys’ fees. That is a result you don’t want to face.

Accordingly, you should review your employee handbooks, policies, and employment agreements to ensure the provisions dealing with the production of employee records conform to the new legal requirements. It’s also important to follow the time limits for record requests. To ensure that is done, you may want to designate a person within HR who is responsible for receiving, evaluating, and ultimately responding to personnel records requests. By doing so, you will be far less likely to run afoul of the new law, especially the 30-day window to respond to a written request.

Potential legal concerns

In addition to making certain you have the procedures in place to provide personnel records to current and former employees, you need to bear in mind that the records you produce, especially wage and salary information, won’t necessarily stay confidential. The documents may well be circulated among your employees who will be able to compare what they are paid to that of their colleagues.

For many employers, this may not present any problem. There always is a potential, however, that wage comparisons will indicate disparities in what employees are paid that might create legal problems for you. For example, if most of your female employees are paid less than their male peers doing comparable jobs, the wage disparity may well indicate sex discrimination.

To avoid any potential problems down the road, now is a good time to take a look at your pay practices. If disparities exist, be prepared to provide a business-related reason for the differences. If, in the course of your analysis, you determine some of the wage disparities aren’t business-justified, then you should take steps to correct any problem. Because wage disparity issues raise potential liability concerns, consult with employment counsel about how best to deal with the situation. An ounce of prevention truly will outweigh any costs of having to defend against a charge of discriminatory pay practices.

M. Jarrad Wright is an attorney with DiMuroGinsberg PC and a contributor to Virginia Employment Law Letter. He may be reached at mjwright@dimuro.com.

We all have a role in stopping gun violence

by Jonathan R. Mook
DiMuroGinsberg, PC

As I am writing this message to you, the readers of Virginia Employment Law Letter, the last of the 22 funerals for the victims of the tragic shooting in El Paso are being held. It seems unfathomable that this horrific act was followed less than a day later by another mass shooting outside a bar in Dayton, Ohio.

Summer of tragedy

Put bluntly, this has been a summer of tragedy. Starting with the shootings of 12 Virginia Beach city employees by a coworker who had just resigned, the summer days have been marked by the names of the gun violence victims. And, unfortunately, by the time you read this message, I am all too certain other shootings will have been added to the list.

If the too many lives lost aren’t enough, we also seem paralyzed as a nation to come to grips with the evil that is amongst us. We appear unable or unwilling to take concrete steps to reduce the unconscionable number of persons whose lives are cut short by gunfire each year.

Political paralysis

After the Virginia Beach mass shooting, Governor Ralph Northam summoned lawmakers back to the state capitol for a special session to take up a package of gun control measures. The governor said the action was urgently needed to prevent further killings like those at Virginia Beach.

The special session ended virtually as soon as it began, however, with no action being taken—even though opinion polls suggest a vast majority of Commonwealth residents support gun safety legislation, including a ban on silencers and high-capacity ammunition magazines, as well as broadening local government’s ability to limit guns in city buildings.

What can HR do?

Given the fractious political times, it doesn’t seem likely we can rely on our public officials to keep guns out of the hands of those who may cause harm. Fortunately, as employers, managers, and HR professionals, you can play a role in helping to lessen the chance that your coworkers will become the victims of a shooter’s hostility.

Of course, there are no foolproof tactics to ensure your business won’t become the next target of a deranged individual’s desire to seek revenge or have his 15 minutes of fame. Nevertheless, here are five measures you can take to lessen the likelihood of a tragic event from occurring:

Create secure and safe work environment. Although we’d all prefer to have an open work environment, unfortunately, you need to limit access solely to those who work there or otherwise have authorization to be present. That is probably the most basic step you can take to help prevent outsiders (including former employees and current workers’ spouses or significant others) from entering your facility to wreak vengeance or otherwise engage in violent conduct. Here are some concrete steps:

  • Securing your facility can range from the simple act of installing locks on office doors to putting in more sophisticated security systems with key card access and video monitoring.
  • Visitors who have been authorized to access your facility should be required to show identification and wear a visitor’s pass, which must be returned to a guard or receptionist when they exit.
  • If you’ve received threats from a disgruntled former employee, alert the security guards at your facility, and provide them with a photograph of the individual.
  • Stopping a potential shooter before he gets into your facility can go a long way toward preventing a tragic situation from occurring.

Institute security training. You probably provide employees and managers with training already. In addition to the traditional types of instruction, consider instituting security training to inform employees about the behavior or red flags that may indicate a coworker could be poised or planning to engage in violent behavior.

You don’t want employees providing you with mere suppositions based on their “feelings.” But, if certain actions or behaviors are causing concern that your employees observe and can articulate to human resources, encourage them to let you know. That way, you (not the employees) can evaluate the situation and take appropriate action if necessary. Let them be your eyes and ears.

Have open-door policy. Make sure (and continually emphasize to employees) that HR has an open-door policy. Any time they feel they aren’t being treated fairly, they should feel free to come to HR and discuss the situation.

Don’t let workplace problems fester. Doing so will only exacerbate the situation, which, if left unaddressed for too long, may well explode into a violent confrontation. Nick problems in the bud while they are manageable. Don’t wait until a crisis develops.

Review employee handbook and other policies. Your written policies should clearly state (1) workplace safety is of the highest priority, and (2) your company or organization has zero tolerance for violence. Also, make sure your employees understand that engaging in violent or threatening conduct will be subject to discipline that includes termination when appropriate.

Private employers should have a written policy in their handbook (and, additionally, distributed to all employees) stating that weapons are prohibited inside the workplace and in their parking areas. (Public employers have less leeway.)

If you have reason to believe an employee has brought a firearm into the workplace in violation of your written policy, take prompt action. Inform the individual that having a gun in the workplace is prohibited, and unless he removes the weapon, he will be terminated. The Second Amendment gives persons the right to bear arms, but the restriction doesn’t apply to private employers or allow employees to carry weapons wherever they like.

Impose discipline, including termination, in respectful fashion. We all remember the classic Aretha Franklin song “Respect.” The recording has as much relevance today as it did in the 1960s, not only in personal relationships with our friends, spouses, or significant others, but also with employees and coworkers.

Train your managers to be aware and understand that their actions may give rise to a violent reaction by an employee under their supervision. Negative performance reviews can certainly trigger violent reactions by the individual being evaluated. When realistically analyzing and criticizing an employee’s work, be as constructive as possible. The point of your remarks should be to alert the employee about the deficiencies and, more important, provide him with a pathway to perform better.

Accordingly, your supervisors, in conjunction with HR, should think through how a negative evaluation will be conveyed to the employee. Attacking or demeaning him for poor work performance benefits no one—not him, not you, and certainly not your company. You could be sowing the seeds of resentment that later lead to a violent outburst and the potential loss of life.

If you need to terminate an employee for job performance reasons, again, do so in a respectful—not humiliating—way. Don’t escort an employee out the door in front of all of her colleagues, which can only create bitterness on her part. Shaming an individual isn’t an appropriate technique for supervising or managing your employees.

Bottom line

The five recommendations above are but a few of the steps you can take to deal with what seems to be an epidemic of violence in our country. As an HR professional, you can play an important role in ensuring your workplace is safe, and employees feel secure enough to carry out their job duties in a cooperative and productive manner. To make the world a better place, the simple truth is we need to start in our own backyards. Yes, it’s only a start, but a critically important one.

Jonathan R. Mook is a founding partner with DiMuroGinsberg, PC and an editor of Virginia Employment Law Letter. He may be reached at jmook@dimuro.com or 703-684-4333.

2nd bite of the apple does the trick: Case dismissed

by Corey Zoldan
DimuroGinsberg PC

Getting a discrimination lawsuit dismissed without a trial is never easy. Fortunately, there are multiple ways to mount a legal defense against a discrimination claim filed by one of your employees that can resolve the case in your favor before you need to face a jury. A recent case filed by the former deputy chief of the Bedford police force is illustrative.

Burden-shifting framework

In our December 2018 issue, we introduced you to Carla Beels Spencer, an openly gay woman who was terminated from her job as the deputy chief of police by the town of Bedford (see “Virginia court examines whether sexual orientation is protected by federal law” on pg. 3 of that issue). Spencer sued the town, alleging she was fired after only eight months on the job because of her sex (i.e., because she’s a gay woman), in violation of Title VII. She didn’t pursue a specific claim based on her sexual orientation, presumably because the status of Title VII’s protection for sexual orientation remains in flux.

As we reported in December, Bedford’s attempt to have Spencer’s entire case dismissed based on the facts she alleged in her complaint was rejected by Judge Norman Moon of the federal district court in Lynchburg. Judge Moon dismissed a portion of Spencer’s lawsuit, but he let the remainder of the case proceed to the discovery, or fact-finding, stage. Following discovery, Bedford again requested summary judgment, asking Judge Moon to dismiss the case without a trial.

At the summary judgment stage, Title VII claims based on indirect evidence of discrimination (like Spencer’s case) are examined under the burden-shifting framework enunciated by the U.S. Supreme Court in its 1973 decision in McDonnell Douglas Corp. v. Green. First, the employee must establish a prima facie (or “first impression”) case of actionable employment discrimination. Then, the burden shifts to the employer to articulate a legitimate nondiscriminatory reason for the adverse employment action. If the employer is able to do that, the burden shifts back to the employee to prove the employer’s reason is a pretext (or smokescreen) for actual discrimination.

Court’s assessment

Using the McDonnell Douglas framework, Bedford argued in its summary judgment motion that Spencer both (1) failed to establish a prima facie case for her remaining discrimination claims and (2) failed to show its stated reasons for firing her weren’t the true reasons but were simply pretext for discrimination.

In assessing Bedford’s motion, Judge Moon concluded that Spencer was able to establish a prima facie case of discrimination by showing she (1) is a member of a protected class (i.e., she is a woman), (2) was doing a satisfactory job, (3) suffered an adverse employment action when she was terminated, and (4) was treated differently than similarly situated employees outside her protected class. At this point, the burden shifted to Bedford to provide a legitimate nondiscriminatory reason for terminating her.

The primary reason Bedford gave for firing Spencer (among other performance-related secondary reasons) was that she hadn’t completed the police department’s National Law Enforcement Challenge application and had lied to the police chief about her efforts to do so. The burden then shifted back to Spencer to prove the city’s stated reason was a mere pretext for sex discrimination.

Spencer faced an uphill battle in proving pretext, Judge Moon explained, because when “the hirer and firer are the same individual [as was the case here] and the termination of employment occurs within a relatively short time span following the hiring, a strong inference exists that discrimination was not a determining factor for the adverse action taken by the employer.” Further, Bedford was able to bolster its defense with e-mails that contradicted her discrimination claims as well as evidence that she lied about when she obtained certain documents requested by her supervisor.

Although Spencer clearly didn’t agree with Bedford’s explanation for her termination, Judge Moon noted such disagreement wasn’t sufficient to show the employer’s “decision to fire her for falsifying her records was dishonest or not the real reason for her termination.” Without additional proof, the judge wouldn’t allow Spencer’s personal opinions to change his analysis of the deficiencies in her case.

Based on Spencer’s lack of evidence, Judge Moon ruled there was no genuine dispute over the material facts in the case, and those facts failed to demonstrate Bedford had discriminated against her. Accordingly, he dismissed all of her remaining discrimination claims. Spencer v. Town of Bedford, C.A. No. 6:18-cv-31 (W.D.Va., May 23, 2019).

Bottom line

Judge Moon’s decision in this case provides insight into the evidence you will need to get an employment discrimination case dismissed before you have to go through an expensive, and often unpredictable, jury trial. The lesson here may seem obvious, but it can be easy to forget: A legitimate reason for terminating an employee should always carry the day.

You should be proactive in gathering and preserving documents and other evidence of your nondiscriminatory reason for firing an employee contemporaneously with the decision to terminate her and any related internal investigation. That evidence will be crucial in convincing a court that any adverse action you may have taken against the employee was based on objective performance factors and wasn’t tainted by discriminatory motives or stereotypes.

Corey Zoldan is an attorney with DiMuroGinsberg PC and a contributor to Virginia Employment Law Letter. He may be reached at czoldan@dimuro.com.

U.S. Supreme Court to decide if Title VII protects LGBT workers

by Andrea L. Moseley
DimuroGinsberg PC

Since last year, we have been watching the U.S. Supreme Court to see whether it will hear a trio of cases that gave conflicting answers to the question of whether Title VII of the Civil Rights Act of 1964’s ban on discrimination “based on . . . sex” protects LGBT workers. That burning question has been simmering for years, and now the Supreme Court is poised to take on the Title VII quandary.

The trifecta of cases, Altitude Express v. Zarda, Bostock v. Clayton County, Georgia, and R.G. & G.R. Harris Funeral Homes Inc. v. EEOC, were initially set for Supreme Court consideration last September. But the Court punted then and continued to do so until last month. On April 22, 2019, the high court finally decided to move forward and hear the cases. After much waiting, we finally know the Supreme Court will weigh in on the question and issue the final word on the scope of Title VII’s prohibition on sex discrimination.

What were those three cases again?

Because each of the cases has its own set of facts, it’s helpful to recap the specific issues the Supreme Court will be considering:

  • In R.G. & G.R. Harris Funeral Homes Inc. v. EEOC, the U.S. 6th Circuit Court of Appeals reasoned that gender identity is fundamentally tied to biological sex. Therefore, the court ruled that an employer violated Title VII when it terminated a transgender employee for failing to conform to gender norms.
  • In Altitude Express v. Zarda, a skydiving company is asking the Court to overturn the 2nd Circuit’s ruling that a former employee established a viable Title VII claim when he alleged the company fired him because of his homosexuality.
  • In Bostock v. Clayton County, Georgia, the 11th Circuit ruled that an employee’s claim that he was fired after his employer learned he had joined a gay softball league wasn’t legally cognizable under Title VII. That ruling, of course, is in direct conflict with the 2nd Circuit’s decision in Zarda.

Significantly, the litigation of the three cases has exposed sharp disagreement within the federal government over Title VII’s range. The U.S. Department of Justice (DOJ) and the Equal Employment Opportunity Commission (EEOC) have taken opposite positions on this significant issue. The EEOC has maintained that Title VII extends to sexual orientation and gender identity, while the DOJ has taken the position that it does not. The Supreme Court will have the final word on which agency is correct.

What’s next?

It has been a long time coming, but now we can expect clarity from the highest court in the land on the meaning of “sex” in Title VII. However, that clarity will not come immediately. The Supreme Court process will take a while.

First, the Court will set a briefing schedule, and then it will schedule a date for oral argument in the fall. The cases have been consolidated, and a total of one hour has been allotted for oral argument. After oral argument, we will have to wait for the Court to deliver its opinion, which likely will not come until sometime in early 2020.

What should you do now?

While we wait, we recommend that you chart a course to safeguard your business against a potentially expansive reading of Title VII. Until we have an answer from the Court, the safest route is to implement policies that protect, and are inclusive of, all your employees, irrespective of their sexual orientation and gender identity. The Supreme Court’s decision to address whether Title VII applies to LGBT employees may shine a new spotlight on the potential for expanded protections under Title VII, and workers may very well become aware of the issue for the first time.

As the debate reaches the Supreme Court and the date for oral argument approaches, you can expect Title VII issues to be on the minds of many more workers. The 2nd Circuit (whose decisions apply to employers in Connecticut, New York, and Vermont) and the 7th Circuit (whose decisions apply to employers in Illinois, Indiana, and Wisconsin) have prohibited discrimination based on sexual orientation. The 4th Circuit, which is based in Richmond and decides cases applicable to Virginia employers, hasn’t ruled either way. However, the Commonwealth of Virginia protects state workers from sexual orientation discrimination, and many Virginia localities have adopted protections for gay employees in their jurisdictions.

Updating your antidiscrimination and antiharassment policies and training your workforce are the best ways to protect yourself against potential liability for discrimination against LGBT employees. Consider contacting experienced employment counsel, the best source of information for developing employment policies and training your managers on possible changes to the scope of Title VII.

Takeaway

Getting ahead of the curve as to the changing currents in Title VII law will put you in the best position to address the employment issues you will be facing, no matter how the Supreme Court defines the term “sex” for Title VII purposes.

Andrea L. Moseley is an attorney with DiMuroGinsberg PC and a contributor to Virginia Employment Law Letter. She may be reached at amoseley@dimuro.com

Everybody talks about sex—but can employers be held liable?

by Corey Zoldan
DimuroGinsberg PC

Imagine this: Two individuals start a job at the same time. Quickly, management recognizes one employee’s hard work and dedication and promotes her. In a short time, the employee ascending the corporate ladder becomes the superior of the employee with whom she had onboarded. The nonpromoted employee becomes jealous and resentful. To this employee, there must be some reason not based on merit why the other employee has advanced. Whether true or not, the nonpromoted employee starts spreading a rumor—the promoted employee “slept” her way to the top.

Facts

The above-mentioned scenario is far from hypothetical. Accusations and unsubstantiated rumors like this unfortunately exist in the workplace. Indeed, this exact fact pattern recently played out in a case arising out of Sterling, Virginia.

In December 2014, Evangeline Parker was working for Reema Consulting Services, Inc. (RCSI), at its warehouse facility. By March 2016, after a series of promotions, she became an assistant operations manager. Within two weeks, another RSCI employee who had started working for the company at the same time began spreading a rumor she had been promoted only because she had a sexual relationship with a higher-ranking manager.

As the rumor spread, Parker alleged she “was treated with open resentment and disrespect” by coworkers, including her subordinates. She was also told by the highest-ranking manager at RSCI, Larry Moppins, that he would be unable to promote her any further because of the rumors, and in May 2016, he fired her.

Lawsuit

Believing her termination was unjustified and unfair, Parker filed suit against RCSI in federal district court. Among her legal claims was a hostile work environment claim for sex discrimination in violation of Title VII of the Civil Rights Act of 1964.

In assessing the legal merit of Parker’s suit, the district court considered the cause of the hostile work environment to which she had allegedly been subjected. Specifically, were her coworkers, superiors, and subordinates harassing her because she was a woman, or were they doing so because of her alleged conduct? And was it even possible to separate the two considerations?

The federal court decided to focus on Parker’s conduct. Although it empathized with her situation, it noted “that her complaint as to the establishment and circulation of this rumor is not based upon her gender, but rather based upon her alleged conduct.” Thus, it reasoned the “same type of rumor could be made in a variety of other contexts involving people of the same gender or different genders alleged to have had some kind of sexual activity leading to promotion.” Because the district court found the cause of the purported hostile work environment couldn’t be attributed to her sex, it dismissed her claim.

Appeal

Parker appealed to the U.S. 4th Circuit Court of Appeals (which is based in Richmond and whose decisions apply to employers not only in Virginia but also in West Virginia, Maryland, and North and South Carolina). In analyzing her discrimination claim, the 4th Circuit disagreed with the district court’s view that the rumor wasn’t related to her sex. Rather, it characterized the rumor as a female subordinate having sex with her male superior to obtain a promotion, “implying that Parker used her womanhood, rather than her merit, to obtain . . . a promotion.”

To the 4th Circuit, the stereotype “that generally women, not men, use sex to achieve success” clearly persists in today’s world. It also pointed out that Parker’s lawsuit, in addition to inferentially invoking sex stereotyping, explicitly alleged only males started and spread the rumors about her and that she was treated differently than the male manager with whom she was alleged to have had a sexual relationship.

Accordingly, the 4th Circuit found that any distinction between harassment “based on gender” and harassment “based on conduct” wasn’t one of substance “because the conduct is also alleged to be gender-based.” Thus, it held that the district court was wrong to have ruled she had failed to state a valid claim for a hostile work environment. It reversed the dismissal of her Title VII claim and sent the case back to the district court for further proceedings. Parker v. Reema Consulting Services, Inc., 2019 WL 490652 (4th Cir., Feb. 8, 2019).

Bottom line

The 4th Circuit’s decision provides important lessons for all employers. Although we as a society may be working to combat negative stereotypes, they still exist in many workplaces. In this case, the 4th Circuit made clear that any attempt to masquerade sex discrimination as discrimination based on conduct will fail when it perpetuates a discriminatory negative stereotype. Although Parker’s case dealt with the stereotype of women using sexual promiscuity to gain advancement in the workplace, the principle applies equally to negative stereotyping based on race, religion, national origin, or some other legally protected category.

As an employer, you can avoid being in the position RCSI now finds itself of facing a jury trial on Parker’s hostile work environment claim. Make sure you have policies in place to identify workplace misconduct, and when problematic situations arise, launch proper and expedient investigations with the oversight and guidance of experienced employment counsel.

Corey Zoldan is an attorney with DiMuroGinsberg PC and a contributor to Virginia Employment Law Letter. He may be reached at czoldan@dimuro.com.

2019 VA General Assembly passes only a few employment-related bills

by Jayna Genti
DiMuroGinsberg PC

The regular session of the 2019 Virginia General Assembly has ended. The session convened on January 9 and adjourned on February 24. The reconvened session is scheduled for April 3. During the regular session, approximately 35 labor and employment bills were introduced, but only three were passed and sent to Governor Ralph Northam for his signature.

Completed actions

Minimum wage exemptions. In an effort to modernize Virginia’s minimum wage law, the General Assembly passed House Bill (HB) 2473, which repeal certain minimum wage exemptions that were viewed as Jim Crow-era legalized wage discrimination against African Americans. The legislation rescinds laws that allowed employers to pay less than minimum wage to newsboys, shoeshine boys, ushers, doormen, concession attendants, cashiers in theaters, and babysitters who work 10 hours or more per week.

In 2018, a similar bill with the same intent died in committee. This year, the measure passed the senate 37-3 on January 18. On February 13, the house voted 18-14 in favor of a modified version of the bill. Two days later, the senate unanimously approved that version and sent it to Governor Northam to be signed into law.

Help for new mothers. Two bills facilitating employees’ ability to express breast milk were introduced this session. One passed, while the other was abandoned in committee.

The bill that passed the house and senate, HB 1916, requires the Virginia Department of Human Resource Management to develop state personnel policies that provide for break time during which mothers may express breast milk. The policies will require each state agency to provide:

  1. Reasonable break time for an employee to express breast milk for her nursing child for one year after the child’s birth each time the employee has a need to express breast milk; and
  2. A place, other than a bathroom, that is shielded from view and free from intrusion by coworkers and the public and may be used by an employee to express breast milk.

The bill that stalled in committee, HB 1862, would have required all employers to provide reasonable unpaid break time each day to employees who need to express breast milk for nursing children and to make reasonable efforts to provide a room or other location, other than a bathroom, where employees can express breast milk in privacy.

Written wage statements. The General Assembly also passed SB 1696, which require every Virginia employer to provide employees, on each regular payday, a written statement on their pay stub or through online accounting that shows:

  1. The name and address of the employer;
  2. The number of hours the employee worked during the pay period; and
  3. The employee’s rate of pay.

Currently, employers must provide a written statement of employees’ gross wages and any deductions only upon request. The new measure doesn’t apply to agricultural employment and has a delayed effective date of January 1, 2020.

Unfinished business

Covenants not to compete. A bipartisan bill prohibiting employers from entering into, enforcing, or threatening to enforce covenants not to compete with low-wage workers passed the senate as well as the House Commerce and Labor Committee. However, the General Assembly ended before the bill could be put up for a vote in the house.

Given the bill’s bipartisan support, similar legislation may be introduced again next year. According to Delegate Schuyler VanValkenburg (D-Richmond), the proposed legislation is probusiness as well as proemployee because noncompete agreements hinder businesses from hiring talented employees and prevent employees from starting their own companies.

Minimum wage increases. At least four bills introduced in the General Assembly this session proposed to raise Virginia’s minimum wage, which is set at the federal floor of $7.25 an hour. None of the measures made it into law, and most were left in committee. A bill passed in the Senate Commerce and Labor Committee by a 9-5 vote would have mandated annual increases to the hourly minimum wage, raising it to $8 this year and reaching a final rate of $11.25 in 2022. Another bill that would have increased the minimum wage to $10 this year, $13 next year, and $15 by 2021 made it through committee but was defeated in the senate by a vote of 21-19.

Although none of the efforts to increase the state minimum wage was successful this year, it’s likely that similar efforts will be undertaken when the General Assembly convenes for its 2020 session.

Wage history. A senate bill that would have prevented employers from requiring as a condition of employment that prospective employees provide or disclose their wage or salary history was defeated in committee. The proposal also would’ve prohibited employers from attempting to obtain prospective employees’ wage or salary history from current or former employers.

Nonpayment of wages. House bills designed to allow employees to file individual claims against employers that fail to pay wages didn’t make it out of committee. Other bills that died in committee included a bill to authorize the commissioner of labor and industry to investigate and proceed against employers suspected of nonpayment of wages and one that would have prohibited employers from retaliating against employees who complain about the failure to pay wages.

Bottom line

The General Assembly made no significant changes to Virginia’s employment laws in 2019, especially for private-sector employers. However, the bills that were introduced but didn’t make it into law show that change is in the air for the minimum wage, restrictive covenants, and policies to assist working mothers. Keep an eye out for our coverage of the 2020 General Assembly to see how legislative proposals in those and other emerging areas of the law will fare with senators and delegates next year.

Jayna Genti is an attorney with DiMuroGinsberg PC and a contributor to Virginia Employment Law Letter. She may be reached at jgenti@dimuro.com

Roanoke newspaper and former sportswriter settle dueling claims

by Jayna Genti
DiMuroGinsberg PC

Readers will recall that last year we reported on the Roanoke Times’ lawsuit against its former sportswriter Andy Bitter over ownership of the @AndyBitterVT Twitter account and its followers (see “Who owns your company’s social media accounts?” on pg. 3 of our September 2018 issue and “Update on Roanoke Times’ Twitter lawsuit” on pg. 3 of our November 2018 issue). The newspaper first sued Bitter in Roanoke federal district court last August. The lawsuit sought to gain access to and use of the Twitter account. He had inherited the account from his predecessor on the beat but significantly increased the number of followers with his own reporting. He countersued the newspaper for defamation. It looked as though this would be a long, drawn-out dispute. But in a sudden turnaround, both sides have now agreed to a settlement.

Court’s ruling

The settlement may have been prompted by the federal court’s decision to deny the Roanoke Times’ attempt to prevent Bitter from using the disputed Twitter account while the case was being litigated. That ruling came after a seven-hour evidentiary hearing. Following the hearing, the court found two things—first, that the evidence failed to clearly establish that the newspaper was likely to prevail on the merits, and second, that irreparable harm would not result if he continued to use the account.

Regarding the likelihood of success, the court said the Roanoke Times had failed to prove by the high standard of clear and convincing evidence that it was the owner of the Twitter account or that it was a Roanoke Times-branded account, as opposed to a personal Twitter account owned by Bitter. Further, the court found that, given the public nature of the Twitter content and followers, the paper had failed to establish that the account contained any trade secrets under federal or state law.

Next, the court noted that the Roanoke Times hadn’t provided any evidence of irreparable harm should Bitter continue to use the account. This especially was the case because the account’s followers are publicly known. Additionally, the court found significant the paper’s “remarkable self-imposed ban on its own reporters’ use of Twitter to cover Virginia Tech football.”

Although the court expressed skepticism about the merit of the Roanoke Times’ legal arguments, it acknowledged there was a certain equity to the paper’s position. Indeed, it noted that the balance of equities somewhat favored the paper based on the evidence that the Twitter account was developed while Bitter was employed as a sports reporter and that this activity, at a minimum, was encouraged as part of his sports-coverage responsibilities. Given the strengths of each side of the dispute, the court ordered them to attend a settlement conference to attempt to resolve the matter.

Settlement

After the court issued its order, a settlement conference was convened. As a result of discussing the strengths and weaknesses of their respective cases, Bitter and the paper decided to settle, and the court, therefore, dismissed the dueling claims. The terms of the settlement haven’t been made public, but the federal court docket indicates that it was reached on mutually agreeable terms.

As part of the settlement, it appears that Bitter will retain access to the account, which uses the handle @AndyBitterVT. Indeed, following the court’s dismissal, he posted a statement to that effect, directing readers to the Roanoke Times’ new Virginia Tech-focused account. As he tweeted, “The Roanoke Times and I have agreed to drop our claims against each other and get on with our lives. I’ll continue to tweet from my account as I always have since I started covering Virginia Tech. If you’re inclined, consider following my successor at the Roanoke Times, Mike Niziolek, at @VTSportsRT. I look forward to continuing to report Virginia Tech football for The Athletic is his new employer. BH Media Group, Inc. v. Bitter, Case No. 7:18-cv-00388 (W.D. Va.).

Takeway

Significantly, the Roanoke Times apparently has learned from the legal dispute with Bitter the dangers of allowing a reporter to use his name as part of a Twitter handle. That’s because his successor at the paper will be using the handle @VTSportsRT, which references the name of the newspaper and sports team but not the reporter.

If you are facing a similar situation, where one or more of your employees uses Twitter or another social media platform as part of the job, you may want to have the Twitter handle or account name be in your company’s name, not the employee’s name. That will help to clarify that you own and control the account, not your employee.

Jayna Genti is an attorney with DiMuroGinsberg PC and a contributor to Virginia Employment Law Letter. She may be reached at jgenti@dimuro.com.