A Virginia Federal Court jury recently determined that Virginia Tech violated the Equal Pay Act, and awarded back pay to two women employees of its fundraising office. The Equal Pay Act is a federal law amending the Fair Labor Standards Act, which prohibits employers from paying unequal wages to women and men for doing the same or substantially similar work.
To establish a case under the Equal Pay Act, an employee must establish that:
different wages are paid to employees of the opposite sex;
the employees perform substantially equal work on jobs requiring equal skill, effort and responsibility; and
the jobs are performed under similar working conditions.
However, an employee who proves all the above elements may still not
prevail. A business may avoid liability if it establishes that such
payment was made pursuant to a seniority system, a merit system, a
system which measures earnings by quantity or quality of production, or a
differential based on any other factor other than gender.
In the Virginia Tech cases, the two women claimed their starting
salaries were lower than the men who did the same work. In its defense,
Virginia Tech countered that the men had more experience when hired.
Both sides presented extensive statistical evidence. According to
the plaintiff’s economist, men’s salaries involved with Virginia Tech’s
fundraising were an average of 15% higher. Virginia Tech’s expert
analyzed the experience and duties of the employees, and determined
there was only an 8% difference. Tech's expert concluded that this
difference could be linked to gender, but opined that there was a chance
it occurred randomly since the disparity was not statistically
significant.
Notably, one of the women testified that when she inquired about the
pay differential between her and her male predecessor, the senior
regional director of major gifts replied that her predecessor had a
family to support. In addition, the Judge identified other statements
that tend to show Virginia Tech's animus toward the women when he
previously denied Virginia Tech's motion for summary judgment.
How does your company prevent potential liability under the
Equal Pay Act? Businesses should evaluate its pay structure, including
policies regarding seniority systems, merit systems and incentive
systems in light of the prohibition of gender pay disparity. An
effective way to prevent managers and supervisors from making
compensation decisions based on a protected category under the
discrimination laws is to establish and implement a comprehensive job
evaluation system. As the lawyers for the women argued during the trial
in this matter - if Virginia Tech "had good policies, we wouldn't be
here."
As summer quickly approaches, businesses begin receiving an
increasing number of offers for unpaid internships. As many businesses
already know, there are many advantages to using an intern – unpaid
internships may help fuel growth for your company and also provide an
opportunity to mentor young professionals. However, unpaid interns can
create legal troubles for the unwary business owner. Federal labor laws
governing internships provide that the relationship has to benefit the
intern more than the company. If it doesn’t, then the business must
comply with the Fair Labor Standards Act (“FLSA”) by paying minimum wages and possibly overtime.
The following criteria provide guidance in evaluating internship
programs for for-profit organizations, but it is important to note that
each program is unique and must be carefully examined:
the training, even though it includes actual operation of the
facilities of the employer, is similar to that which would be given in a
vocational school;
the training is for the benefit of the trainee;
the trainees do not displace regular employees, but work under close observation;
that the employer that provides the training derives no
immediate advantage from the activities of the trainees and on occasion
the employer’s operations may actually be impeded;
the trainees are not necessarily entitled to a job at the completion of the training period; and
the employer and the trainee understand that the trainees are not entitled to wages for the time spent in training.
If your company’s internship program does not satisfy all of the above criteria, your interns may be considered “employees” under the FLSA. Hiring an intern, which qualifies as an “employee” may cost your company thousands in unpaid wages and legal fines!
So, how do you ensure compliance? Establish a written
internship program outlining the terms and structure of the relationship
in a way that the intern is receiving the full benefit of the learning
experience, and ensure that your managers and other employees properly
implement it.
I was recently contacted by a
professor who was seeking advice about a piece of intellectually
property (IP) he created, and that his university was profitably
exploiting. Who owned the IP? Can he exploit it himself? Was he
entitled to share in the proceeds above and beyond his university (base)
salary? Not surprisingly, these questions are not rare. After all,
universities, colleges and research institutions are hot beds of
creativity. In 2008, U.S. universities and research institutions spent
over $51.47B in R&D and received 3,280 issued U.S. patents, all
while forming 595 new companies in IP “spin-outs.” [1]
Given this setting, who then owns the IP created by someone within a
university community? Intuitively, the answer seems simple in the case
of a tenured, research professor who develops IP related to their
university research duties – the university owns it! But how about the
case of an undergraduate student who creates IP totally unrelated to any
of her coursework!? The student? How about certain university
community citizens, such as university executives, administrators,
(exempt or nonexempt) staff, graduate students, postdoctoral fellows,
wage payroll employees, adjunct faculty, emeritus or retired faculty,
visiting scholars and others? The analysis for those university
community citizens is often a fact-intensive endeavor.
In general, under varying applicable state and federal laws
where the university employs the individual in question, there is a
presumption that the employee owns the rights to their IP, even though
it may have been created during the course of their employment. This
general rule, however, has two exceptions and one limitation.
First Exception: If
the employee has an express employment agreement, stating the contrary
(i.e., an employee agreement assigning all IP to the
employer/university), then the general rule does not apply.
Second Exception: If
the employee was specifically “hired to invent,” later directed to solve
a specific problem, or his employment requires that he exercise his
“inventive faculties,” then the above-stated general rule also does not
apply.
Limitation: Even when
none of the two exceptions to the above-stated general rule apply, the
employer – in the case of patented inventions – may have a
non-exclusive, non-transferable, royalty-free license to practice the
employee’s patented invention if it was made using the resources of the
employer. This is known as an employer’s “shop right.”
An overwhelming majority of universities have an “official intellectual
property policy” that requires employees, as a condition to employment,
to assign their IP rights under certain circumstances (e.g., when
university funds or facilities are involved in the creation of the IP).
Thus, most situations fall under the above-stated first exception even
though many professors and postdoctoral fellows fail to read such
policies when they sign their employment agreements!
So what about the case of the undergraduate student who created IP
totally unrelated to any of her coursework? What if that IP was created
without a professor’s help? Well, in a recent reported case
having those exact facts, a university’s lawyers demanded a 25%
ownership stake and two-thirds of any profits from four undergraduate
students who created a popular iPhone® application in their dorm room!
Although the university eventually backed down, one campus technology transfer expert
has observed that many universities “generally seek to retain
ownership, or at least have a formalized mechanism for assessing
ownership of a student’s work in much the same way they would regarding a
faculty member’s work.”
In sum, those working/learning/creating within a university community
should become familiar with their university’s intellectual property
policy at the start of their affiliation, and pay attention to the
agreements they sign as a part of the new university employee
“on-boarding” process. And, when potentially valuable new IP is created,
be vigilant about asserting their rights in such IP.
[1] Association of University Technology Managers, AUTM U.S. Licensing Activity Survey, FY2008: Survey Summary.
We have all been there. Walking
through the aisle of a store and some store personnel who was stocking a
shelf has left a ladder or some supplies right in the middle of the
aisle, obstructing the path. Well, the Plaintiff in this case did what
most of us would do. She attempted to walk around the ladder, but when
she did -- bam! – she hit her head on a metal shelf
that was on the other side of ladder, and she (sadly) suffered
significant, and likely permanent, brain injury.
In this diversity jurisdiction personal injury case, Zankow v. Sears Holding Corp., et al.,
Plaintiff claimed that Sears was negligent because the placement of the
ladder combined with the shelves in the narrow aisle created an
unreasonably dangerous condition that caused her serious and permanent
injuries. The shelves were 1 to 1.5 inches thick and were connected to
the back of a shelving unit with no side walls. While trying to get
around the ladder, Plaintiff apparently did not notice the shelves as
she was focused on the ladder – the original obstruction.
For its part, Defendant claimed that
it should not be held liable as the ladder and the shelves were in plain
sight; and, in any event, because Plaintiff failed to use ordinary and
reasonable care in walking around the ladder, she was contributorily
negligent and barred from recovery.
On summary judgment, the Court
dismissed Plaintiff’s claims. The Court ruled that from the pictures
submitted by the Plaintiff of the scene (which were attached to the
Opinion) and the description provided, the shelf and the ladder were “open and obvious”
conditions from which Plaintiff had a duty to use reasonable care to
avoid. The court rejected Plaintiff’s argument that the shelf she hit
her head on was protruding, because the evidence showed that no one
shelf stuck out further than the others. Further, the Court did not
find that the combination of the ladder and the shelves rendered either
of the hazards “latent” such that Plaintiff would not have been expected
to notice and avoid the open and obvious hazards. Citing Virginia
Supreme Court precedent, the Court ruled that once a hazard is deemed to
be open and obvious, an injured plaintiff’s claim must fail as a matter
of law since she will be deemed to have failed to exercise reasonable
care, and will thus be found contributorily negligent.
Federal employee Robert T. Perry (“Perry”) had a long-running legal battle with his federal employer, the Pension Benefit Guaranty Corporation
(“PBGC”). After three lawsuits, two of which were settled, Perry’s
claims of hostile work environment and retaliation have now been
dismissed on summary judgment.
The case, Perry v. Gotbaum,
was the third lawsuit brought by Perry against the PBGC and centered
around Perry’s allegations that the PBGC discriminated and retaliated
against him based upon a Settlement Agreement entered into by the
parties to settle the first two lawsuits. As required under the
Settlement Agreement, the PBGC provided Perry with a grade and step
increase in salary, paid for $10,000 worth of training, paid Perry a
lump sum of $60,000, and placed him on Leave Without Pay (“LWOP”) Status
for a time-period not to exceed six months. In addition to proving
Perry with a salary increase and training, it appears that the impetus
behind the Settlement Agreement was to provide Perry with an opportunity
to find employment outside of the PBGC and give him a lump sum payment
during his job search. Per federal government regulations, the personnel
actions required under the Settlement Agreement had to be documented
using a federal government Standard Form 50 (“SF-50”).
In his third lawsuit, Perry complained, inter alia, that the comments
section of the SF-50 forms used to process the personnel actions
included information referencing his prior lawsuits and the Settlement
Agreement. According to Perry, such comments would have a chilling
effect on his ability to seek employment outside of the PBGC because it
would be clear that he had engaged in protected activity. Further, Perry
complained that the PBGC had used a more generic code when processing
SF-50 forms for other employees, and therefore he should have been
afforded the same treatment.
While the Court agreed with Perry that he engaged in protected
activity regarding his prior lawsuits and the resulting Settlement
Agreement, the Court ruled in favor of the PBGC finding that the Agency
actually went back and corrected the SF-50 forms to respond to Perry’s
concerns about the remarks placed on the forms. Further, since the
Settlement Agreement was not confidential and had been filed with the
Court, it was a public record and Perry could not base his claims of a
retaliatory and/or discriminatory disclosure upon information that was
generally available to the public. In addition, the Court found that
there was no basis to find the PBGC’s “honest mistake” was an attempt
to hamper Perry’s future job opportunities since it was in the Agency’s
interest to have Perry find employment outside of the PBGC as soon as
possible. As such, the Court dismissed Perry’s federal employment discrimination and retaliation claims.
It should be noted that the legal standard applied by the Court in
this public sector case applies to private sector Virginia businesses as
well.
In an unpublished decision, the Fourth Circuit Court Appeals
recently held that an employer may be liable for third-party harassment
by a customer if the employer knew or should have known of the
harassment and failed to take appropriate actions to halt it. The
evidence of repeated complaints to supervisors and managers by the
employee created a triable issue as to whether the employer had notice
of the harassment, and thus, the Appeals Court allowed this claim to go
forward to trial.
In EEOC v. Cromer Food Services, Incorporated, a route driver for a southeastern vending machine company
alleged he suffered daily sexual harassment at the hands of two
housekeeper employees of one of the company’s largest customers – a
hospital. According to the driver, the harassment began after a
co-worker left a note in the hospital cafeteria calling him gay.
Following this incident, the two male hospital employees allegedly began
harassing him with unwanted sexual comments.
The driver claims he complained to numerous people at CFS, including
his supervisor, his direct supervisor, another supervisor, a manager of
the company, and the chairman of the Board. As the harassment
continued, he took more drastic measures by reporting the harassment
directly to a human resources professional at the hospital and to the
supervisor of the two hospital employees. But, the hospital employees
were unrelenting.
In response to this lawsuit, the company asserted that it did not
have actual or constructive knowledge of the harassment because the
complaints by the driver were vague and insufficiently detailed for
action to be taken. In addition, the company pointed out that the
employee failed to report the harassment to its President in accordance
with the company’s written sexual harassment protocol.
The Fourth Circuit reversed the trial court’s dismissal of the claim.
In doing so, it noted that the District Court focused on only one
snippet of the driver’s deposition testimony which stated that he did
not provide details of the harassment to the company. The Appeals Court
acknowledged that although anti-harassment law requires notice to the
employer – it should not require it to be pellucid.
The Fourth Circuit also pointed out the flaws in the employer’s
approach in this matter. The Court stated that harassment claims could
not be avoided by utilizing a “see no evil, hear no evil” strategy, and
it criticized the protocol requiring reports to be made to the President
by recognizing that such requirement may likely intimate an employee.
Moreover, the Court drew attention to the fact that management failed to
report the harassment up the chain of command as required by company
policy.
This case illustrates to employers within the Fourth Circuit
(which includes Virginia, Maryland, North Carolina, West Virginia and
South Carolina) that a company’s written policy for reporting harassment
may not provide insulation from liability under Title VII. Virginia
businesses must ensure that they have a reasonable process in place to
address allegations of harassment by its employees and third parties.
For several years now, many
practitioners that advise and/or draft non-competes for their business
clients have stopped including language in non-compete provisions which
prohibit a former employee from being an “owner” or “shareholder” in a
competing business. Virginia Courts have routinely held that including
language which prohibits a former employee from essentially owning stock
in a competing business was overbroad and not necessary to protect an
employer’s legitimate business interest. Therefore, such non-competes
have regularly been invalidated.
Consistent with prior court opinions, a Virginia Beach Circuit Court
recently invalidated a non-compete provision which prohibited a former
employee from, inter alia, being an owner or shareholder in a competing
business. The case, Patient First Richmond Medical Group, LLC v. Ameanthea Rica Blanco
(Virginia Beach Circuit Court, Feb. 15, 2011), involved Defendant
Blanco, a family nurse practitioner who was employed by Plaintiff
Patient First. According to the allegations in the case, Blanco, while
still working at Patient First, began formation of a competing
healthcare practice which was to provide primary and urgent care
treatment at reasonable or fixed fees during extended weekday and
weekend hours without the need for an appointment.
Blanco also solicited two doctors
from Patient First to come work with her at the new medical practice.
After she resigned her position with Patient First, Blanco opened up the
competing business within seven miles of her former place of
employment. Patient First brought suit alleging that Blanco violated
her employment agreement which contained non-competition and
non-solicitation provisions.
The covenant not to compete prohibited Blanco from performing medical
services of the type performed for Patient First (though the term
“medical services” was not defined) for two years after her employment
and within a seven-mile radius as an “agent, officer, director, member,
partner, shareholder, independent contractor, owner, or employee” of the
competing business. The Court found that the non-compete provision was
overbroad because its provisions went beyond occupations and businesses
that were in competition with Patient First. The Court reasoned that
by barring Blanco from being a shareholder in a competing business, she
would be barred from merely owning stock in a publically traded company,
even if she were not providing medical services for the company and
thus not competing with Patient First.
The Court also held that a number of the terms in the provision were not
defined and left too much uncertainty as to which activities of the
former employee would, or would not, be in violation of the covenant.
Therefore, an employee would essentially have to guess at which conduct
was prohibited. The Court held that in such cases, the non-compete was
unenforceable as offending sound public policy, and sustained Blanco’s
demurrer without leave for Patient First to amend.
Plaintiff’s attempt to litigate in the Rocket Docket
because it desired a "quick, efficient and consistent resolution of its
claims" was recently thwarted. In an opinion from late January, the United States District Court for the Eastern District of Virginia Federal Court
(commonly referred to as the “Rocket Docket”) transferred venue in a
patent infringement case to California because it found the plaintiff
patent holding company’s connection to this district was tenuous.
Pursuant to the patent venue statute,
patent infringement lawsuits may be brought against a defendant
anywhere that the company is subject to personal jurisdiction. The
purpose of venue statutes is to provide a logical and efficient forum
for the resolution of disputes, but the patent venue statute provides
plaintiffs with a great deal flexibility in choosing where to litigate.
The case of Pragmatus AV, LLC v. Facebook, Inc., YouTube LLC, LinkedIn Corporation, and Photobucket.com Inc.
involves three patents related to the storage, distribution, and
playback of media files. The plaintiff company, Pragmatus, is a patent
holding company that was incorporated in Virginia a week after it
acquired the patent portfolio at issue. A few days after the last
patent was issued by the United States Patent and Trademark Office,
Pragmatus filed suit alleging the video uploading and linking
technology on the defendant companies’ websites infringed on its
patents.
The Alexandria Federal Court considered the convenience of the
parties, and the witness convenience and access in determining to
transfer venue to California. In analyzing this issue, the Court noted
that the inventors of the patents and attorney who prosecuted the
applications are located in California; and three of the four defendants
are headquartered in California, and the other defendant has offices in
Denver and San Francisco. The Court determined that these factors
weighed in favor of transferring venue to California.
The Rocket Docket is an attractive forum for business
litigation due to its efficiency – continuances are rare; weekly
motions; relatively short discovery period; and trials within eight
months from filing. However, a party must be able to prove a
legitimate connection to the forum in order to maintain suit in this
Court. As this case illustrates, patent holding companies raise a
particular concern in this regard since their business is most often
limited to enforcement of IP rights – not invention or development of
the technology at issue.
In a unanimous recent opinion, the United States Supreme Court
broadly construed the term “person aggrieved” in Title VII's
antiretaliation provision to include a co-worker who is a relative or
close associate of a targeted employee.
In the case of Thompson v. North American Stainless, LP, Plaintiff Thompson worked as a metallurgic engineer for North American Stainless
(“NAS”), the owner and operator of a stainless steel manufacturing
facility in Kentucky. Thompson began dating a coworker, and thereafter
they became engaged to be married. According to the lawsuit, the
couple’s engagement was common knowledge at the facility. Three weeks
after the Equal Employment Opportunity Commission
notified NAS that Thompson’s fiancée had filed a discrimination charge,
NAS fired Thompson. Thompson pursued a retaliation claim against NAS
for his discharge.
NAS moved for dismissal of the case before trial, contending that
Thompson’s claim of third-party retaliation under Title VII was
insufficient as a matter of law. The trial court granted NAS’s motion
for summary judgment, which decision was affirmed by the Sixth Circuit Court of Appeals.
In denying Thompson a trial, the Sixth Circuit joined several other
appeals courts in holding that the authorized class of claimants under Title VII’s antiretaliation provision is limited to persons who have personally engaged in protected activity.
The Supreme Court disagreed, and rejected this narrow interpretation
of aggrieved persons under the law. However, it declined to expand the
provision into the outer boundaries of the standing standard set forth
in Article III of the Constitution – which would allow anyone who
claimed an injury by a Title VII violation to sue. The Court noted that
such expansive interpretation would allow a shareholder to sue a company
for firing a valuable employee for racial discriminatory reasons if he
showed a decrease in his stock value as a consequence.
In settling on the middle ground, the Supreme Court stated that
“Title VII’s antiretaliation provision must be construed to cover a
broad range of employer conduct.” The Court’s concern was to prohibit
employer action that would dissuade a reasonable employee from asserting
or supporting a discrimination claim. Thompson fell within the zone of
interests protected by the law.
Employment Pointer: This decision clears up the
ambiguity over whether third parties have standing to sue for
retaliation under Title VII. Although, the Court noted that there is no
bright line test for who is protected. Given the broader scope of
persons to be protected under this law, companies must be aware of its
management’s underlying reasons for adverse employment actions and
ensure that indirect revenge against an employee for filing a
discrimination charge has not been a contributing factor.
An Alexandria, Virginia federal court
judge has held that the heightened pleading requirements under the
so-called ‘Twiqbal’ cases do not apply to affirmative defenses.
In a recent failure to pay overtime case under the Fair Labor Standards Act, Senior U.S. District Court Judge James C. Cacheris held that the defendant employer’s general, boilerplate affirmative defenses were sufficient under the federal rules as they provided the plaintiff employee with fair notice of the nature of the defense
Judge Cacheris’ ruling marks a striking departure from the rulings of a majority of the other federal district courts in the Fourth Circuit (comprised of federal courts in Maryland, North Carolina, South Carolina, Virginia, and West Virginia), which had each previously held that the ‘Twiqbal’ standard should apply equally to a plaintiff’s complaint and a defendant’s defenses. (Under the ‘Twiqbal’ standard, which was borne out of the cases of Bell Atlantic v. Twombly and Ashcroft v. Iqbal, the U.S. Supreme Court held that a plaintiff’s complaint must be based on more than just “threadbare recitals” to survive a motion to dismiss; instead, a plaintiff’s complaint must contain sufficient facts to give
rise to a plausible entitlement to relief.)
While acknowledging that policy considerations such as “fairness, common sense, and litigation efficiency” are “compelling,” Judge Cacheris opined that, unlike the federal rules which govern the pleading requirements for a plaintiff’s claims for relief, the federal rules which govern a defendant’s affirmative defenses merely require a
responding party to “state in short and plain terms its defenses to each claim asserted against it.”
Until the Fourth Circuit chimes in on this issue, plaintiffs and defendants alike will continue to litigate whether Twiqbal applies to
affirmative defenses. Until then, defendants (especially those appearing in a Virginia federal court) can use Judge Cacheris’ opinion as authority in support of their position.
Post a Comment