A Signature Can Be Worth Thousands of Dollars

by Kathleen J. Jennings (kjj@wimlaw.com)

There is a lot of discussion about the utility and enforceability of arbitration agreements to resolve employee disputes with their employers. As we noted in a recent blog post, last month, the U.S. Supreme Court held that employment contracts that contain arbitration clauses and class action waivers are enforceable. Employers find these agreements attractive because arbitration tends to be faster and less expensive than court litigation. However, a recent case out of the 5th Circuit reminds us that an employer seeking to enforce a written arbitration should not overlook a small but important detail: the signatures of the parties to the agreement.

In Huckaba v. Ref-Chem, LP, No. 17-50341, (5th Cir. June 11, 2018), the 5th Circuit Court of Appeals reversed the district court’s judgment compelling arbitration. Why? Because the express language of the agreement at issue required for it to be signed by both parties and because it was undisputed that Ref-Chem did not sign the agreement. That’s right, the company did not sign the agreement it was seeking to enforce.

Whether or not all parties must sign a written agreement for it to be binding is a matter of state contract law. The 5th Circuit interpreted the agreement at issue under Texas contract law. In support of its decision, the Court noted that the arbitration agreement contained: (1) a statement that “[b]y signing this agreement the parties are giving up any right they may have to sue each other;” (2) a clause prohibiting modifications unless they are “in writing and signed by all parties;” and (3) a signature block for the employer, Ref-Chem. Thus, the Court concluded, this express language clearly indicated an intent for the parties to be bound to the arbitration agreement by signing. The agreement also identified the parties in the first line as “[t]he organization referred to above (‘Employer’) and the Employee, whose signature is affixed hereto.” The Court found that this clause made clear the parties’ intention that the employer would sign the agreement. (The Court also acknowledged that Texas courts have held that a signature block by itself is insufficient to establish the parties’ intent to require signatures).

What did the absence of this one signature cost the company? The company probably spent thousands of dollars in attorneys’ fees briefing this issue at the District Court and then at the Circuit Court. Now the former employee has the opportunity to pursue her claims in court, which is going to cost the company even more money. Expensive lesson.

The takeaway: Know and understand your agreement. If you are not sure who should sign it, ask your attorney.

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2018 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

 

 

Does Your Company Have Its Own “Roseanne?”

By Kathleen Jennings (kjj@wimlaw.com)

Even if you did not watch the reboot of the Roseanne show, you are aware that the show was cancelled following a racist Tweet from its star, Roseanne Barr. Although Ms. Barr has a history of bizarre and insensitive behavior, her show was highly rated and popular, so it was somewhat surprising that the network went ahead and cancelled it. The cancellation sends the message that the network is not going to tolerate racist comments or behavior, even from successful “stars.” This could be further fallout from the #metoo movement.

Do you have a “Roseanne” in your workplace? That is the employee who is highly successful, highly productive or maybe a brilliant salesperson, but who also makes offensive comments and/or engages in inappropriate behavior. However, the comments and behavior are tolerated by upper management because nobody wants to run off the guy (or gal) who is a top performer. What could possibly go wrong?

Here’s what could go wrong—a lawsuit or multiple lawsuits from other employees. If your “Roseanne” regularly makes racist, sexist, ageist or other types of remarks that show a discriminatory animus toward employees who are in protected classes, eventually one or more of those offended employees (or more likely, former employees) is going to become fed up and go to the EEOC and then to an attorney to file a lawsuit. What is the company’s defense? That this employee was too successful to discipline or discharge? That is not a defense; it is an invitation for a jury to award punitive damages.

What should the company do? If the company knows (because an employee has complained) or should know (because the behavior is so open and obvious) that an employee is making racist, sexist, ageist, or otherwise discriminatory remarks toward employees, federal law (and some state laws) require the company to take prompt, effective remedial action, regardless of how much money the offender makes for the company. The remedial action must be designed to stop the discriminatory remarks. Keep in mind also that these discriminatory remarks could be used by an employee as evidence of discriminatory animus in a claim that the employee was denied a promotion or raise or was terminated for discriminatory reasons.

The company may be tempted to accept these charges or lawsuits as the cost of doing business and keeping its “Roseanne” around, as long as he or she is making money for the company, balancing the lawsuits costs against the profits generated by the “Roseanne.” The company needs to also factor in non-monetary costs—impact on employee morale that results in excessive employee turnover, increased recruiting and training costs, and loss of valuable talent, as well as the impact on the company’s reputation as a workplace and a brand (especially if “Roseanne” is spouting the epithets to customers and potential customers). Is your “Roseanne” really worth it?

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2018 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

 

U.S. Supreme Court Approves Class Action Waivers

By Kathleen J. Jennings (kjj@wimlaw.com)

Yesterday, by a 5-4 decision along ideological lines, the U.S. Supreme Court held that employment contracts that contain arbitration clauses and class action waivers are enforceable. This ruling was not terribly surprising in light of the makeup of the Court, and it is considered a big win for employers.

What does this ruling mean? It means that employers can enforce written agreements with employees that require the employees to take any claims against the employer to arbitration (rather than into court) and that prohibit employees from bringing their claims as part of a class action.

Arbitration is generally faster and less expensive than court cases. Arbitration decisions are also harder to appeal than court decisions. Many employers would prefer to have employment claims heard by a single arbitrator than by a judge and jury.

The ability to enforce waivers of class action claims is likely to have major impact on employee wage and hour claims. Plaintiffs’ attorneys have embraced wage and hour collective actions as a way to get the most “bang for their buck.” In those collective actions, the individual members of the collective group often have to do little more than to sign an opt-in form to participate and eventually get a piece of a settlement or judgment. Requiring each individual to go to arbitration on his/her claim is likely to reduce the number of folks who pursue their claims.

Does your company need an arbitration agreement that contains a class action waiver? The attorneys at Wimberly Lawson can tailor one to the needs of your business. You can contact any of our attorneys at (404) 365-0900.

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2018 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

Some Very Expensive Age Discrimination at Seasons 52

By Kathleen J. Jennings

Last week, we talked about a case where age discrimination was an issue in an employee termination. This week, we bring you news of a significant settlement of a case which involved age discrimination in hiring.

Seasons 52, a national, Orlando-based restaurant chain and part of the Darden family of restaurants, will pay $2.85 million and provide significant equitable relief to settle a nationwide class age discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC), the federal agency announced on May 3.

The EEOC’s lawsuit sought relief for applicants age 40 and older that had been denied front-of-the-house and back-of-the-house positions at 35 Seasons 52 restaurants around the country. During the course of the litigation, over 135 applicants provided sworn testimony that Seasons 52 managers asked them their age or made age-related comments during their interviews, including: “Seasons 52 girls are younger and fresh,” “Most of the workers are younger,” “Seasons 52 hires young people,” or “We are really looking for someone younger.” The company also hired applicants age 40 and older at a significantly lower rate than applicants under the age of 40. Considering the comments made by the managers, that is not a very surprising result.

The consent decree resolving the case sets up a claims process that will identify and compensate those affected individuals age 40 and older who applied to Seasons 52 for a front-of-the-house or back-of-the-house positions at 35 Seasons 52 restaurants but were denied a position on the basis of age.

In addition to the monetary relief, the decree requires significant changes to Seasons 52’s recruitment and hiring processes. It also includes an injunction preventing Seasons 52 from discriminating on the basis of age in the future and requires the company to pay for a decree compliance monitor, who is charged with ensuring that the company does not discriminate further and complies with the decree’s terms.

“As we commemorate May as Older Americans Month, we should be mindful that age discrimination continues to keep too many older, experienced American workers out of the workforce – many of whom are not working as a matter of choice, but as a matter of need,” said EEOC Acting Chair Victoria A. Lipnic.

Pro tip: As this case demonstrates, hiring managers need to focus on the requirements for the job and an applicant’s ability or inability to meet those requirements, and not the applicant’s relative youth or freshness.

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2018 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

 

 

 

Employees Can Bring Guns to Work in Georgia—But Who is Liable if They Use Them? The Georgia Supreme Court Says the Employer May Be Liable.

By Kathleen Jennings (kjj@wimlaw.com)

The Georgia Supreme Court just complicated the issue of employee possession of guns in the workplace for Georgia employers. In Lucas v. Beckman Coulter, Inc., (Georgia Supreme Court Case No., No. S17G0541, 3/5/18), the Georgia Supreme Court held that OCGA § 16-11-135 (e) , which is part of the Business Security and Employee Privacy Act, (also affectionately known as the “Bring Your Guns to Work Law”) does not grant immunity “from firearm-related tort liability” to an employer who was sued for liability for the allegedly negligent acts of its employee under the theory of respondeat superior, and for the employer’s alleged negligent supervision.

The case involved an employee, Jeremy Wilson, who accidentally shot another employee, Claude Lucas, with his handgun while they were out on a customer call. Wilson normally kept his handgun in his car, but he took it with him on the customer call when he heard that there were a number of thefts from vehicles in the customer’s parking lot. The company had a policy prohibiting employees from transporting firearms while on company business.

At the time of the shooting, OCGA § 16-11-135 (e) read as follows:

No employer, property owner, or property owner’s agent shall be held liable in any criminal or civil action for damages resulting from or arising out of an occurrence involving the transportation, storage, possession, or use of a firearm, including, but not limited to, the theft of a firearm from an employee’s automobile, pursuant to this Code section unless such employer commits a criminal act involving the use of a firearm or unless the employer knew that the person using such firearm would commit such criminal act on the employer’s premises. Nothing contained in this Code section shall create a new duty on the part of the employer, property owner, or property owner’s agent. An employee at will shall have no greater interest in employment created by this Code section and shall remain an employee at will.

The trial court and the Court of Appeals found that this provision insulated the company from liability for Wilson’s shooting. The Georgia Supreme Court, however, disagreed. It held that this Code section does not immunize an employer for all damages arising out of an employee’s transportation, storage, possession, or use of a firearm. Instead, it held that “the intent of subsection (e) is to exempt employers from liability that might arise by complying with the Code section’s prohibition against maintaining a policy of searching an employee’s own vehicle (or those of guests) on the employer’s parking lot or its prohibition against conditioning employment on an employee’s agreement not to bring firearms into the parking lot in the employee’s own vehicle, even when they are locked out of sight by an employee who possesses a weapons carry license.” In other words, this statute insulates an employer from liability only for actions taken to comply with the law’s intent to allow employees to keep firearms in their locked vehicles free of the threat of a search or losing their job. That’s a big difference.

Bottom line: OCGA § 16-11-135 (e) does not give employers blanket immunity from liability for torts committed by their employees with guns.

Pro tip: In light of this new decision, Georgia employers should review their policies and practices regarding employee possession of guns in the workplace. Georgia law provides that employers cannot prohibit employees from bringing guns to work as long as the employees leave them locked in their private vehicles in the parking lot. However, private property owners in Georgia can prohibit people from bringing firearms onto their property. Keep in mind that the employee in this case was not on the employer’s premises but was out on company business, so those situations need to be addressed as well.

And remember: a written policy is no good unless the employer actually enforces it.

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2018 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

 

Do You Know the Effect of the New Tax Law on the Tax Deductibility of Harassment Settlements?

By Kathleen Jennings (kjj@wimlaw.com)

I am not a tax lawyer, but I do need to concern myself with the general tax consequences of settlements of litigation that I handle on behalf of our clients. So I was fascinated to learn of in a little-known provision of the Tax Cuts and Jobs Act of 2017, a/k/a the new Tax Law (which was signed into law on December 22, 2017), that changes the tax consequences to employers of settlements in sexual harassment and sexual abuse cases. What does the New Tax Law change? It now prohibits tax deductions to companies for sexual harassment settlements that are confidential.

Under Section 13307 of the Tax Cuts and Jobs Act, employers no longer receive a business deduction for “(1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or (2) attorney’s fees related to such a settlement.” In plain English, this means that if an employer requires an employee to sign a nondisclosure agreement as a condition of a sexual harassment settlement, or the settlement agreement contains a confidentiality provision, then the employer cannot claim the settlement payment, nor the corresponding attorney’s fees as a business deduction. This provision applies to amounts paid or incurred after December 22, 2017.

Because the New Tax Law was hastily put together without anything in the way of public hearings, there are issues that will need to be resolved, such as:

  • What constitutes a “confidentiality provision?”
  • Can the parties separate out portions of a settlement payable to sexual harassment from those payable to other allegations to minimize the tax consequences?
  • Is the bar on deducting attorney’s fees “related to such a settlement or payment” to be read literally as meaning that only the fees relating to the settlement process are not deductible — as opposed to the fees incurred in all other aspects of the litigation that came before settlement?

One big question is whether this change in the tax law will act as a disincentive to employers to settle harassment cases. Companies may now balance the costs (including attorneys’ fees) of a trial (which will be tax deductible) against the lost tax deduction of a confidential settlement.

In all, this new law appears to be a heavy-handed approach to the recent publicity regarding sexual harassment and abuse and the #MeToo movement. Most of the time, companies insist upon confidentiality of settlements of harassment and other employment claims not to cover up bad behavior, but to prevent other employees and former employees from showing up to the company’s door with their hands out for money. And confidentiality benefits those employees who do not want to attract a bunch of newfound friends and relatives who also have their hands out for money.

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2018 Wimberly Lawson

The materials available at this blog site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between Wimberly Lawson and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.