Employment Law Chronicle for Virginia & the District of Columbia

Virginia Non-Compete Agreements: Home Paramount v. Shaffer

Mon, 14 Nov 2011 18:59:01 -0500

"Employers, Draft Your Non-Compete Provisions in Employment Agreements Carefully." That is the main takeaway from a recent Virginia Supreme Court decision.

In Home Paramount Pest Control v. Shaffer, the Court held that the former employer's non-compete restriction in its employment agreement was overbroad and unenforceable because it effectively restricted former employees from performing any activity whatsoever for any competitor of the former employer's. Invalidating a provision that the Court acknowledged was "identical" to a covenant not to compete that the Court had upheld more than 20 years ago, the Court said the law of non-compete agreements in Virginia has "evolved."

In light of this case, employment lawyers and employers may need to shake off the dust and clean up old non-compete agreements. Here are the general rules for non-competes in Virginia:

To be valid, a non-compete agreement must be narrowly drawn to protect the employer’s legitimate business interest, not be unduly burdensome on the employee’s ability to earn a living, and not be against public policy.

To determine whether a non-compete agreement meets the above factors, Virginia courts consider three elements: function, geographic scope, and duration. In other words, the function, geographic scope, and duration of a non-compete restriction must be narrowly tailored in that it reaches only the employer's "legitimate" business interests, does not unduly burden the employee's ability to work, and does not violate public policy.

In this recent case, as is often true, the focus was on the "function" element. Courts assess the function element of covenants not to compete by determining whether the activities restricted are the same type of activities actually engaged in by the former employer. In general (although this is an oversimplification because the elements must be considered together), employers may restrict employees from engaging in activities with future employers that actually or potentially compete with the former employer. On the other hand, non-compete agreements that restrict employees from working for an employer's competitor in activities that do not compete with the former employer are generally unenforceable.

The problem in this case was that the provision prohibited former employees from performing any function for a competitor of the former employer’s. The restriction at issue was as follows:

The Employee will not engage directly or indirectly or concern himself/herself in any manner whatsoever in the carrying on or conducting the business of exterminating, pest control, termite control and/or fumigation services as an owner, agent, servant, representative, or employee, and/or as a member of a partnership and/or as an officer, director or stockholder of any corporation, or in any manner whatsoever, in any city, cities, county or counties in the state(s) in which the Employee works and/or in which the Employee was assigned during the two (2) years next preceding the termination of the Employment Agreement and for a period of two (2) years from and after the date upon which he/she shall cease for any reason whatsoever to be an employee of [Home Paramount].

According to the Court, the highlighted language effectively restricted employees from working for any business in the pest control industry in any capacity and barred employees from engaging, even indirectly, with a competitor of the former employer’s. Accordingly, the restriction was overbroad as to the functions restricted.

In addition to overturning prior case law on non-compete agreements in Virginia, the case is worth reading as it provides several illustrations and examples of enforceable and unenforceable non-compete agreements based on recent Virginia case law.

HOME PARAMOUNT PEST CONTROL COMPANIES, INC. v. JUSTIN SHAFFER, ET AL., No. 101837, November 4, 2011, OPINION BY JUSTICE WILLIAM C. MIMS

If you have a question about drafting, interpreting, or enforcing a non-compete, non-solicitation, or other provision in an employment agreement, feel free to contact business and employment lawyer Lori Searcy at 703-644-4122.

Religious Discrimination Exemption Bars Employee's Title VII Claims against Catholic Facility Based on Religious Attire

Tue, 20 Sep 2011 13:37:22 -0500

Religious Discrimination: Adopting a broad interpretation of the word "employment" in Title VII's exemption for religious organizations, the Fourth Circuit nullified the employee’s workplace harassment, retaliation, and discriminatory termination claims. In the case, Lori Kennedy, a geriatric nurse, sued her former employer, St. Catherine, alleging employment discrimination stemming from Ms. Kennedy's religious attire. As a member of the Church of the Brethren, Ms. Kennedy wore "modest garb” including long dresses or skirts and a hair covering. St. Catherine, a Catholic facility, told Ms. Kennedy that her attire was inappropriate for the facility. Ms. Kennedy was fired after she refused to change her attire.

Title VII includes various exemptions, including one for religious organizations as follows:

This subchapter [of Title VII] shall not apply to . . .a religious corporation, association, educational institution, or society with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities.

The EEOC Compliance Manual had stated that, for purposes of this exemption, “employment” should be narrowly construed to mean only "employment decisions," such as hiring and firing. Relying on the EEOC’s interpretation, the district court had concluded that St. Catherine’s decision to terminate Ms. Kennedy was an exempt “employment decision” that was outside of Title VII’s reach, but that the workplace harassment and retaliation claims were not “employment decisions” and therefore could be the basis for Title VII claims.

The Fourth Circuit disagreed, and held that limiting the religious organization exemption to “employment decisions,” as opposed to all aspects of the employment relationship, was “simply incompatible” with the statute. As a consequence, Ms. Kennedy's harassment and retaliation claims -- like her discriminatory firing claim -- could not survive.

According to the dissent, “in one fell swoop,” through this opinion, the Fourth Circuit has “shielded religious organizations from every Title VII claim alleging either religious harassment or retaliation for opposing such harassment."

Lori Kennedy v. St Joseph's Ministries, Inc., d/b/a St. Joseph’s Ministries, No. 10-1792, Appeal from the United States District Court for the District of Maryland, at Baltimore, Paul W. Grimm, Magistrate Judge. Decided: September 14, 2011 before KING, SHEDD, and WYNN, Circuit Judges. Reversed and remanded by published opinion. Judge Shedd wrote the majority opinion, in which Judge Wynn joined. Judge King wrote a dissenting opinion.

Fourth Circuit Holds that Baltimore City Employee Presents Strong Case of Sexual Harassment

Wed, 10 Aug 2011 11:18:29 -0500

Sexual Harassment Decision Reversed: While some of my employment lawyer colleagues may disagree, in my view a definite change has come to the Fourth Circuit in its willingness to overturn federal district court decisions favorable to employers.

Virginia employers, whose cases go to the Fourth Circuit for review, should take note.

Case in point: Okoli v City of Baltimore

On August 8, 2011, the Fourth Circuit found in favor of the employee (Ms. Okoli), vacating the lower court's grant of summary judgment to the employer (City of Baltimore) and remanding this sexual harassment case on three claims: hostile work environment, quid pro quo harassment, and retaliation. In the case, Ms. Okoli alleges that her boss, John P. Stewart, director of Baltimore’s Commission on Aging and Retirement ("CARE"), sexually harassed her.

The federal district court had dismissed Ms. Okoli's sexual harassment claims finding, in part, that there were "[j]ust three or four incidents [of physical contact] over a five month period," no physical threat to Ms. Okoli, and Mr. Stewart had stopped the incidents on his own. The lower court had also concluded that Ms. Okoli had read too much into certain actions, and that Mr. Stewart had decided to fire her before she reported the alleged harassment (thus negating the retaliation claim.)

The Fourth Circuit assessed the facts quite differently. In sharp contrast to the lower court's analysis, the Fourth Circuit held that Ms. Okoli "presents a strong claim for hostile work environment" because she had suffered 12 incidents of sexually harassing misconduct in four months that spanned "fondling, kissing, propositioning, describing sexual activities, and asking intimate questions." As the court noted, "some of the incidents may have been severe enough to be actionable in and of themselves." The Fourth Circuit's analysis of the employee's quid pro quo and retaliation claims also provide useful insights for employment attorneys who bring or defend such claims.

While a few cases does not a trend make, this case and other recent decisions from the Fourth Circuit are encouraging to employees who allege serious incidents of sexual harassment in the workplace.

Okoli v City of Baltimore -- Appeal from the U.S. District Court for the District of Maryland, at Baltimore. William M. Nickerson, Senior District Judge; 1:06-cv-03025-WMN; Argued: March 22, 2011; Decided: August 8, 2011; Before KING, GREGORY, and WYNN, Circuit Judges.

D.C. Employment Laws: District of Columbia Family and Medical Leave Act (DCFMLA), D.C. Code Section 32-501 et. seq.

Mon, 18 Jul 2011 09:38:44 -0500

As a courtesy to employers and employment lawyers, The Employment Law Chronicle provides general information about key Federal, Virginia, and District of Columbia labor and employment laws published on government sites.

The District of Columbia Family and Medical Leave Act (DCFMLA) provides eligible employees with up to 16 weeks of medical leave and 16 weeks of family leave for qualifying events. The DCFMLA also provides certain benefit and job protections to employees who take family or medical leave. Special restrictions apply to family and medical leave for school employees.

In addition to explaining the DCFMLA, this article summarizes other D.C. leave laws relating to family members, including the District of Columbia's paid sick leave law (Accrued Sick and Safe Leave Act) and the District of Columbia Parental Leave Act.

Employees in D.C. & Virginia May "Self-Check" Employment Eligibility Through E-Verify

Wed, 23 Mar 2011 15:20:37 -0500

This week, the U.S. Department of Homeland Security (DHS) launched "E-Verify Self-Check," which allows employees in select states, including Virginia and the District of Columbia, to check their employment eligibility status before seeking work. Potential employees may also correct errors that may undermine employment opportunities. According to the press release, Self-Check will be expanded to additional states on a rolling basis.

D.C. Employment Law Case: N'Samba Ndondji v. Interpark, Inc. (Race Discrimination; National Origin Discrimination; Adverse Employment Actions)

Mon, 14 Mar 2011 11:44:35 -0500

While this District of Columbia federal court opinion deals with several important employment law issues, of particular note is the Court's explanation of: (1) the distinction between race discrimination and national origin discrimination claims; and (2) the test for "adverse employment actions" under Title VII and the D.C. Human Rights Act (DCHRA).

In this case, Mr. Ndondji sued his former employer under Section 1981, Title VII and the DCHRA alleging race discrimination, national origin discrimination, and retaliation. By way of background, the DCHRA and Title VII protect employees against race discrimination, national origin discrimination, and other forms of employment discrimination. Section 1981 applies to racial discrimination only.

In dismissing the employee's race discrimination claims, the Court held that Mr. Ndondji had failed to allege facts to establish that alleged discrimination because he was from Angola (national origin) also meant that he had been discriminated against because of his race.

The Court dismissed most of Mr. Ndondji's remaining claims on grounds that the claims were procedurally barred or that Mr. Ndondji had failed to identify any "adverse employment action" taken by his employer that could satisfy the test under Title VII or the District of Columbia Human Rights Act. This was true even though Mr. Ndonji had identified at least five different adverse actions that he believed violated the employment laws.

Federal Immigration Law: Administration Cracking Down on Employers Who Hire Undocumented Workers

Fri, 18 Feb 2011 14:15:02 -0500

Employers in Virginia, the District of Columbia and throughout the nation should take note of the Obama Administration's increasing focus on companies who employ undocumented workers. As summarized in this Business Week article, the Government has launched a new round of worksite investigations and notified 1,000 companies that their I-9s are being audited.

Employers should take the enforcement initiatives seriously particularly in light of the increasing number of employers who are being arrested for violations of immigration laws and the substantial increases in fines in recent years.

Grievance Procedures for Virginia Public Employees

Wed, 01 Sep 2010 03:04:21 -0500

As a courtesy to employers and employment lawyers, The Employment Law Chronicle provides the text or links to the text of key Federal, Virginia, and District of Columbia labor and employment laws published on government sites.

The Virginia Personnel Act, which is found at Title 2.2, Chapter 29 of the Virginia Code (§§ 2.2-2900 thru 2905) mandates a grievance procedure for State employees, but it includes a number of exceptions. Specifics of the State grievance procedure are in Title 2.2, Chapter 10 ((§§ 2.2-3000 thru 3008).

Virginia Code Sections 15.2-1506 and 15.2-1507 requires all Virginia localities with more than 15 employees to establish a grievance procedure or be subject to the State's grievance procedure.

Virginia Employment Law: Cost of Medical Examinations or Reports (VA Code § 40.1-28)

Tue, 24 Aug 2010 08:07:48 -0500

As a courtesy to employers and employment lawyers, The Employment Law Chronicle provides links to the text of key Federal, Virginia, and District of Columbia labor and employment laws published on government sites.

As set forth in Virginia Code Section 40.1-28, it is illegal for Virginia employers to require employees to pay for medical examinations as a condition of employment.

Does Your Employee Background Check Violate Race Discrimination Laws?

Fri, 13 Aug 2010 10:54:22 -0500

This AP article describes some of the serious concerns that employers need to consider when using criminal records and credit reports to make hiring decisions. As reported, such use may violate employment discrimination laws. For an analysis of whether your company's employee background checks raise potential legal problems, feel free to contact Lori Searcy at 703-644-4122.

Virginia Occupational Safety and Health Act (§§ 40.1-49.3 thru 51.3)

Sun, 01 Aug 2010 05:53:44 -0500

As a courtesy to employers and employment lawyers, The Employment Law Chronicle provides links to the text of key Federal, Virginia, and District of Columbia labor and employment laws published on government sites.

Pursuant to the Federal Occupational Safety and Health Act (OSHA), Virginia has received approval for the Virginia OSHA program. In addition to adopting the federal standards almost verbatim, Virginia has enacted additional safety and health requirements. As a consequence, all Virginia employers are required to: (a) comply with numerous safety and health regulations; and (b) comply with the "general duty clause," which requires employers to provide a workplace that is free from recognized hazards that are causing or likely to cause death or serious physical injury."

Links to select provisions of the Virginia Occupational Safety and Health Act are provided below:

VA Code § 40.1-49.8. Duties of employers. This provision describes the employer's duty to provide a safe workplace free from recognized hazards. It also describes disclosure, notice and reporting requirements.
VA Code § 40.1-51.2. Rights and duties of employees. This provision explains employees' obligations to comply with all workplace health and safety rules and regulations. It also provides employees with the right to report workplace health and safety violations.

VA Code § 40.1-51.2:1. Discrimination against employee for exercising rights prohibited. This provision protects whistleblowers as follows:
No person shall discharge or in any way discriminate against an employee because the employee has filed a safety or health complaint or has testified or otherwise acted to exercise rights under the safety and health provisions of this title for themselves or others.

VA Code § 40.1-51.2:2. Remedy for discrimination. This provision states the procedures and remedies for filing whistleblower claims for reporting workplace safety and health violations. In general, the employee has 60 days to file a complaint.

Virginia Employment Law: Wage Garnishments (VA Code § 34-29)

Wed, 28 Jul 2010 03:45:43 -0500

In addition to setting restrictions on the amount of employee pay that can be garnished, the Virginia Wage Garnishment Law makes it illegal to fire an employee for being subjected to garnishment for a single debt.

Virginia Wage Payment Law (VA Code § 40.1-28.6)

Mon, 26 Jul 2010 21:27:27 -0500

The Virginia Wage Payment Law identifies requirements and restrictions on employee pay. Some of the topics covered by the wage payment law include the timing of employee pay periods; medium of wage payment; legality of wage withholdings, deductions or forfeitures; requirements for earnings statements; and payment of wages upon termination.

Virginia Equal Pay Act (VA Code § 40.1-28.6)

Sun, 25 Jul 2010 21:14:10 -0500

Like the federal Equal Pay Act and Title VII, the Virginia Equal Pay Act prohibits employers from paying males and females in the same establishment different wages for substantially similar work. As set forth below, the Virginia Equal Pay Act covers the limited group of employers who are not covered by the federal Equal Pay Act.

Virginia Employment Law: Whistleblowers (VA Code § 40.1-51.2:1)

Fri, 23 Jul 2010 05:30:50 -0500

As a courtesy to employers and employment lawyers, The Employment Law Chronicle provides the text or links to the text of key Federal, Virginia, and District of Columbia labor and employment laws published on government sites.

Below is the Virginia whistleblower law prohibiting wrongful termination or other discrimination of employees who report or testify about safety or health complaints:

VA Code § 40.1-51.2:1. Discrimination against employee for exercising rights prohibited.

No person shall discharge or in any way discriminate against an employee because the employee has filed a safety or health complaint or has testified or otherwise acted to exercise rights under the safety and health provisions of this title for themselves or others.

Section 40.1-51.2:2 of the Virginia Code provides the procedures and remedies for Virginia safety or health whistleblower claims.