Cuyahoga Court Enforces Cognovit Note Against Employee for Employer's Training Expenses

 In October, I reported that the Cuyahoga Court of Appeals had enforced an employer's hiring bonus agreement and required the former employee to repay it when he had resigned before completing training and within 18 months of being hired.   In November, the Cuyahoga County Court of Appeals affirmed enforcement of a $10K cognovit note signed by an employee agreeing to repay training costs incurred by the employer if she resigned within two years of being hired.  Overdrive Espresso, L.L.C. v. Finein, 2025-Ohio-5226.  The Court concluded that it could not "say that this transaction, arising out of employment contract, was a consumer transaction as defined under R.C. 2323.13(E)."  Because her remaining defenses went to enforceability of the note and not to its creation or calculation of the underlying debt, they were invalid. 

According to the Court's opinion, the employee was hired in April 2022 and the employer incurred $10K to obtain specialized training for her.  Accordingly, she was required to sign a cognovit note promising to repay within 30 days that $10K training expense plus 10% interest and collection costs  if she was terminated before April 2024 or a judgment would be confessed against her in court.  She resigned in December 2023 and had not repaid the training expense before February.  A complained was filed and an answer filed on her behalf pursuant to the cognovit agreement admitting to the allegations and confessing judgment.  Judgment was entered in favor of the employer the same day (as is typical). She failed to file a timely employee and, instead, employee sought relief from judgment, which was denied.  The Court of Appeals affirmed. 

Motions for relief from judgment under Civil Rule 60 are evaluated only for abuse of discretion. 

 “‘A cognovit promissory note is a special type of commercial paper by which a debtor authorizes a creditor, in the event of the debtor’s default on his payment obligation, to obtain an immediate judgment against him without prior notice or an opportunity to be heard.’”  . . .  “‘The purpose of a cognovit note is to allow the holder of the note to quickly obtain judgment, without the possibility of a trial.’” . . . As such, “when a debtor signs a cognovit note, the debtor relinquishes the possibility of notice, hearing, or appearance at an action to collect in the event of nonpayment on the note.”

As a result, Ohio courts have determined that in such cases where the party had never had the opportunity to be heard in a cognovit note proceeding, their burden is lessened when moving for relief for judgment under Civ.R. 60(B).  . . .  “Therefore, ‘a movant who files for relief from a judgment taken upon a cognovit note need only establish (1) a meritorious defense and (2) that the motion was timely made.’”

Under Civ.R. 60(B), the “‘moving party need only to allege a meritorious defense; it need not prove that it will prevail on that defense.’”  . . .  Although proof of success is not required, “the moving party still needs to allege operative facts with enough specificity to allow the trial court to decide whether a meritorious defense exists.”  . . . And the “movant must provide evidentiary material supporting his or her Civ.R. 60(B) motion.”  . . . These evidentiary materials “‘must present operative facts and not mere general allegations to justify relief.’” 

This court has recognized that “[t]he defenses available to the maker of a cognovit note are extremely limited. The ‘defense of non-default’ is certainly one.”  . . . . But “the defense of non-default is not the only meritorious defense recognized by courts as being available to a cognovit judgment debtor seeking Civ.R. 60(B) relief[;] in general, a judgment on a cognovit note will ‘not be vacated for reasons which do not encompass such matters of integrity and validity.’”  . . . For instance, other meritorious defenses may include “‘improper conduct in obtaining the debtor’s signature on the note; deviation from proper procedures in confessing judgment on the note; and miscalculation of the amount remaining due on the note at the time of confession of judgment.’”  . . . In short, “a meritorious defense is one that goes to the integrity and validity of the creation of the debt or note, the state of the underlying debt at the time of confession of judgment, or the procedure utilized in the confession of judgment on the note.”

The Court rejected the employee's argument that this transaction was a consumer rather than a commercial transaction.  

R.C. 2323.13(E) provides that “[a] warrant of attorney to confess judgment . . . arising out of a consumer loan or consumer transaction, is invalid and the court shall have no jurisdiction to render a judgment based upon such a warrant.” As such, in cases where a note arises out of a consumer loan or consumer transaction a common pleas court lacks jurisdiction to enter a cognovit judgment against the defendant.  ... 

         . . . 

 R.C. 2323.13(E)(2) defines a “consumer transaction” as “a sale, lease, assignment, award by chance, or other transfer of an item of goods, a service, franchise, or an intangible, to an individual for purposes that are primarily personal, family, educational, or household.”  . . .. 

             . . . .  

Here, the cognovit note arose out of an employment contract between [plaintiff] and [employer], wherein [she] agreed to reimburse [it] for the total expense of training costs in the amount of $10,000 if she voluntarily quit or breached the contract within two years of signing the employment agreement. The agreement, which was signed by both parties, provided, in relevant part, that ““[s]imultaneous with the execution of this Employment Agreement, the Employee [Finein] shall execute and deliver to the Company [Overdrive] a written Cognovit Promissory Note for the Training Cost . . . .” The note was executed for the agreed upon training cost of $10,000. 

[She[ does not direct us to any authority holding that a cognovit note arising out of an employment contract is considered a consumer transaction. Rather, it is clear from the contract that the primary purpose of the training received by [her] was not personal, but as a condition of her employment with [the employer]. This is further evidenced by the fact that [the employer] sought to protect its investment by requiring [her] to remain employed for a period of two years. Thus, we cannot say that this transaction, arising out of employment contract, was a consumer transaction as defined under R.C. 2323.13(E).

The Court concluded that the remaining defenses did not go to the validity of the note, but rather, to its enforcement which could not be challenged at this point:

[Her] remaining claims challenge the enforceability of the cognovit note under New York law and federal law. [She] also challenges whether the amount owed on the note adequately represents the training costs incurred by [the employer]. None of these defenses allege improper conduct in obtaining the debtor’s signature on the note; a deviation from proper procedures in confessing judgment on the note; or a miscalculation of the amount remaining due on the note at the time of confession of judgment.  . . .  As discussed above, “a meritorious defense is one that goes to the integrity and validity of the creation of the debt or note, the state of the underlying debt at the time of confession of judgment, or the procedure utilized in the confession of judgment on the note.”  . . . Since none of [her] remaining claims amount to a meritorious defense to a cognovit note, the trial court did not abuse its discretion in rejecting these claims. 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Gray v State Farm Was Amended to Clarify Cat's Paw Theory and Breaks in Causation

 In August, I posted about an interesting Cat’s Paw theory case, Gray v. State Farm Mutual Auto. Ins. Co.,  (6^th Cir. 2025), where the Sixth Circuit reversed an employer's summary judgement due to possible selective enforcement of a time card fraud policy by a manager in retaliation for the plaintiff's prior protected conduct. 

As I briefly explained:

In July, the Sixth Circuit reversed an employer’s summary judgment on a retaliation claim where the plaintiff claimed that she was investigated and then fired in retaliation for assisting a co-worker assert her rights under the ADA and be transferred away from her discriminatory supervisor.  Gray v. State Farm Mutual Auto. Ins. Co., 145 F.4th 630 (6^th Cir. 2025).   When her co-worker’s discriminatory supervisor filled in for the plaintiff’s supervisor shortly after the protected conduct, he launched an unprompted and unprecedented investigation into the plaintiff’s time cards by comparing them to her computer use.  No other employee was investigated – despite similar discrepancies -- and the plaintiff was ultimately fired for time card abuse.  

The Court agreed that the evidence aligned with its precedent holding that “employees can establish prima facie causation by showing that their employer began scrutinizing them more heavily shortly after they engaged in protected activity, and then used its findings to justify termination.” The plaintiff was able to show that the discriminatory supervisor knew of her assistance to her co-worker and his retaliatory intent under a “cat’s paw” theory of vicarious liability. 

While the employer may have avoided direct liability under an honest belief theory, the supervisor’s actions could not. A “supervisor does not have to lie in order to be biased. As we have repeatedly recognized, a supervisor can cause an employee’s termination by reporting true yet selective information.”  Moreover, although “an employer can escape liability by conducting ‘an in-depth and truly independent investigation’ into an otherwise biased report,  . . . when a supervisor reports true but selective information, an investigation will always confirm the supervisor’s allegation.”  In this case, the employer and HR failed to take the plaintiff’s complaint of retaliation seriously or to compare her misconduct to other employees before terminating her employment.

The Court then held a re-hearing and amended its decision and dissent in December.   Gray v. State Farm Mutual Auto. Ins. Co., 159 F.4th 1024 (6th Cir. 2025).   Here is some of the additional text that was then added to its decision (emphasis added):

A simple example illustrates why. Imagine a workplace where five employees were engaged in the same pattern of misconduct. If a supervisor made a true but selective report of wrongdoing against one of the five employees because of that employee's race, they would be attempting to use the company's human resources as the "conduit" for their bias. See Romans v. Michigan Dep't of Hum. Services, 668 F.3d 826, 835 (6th Cir. 2012). If human resources then opened an independent investigation into that one employee, it would confirm the biased report, but it would not necessarily negate the supervisor's bias in singling out one employee based on race. That's why the Supreme Court "declined to adopt [] a hard-and-fast rule" that "an independent investigation has a claim-preclusive effect" or "somehow relieves the employer of 'fault.'" Staub, 562 U.S. at 420-21.

              . . . 

Our decision today does not impose a bright-line rule that a supervisor's true-but selective report will always be the proximate cause of any subsequent adverse employment action. Rather, we simply echo Staub's holding that a subsequent investigation that does nothing more than confirm a supervisor's true-but-selective report is by itself insufficient to break the chain of proximate causation.  . . . . An employer can still negate causation by establishing that "the employer's investigation result[ed] in an adverse action for reasons unrelated to the supervisor's original biased action."  . . . . . Put another way, an employer will not be liable if its investigation uncovers a superseding "cause of independent origin that was not foreseeable" from the supervisor's biased action . . .

We have previously held that the existence of a superseding cause is a question of fact.  . . .

Here, the undisputed record shows that [the manager] reported [the plaintiff] for "manually changing" her time entries and identified three discrepancies as proof of that fact. [The employer’s] HR employee,  . . . , thereafter conducted her own investigation that revealed additional discrepancies beyond the three identified by [the manager], including instances where [the plaintiff] reported working while she was not in the building. [The employer] claims that it fired [her] based on these additional out-of building discrepancies. On summary judgment, the question that we must answer is whether [her] termination based on these additional discrepancies was so "unrelated" to [his] original report and so "not foreseeable" by him that no reasonable factfinder could find proximate causation.

We hold that this question cannot be answered as a matter of law. [The manager] reported generally that [the plaintiff] was "manually changing" her time, not that she had done so only in the three instances that he identified. He also falsely informed [HR] that [she] had previously been reprimanded for similar conduct, suggesting that his report concerned a broad pattern of timekeeping issues. And he suggested in his report to HR that an investigation of [her] would uncover additional timekeeping errors. Given that [his] report and [her] termination both related to [her] timekeeping entries, a reasonable jury could find that the former improperly influenced—and was a proximate cause of—the latter.

Our decision in Romans does not counsel otherwise. Romans does not stand for the proposition that an independent investigation always breaks the chain of causation. Nor could it after the Supreme Court's rejection of that argument in Staub. It instead held that the independent investigation broke the causal chain because of the particular facts at issue in that case. There, the decisionmaker expressly disclaimed reliance on an allegedly biased report and conducted a separate investigation into the plaintiff's alleged misconduct.  . . . . The separate investigation found that the plaintiff had "violated four work rules, only one of which was related to [the allegedly biased] report, and each of which would have individually supported a termination."  . . . Therefore, Romans falls comfortably within the scenario delineated in Staub where an independent investigation "results in an adverse action for reasons unrelated to the supervisor's original biased action."  . . .

By contrast, here, [the employer] relied on [the manager’s] report and opened an investigation that confirmed his allegations. [It] then took the adverse action that [his] report was "designed and intended" to produce by firing [her] for timekeeping discrepancies.  . . . . So a jury could conclude that [its] investigation took into account [his] biased report and failed to determine that the adverse action was justified apart from his recommendation.  . . . . Romans supports rather than undermines this analysis.

The  dissent continued to elaborate why the  independent investigation by HR, which uncovered additional and more sever timekeeping violations, should have resulted in summary judgment as breaking the cat’s paw causation. 

 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Upholds Termination for Time Card Fraud Despite Cat's Paw Theory or Suspicious Timing

Yesterday, the Sixth Circuit Court of Appeals affirmed an employer’s summary judgment for terminating an employee for time-card fraud despite his arguments about failure to accommodate, retaliation and a cat’s paw theory that was remarkably similar to an earlier decision in   Gray v. State Farm Mutual Auto. Ins. Co., 159 F.4th 1024 (6^th Cir. 2025) (finding possible selective enforcement of time card fraud policy in cat’s paw retaliation case).   Shears v. FirstEnergy Corp., No. 24-3915 (6^th Cir. 1/5/26).  The Shears Court rejected the plaintiff’s assertion for the first time on appeal that his misconduct was caused by brain fog from his known disability and should have been accommodated.  The Court rejected all retaliation claims, regardless of the suspicious timing, because there was insufficient evidence of pretext, such as comparators receiving better treatment, knowledge by the initiating manager of prior protected activity or deviation from policy, etc.  The employer also conducted several reasonable investigations, entitling it to the honest belief defense.   Unlike the Gray case, there was apparently insufficient evidence presented to the trial court about selective investigation of time card fraud.

According to the Court’s decision, Plaintiff was diagnosed with Type 2 diabetes in 2012 and had been granted an accommodation to work only days from 2012 to March 2019. In  January 2019, he  assisted co-workers with sexual harassment complaints against his manager.  There was no evidence that the manager was aware of this.  During a work emergency, his manager assigned him to work nights again despite his complaints until he mentioned his diabetes and was requested to provide medical documentation.  He did in April and was immediately returned to day shift.  Afterwards, his manager investigated and discovered time card discrepancies ranging from 36-106 minutes during March 2019.  These were investigated and confirmed by his director, HR and a separate safety committee.  Plaintiff was interviewed several times and apparently never claimed retaliation or different scrutiny. He was fired in May 2019.   

The trial court granted summary judgment to the employer.  Employer was granted summary judgment.  The employer articulated a legitimate basis to terminate him for time card fraud, and the plaintiff never disputed that he had had not entered the plant at times he had reported being at work. The employer was also entitled to the honest belief defense because it had conducted several reasonable investigations to confirm the facts and given him the opportunity to respond. 

The courts rejected his reasonable accommodation claims.  First, he had failed to show any unreasonable delay in March when the employer was entitled to medical documentation and immediately provided his requested accommodation once he produced it and abandoned this theory on appeal.  It also rejected his new argument that his discrepancies were caused by brain fog from his known diabetes because “a failure-to-accommodate claim requires proof that the employer denied a reasonable accommodation—not that it disciplined or discharged an employee whose disability allegedly contributed to the underlying conduct.”  It found that he failed to prove this theory and found his cited cases distinguishable.  What the Court did not note is that the EEOC Guidance from 2008 had previously provided that an employer is not required to accommodate misconduct caused by a disability unless the employee had put the employer on notice of the need for an accommodation of that issue: 

When an employee does not give notice of the need for accommodation until after a performance problem has occurred, reasonable accommodation does not require that the employer   . . . tolerate or excuse the poor performance; . . . withhold disciplinary action (including termination) warranted by the poor performance . . . .

The Court also rejected the ADA retaliation because he could not show pretext when admitting the time card discrepancies and without similarly situated comparators who were treated better.  His excuses for his actions did not dispute the action and the employer not required to believe his “honest mistake” defense.   He might have prima facie case from the timing of his termination compared to his request to return to the day shift, but he lacked evidence of pretext to rebut the intervening causation factor of his time card fraud.

The Court also rejected his Cat’s Paw Theory because there was apparently no evidence that his manager was aware about his prior protected Title VII conduct in assisting his co-workers sexual harassment allegations.  There were also independent investigations and plaintiff had insufficient evidence that other employees engaged in similar misconduct without being fired or that he had ever alleged such similar misconduct during the employer’s multiple investigations and interviews.   In other words, there was insufficient evidence of selective enforcement by his manager of the time card fraud issues to support a cat’s paw theory.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Rejects ADA Accommodation and Interactive Process Claims When Request to Sit Every 10 Minutes Was Unreasonable on its Face

Earlier this month, the Sixth Circuit Court of Appeals affirmed an employer’s summary judgment on an ADA claim on the grounds that the requested accommodation was unreasonable on its face, meaning that the employer did not have to even engage in the interactive process or grant the requested accommodation.   Bowles v. SSRG II, LLC, No. 25-5329 (6^th Cir. 12-17-25).   The newly-hired  fast-casual restaurant cashier had requested the right to sit for five minutes every time that she had to stand for 10 minutes because of arthritis in her knees.  The undisputed facts showed that the essential functions of the job required multi-tasking and spending the majority of time standing and walking.  There were no “standalone register-only” positions.

According to the Court’s opinion, the plaintiff was hired for a cashier position.  This required her to take orders for dine-in and carry-out, fill drink orders, stocking the drink station and refrigeration station, expediting food orders, delivering items to eat-in customers, clean tables, vacuum, etc. in a fast-paced environment.   “Those features made multitasking essential.”  During the application process, she had disclosed her disability and that she would need to periodically sit if required to stand for long periods of time and was hired anyway. 

During her orientation, the plaintiff disclosed that she would need to sit when needed or to sit and work. HR delayed her start date pending medical documentation, which initially indicated only that she would need a chair because of her arthritis.  HR then requested to know how long she could stand and how often she would need to sit, etc.   The plaintiff responded that she could only stand for 10 minutes at a time and then would need to sit for 5 minutes.   HR responded that there were no sitting positions.

The Court rejected the employee’s failure to accommodate claim for failing to specify a reasonable accommodation:

[Her] claim stumbles from the start, as she did not satisfy her initial burden of showing that her proposed accommodation—being able to sit for five minutes after every ten minutes of standing—is objectively reasonable, accounting for the essential requirements of the cashier/service-team member role  . . . .

 . . .

Juxtapose these critical job duties with what [she] requested: the ability to sit in one location for a duration of five minutes—presumably in front a cash register—after standing for ten. [Her] request would necessarily change the nature of the cashier/service-team member position. For a third of her shift, [her] job would be isolated to manning the cash register, regardless of whether there was a customer waiting at the register. And during those periods, [she] would be unable to tackle numerous duties, from greeting a customer at the door to rushing an order out to a hungry patron to cleaning up a spill at the drink station, just to name a few, any of which could occur at a moment’s notice in the setting of a fast-casual restaurant. This collection of duties is why [the employer] requires both multitasking and mobility from its team members.

The plaintiff attempted to argue that she was only hired to be a cashier and not to multi-task.

The problem for [the plaintiff] is that there is no evidence that she was hired for a standalone register-only position. In fact, no such position existed at the restaurant. The only position identified in the record is the cashier/service-team member role. And its written job description and the deposition testimony presented at summary judgment show that the role was far more than a limited, register-centric job. True, both [the restaurant’s] employees as well as [the plaintiff] referred to the position colloquially as the “cashier” role. But the position’s name, either formal or informal, is far less meaningful than its critical functions. As we engage in the “highly fact specific” inquiry into what is an essential function,  . . .a job title alone tells us very little, . . .

The Court also rejected her argument that her earlier requests to sit periodically should have been given more weight than her last, more specific request.   It distinguished other cashier cases where the plaintiff’s station was stationery, rather than fluid. 

 . . . requiring a duration of five minutes of sitting after standing for ten is what makes [her] request facially unreasonable. Meeting those terms would alter essential functions of the cashier/service-team member position while foisting added duties on co-workers when [she] manned the cash register. Perhaps, as [she] emphasizes, she could perform some tasks during her time standing. But that misses the point. The nature of the job—working in the front of the house at a fast-casual restaurant— necessarily means that a given task could crop up at any time. In one minute, the kitchen might have prepared a food order to run out to a customer. The next, a customer might finish her meal, leaving a messy table behind. And a minute later, the beverage station or refrigerator may need restocking. Had [the employer] granted [her] accommodation, all of those tasks would go unattended by [her] while she sat at the cash register, despite her position’s essential requirements and the restaurant’s needs.

The Court also refused to assign the “reasonableness” of the request to a jury determination:

While there undoubtedly are cases where disputes of fact arise over what a job entails and whether an accommodation would interfere with core functions of that job, in the end, disputes over both issues involve a mixed question of law and fact.  . . .  And it is appropriate for us to resolve these mixed questions at summary judgment when there are few evidentiary disputes over the material facts. . . .  That is the case here. There is no evidentiary dispute as to the essential functions of the cashier/service-team member position. Nor is there a dispute over the nature of [her] proposed accommodation. As a result, we follow the well-trodden path of determining as a matter of law whether [her] proposed accommodation is a facially reasonable one.

The Court also rejected her allegation that the employer failed to engage in the interactive process.  Rather than address the employer’s request for medical information, it concluded that no interaction was required when the requested accommodation was unreasonable on its face:

a viable interactive-process claim presupposes the existence of a reasonable accommodation. And with [her] having presented a facially unreasonable request to [the employer], her remaining claim necessarily fails.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Enacts E-Verify Workforce Integrity Act for Non-residential Construction Employers Beginning in March 2026

 Last week, Governor DeWine signed into law House Bill 264, the E-Verify Workforce Integrity Act,  which requires most non-residential construction contractors to utilize e-verify to confirm the legal work status of employees at Ohio Revised Code §§4151.01 et seq.  The Act prohibits employers from continuing to employ individuals whose legal work status has not been confirmed by e-verify.  The Attorney General shall enforce the provisions, and can receive anonymous complaints, but will not base an investigation on race, color or national origin.   Notably, there is no deadline to utilize e-verify  (but employers are required under federal law to complete I-9 forms within 3 days of hire) and the Act does not address the use of day laborers.  Violating employers can be fined and barred from state contracts for a period of time.  Knowing violations can result in the revocation of any required license to conduct business.   Covered employers must maintain their records for at least three years.  The Act becomes effective on March 19, 2026.

Key terms of the legislation include:

·       Sec. 4151.02. (A) Except as provided in division (C) of this section, no nonresidential construction contractor, subcontractor, or labor broker shall fail to verify the employment eligibility of each employee hired to perform work on a nonresidential construction project through the e verify program. A nonresidential construction contractor shall use e-verify to confirm the identity and legal working status of each employee employed by the nonresidential construction contractor. A subcontractor shall use e-verify to confirm the identity and legal working status of each employee employed by the subcontractor. A labor broker shall use e-verify to confirm the identity and legal working status of each employee employed by the labor broker.

·        (B) A nonresidential construction contractor, subcontractor, or labor broker shall keep a record of the verification required by division (A) of this section for three years after the date of hire or one year after the date the employee's employment is terminated, whichever is later.

·       (C) A nonresidential construction contractor, subcontractor, or labor broker is not required to comply with division (A) of this section if both of the following apply: (1) The nonresidential construction contractor, subcontractor, or labor broker has previously verified an employee's employment eligibility using e-verify. (2) The employer is not required to verify or reverify the employee's eligibility to work under section 101(a)(1) of the federal "Immigration Reform and Control Act of 1986," 8 U.S.C. 1324a(b). Sec. 4151.03.

·       No nonresidential construction contractor, subcontractor, or labor broker shall continue to employ an individual after receiving a notice of final nonconfirmation for that individual from the e-verify program. For purposes of this section, a final nonconfirmation occurs when the contractor, subcontractor, or labor broker receives a case result indicating that an employee's employment eligibility could not be confirmed and instructions that the contractor, subcontractor, or Sub. H. B. No. 246 136th G.A. 3 labor broker should close the e-verify case associated with the employee.

·       (C) "Employee" means any individual who performs services for a contractor, subcontractor, or labor broker who satisfies both of the following conditions: (1) The individual is subject to the contractor's, subcontractor's, or labor broker's direction and control, not only as to the result accomplished but also as to the details of how the work is performed; (2) The individual receives compensation in the form of wages, salary, or any other form of remuneration in exchange for services rendered.

·       (E)(1) "Labor broker" means any individual or entity who hires an employee and supplies the employee's labor to a nonresidential construction contractor or a subcontractor, regardless of tier, through the use of a contract. (2) "Labor broker" does not include any governmental entity or labor organization as defined in section 3517.01 of the Revised Code.

·        (F) "Nonresidential construction contractor" means any individual or entity that has responsibility for the means, method, and manner of construction, improvement, renovation, or repair on a nonresidential construction project with respect to one or more trades and who offers, identifies, advertises, or otherwise holds out or represents that the individual or entity is permitted or qualified to perform or have responsibility for the means, method, and manner of construction, improvement, renovation, repair, or maintenance with respect to one or more trades on a nonresidential construction project.

·       (G) "Nonresidential construction project" means the construction or renovation of any building, highway, bridge, utility, or related infrastructure, but does not include any of the following: (1) An industrialized unit, manufactured home, or a residential building as defined in section 3781.06 of the Revised Code; (2) A building or structure that is incidental to the use of the land on which the building or structure is located for agricultural purposes as defined in section 3781.06 of the Revised Code; (3) A mobile home as defined in section 4501.01 of the Revised Code.

·        (H) "Subcontractor" means any individual or entity who enters into a contract with a nonresidential construction contractor or another subcontractor, regardless of tier, to perform work on a nonresidential construction project.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Court of Appeals Refuses to Enforce Non-Compete or Award Damages and Dismisses Counterclaims.

On Monday, the Warren County Court of Appeals upheld the dismissal of both the employer and contractor’s claims involving the enforcement of a non-compete clause and abuse of process claims. Reliant Serv. MJF, L.L.C. v. Brown, 2025-Ohio-5364.   The Court treated the non-complete clause involving the independent contractor as though he were an employee of the employer contracting business.   It found that the clause was unenforceable because it was overly broad in prohibiting all competition and in failing to show any protectible interest such as an investment in training the contractor or in confidential information.  In its breach of contract claim, the employer also failed to show that its level of business with that customer (or any other customer) had declined as a result of the allegedly unfair competition.  The court also refused to award the individual damages for the amount of lost income he suffered while the TRO was in effect because he was limited to the amount of bond required for the TRO and failed to challenge the low amount with evidence.  It also found that he could not prevail on his counterclaims because the employer was permitted to file a lawsuit, even if it lost on the merits of its claim. 

According to the Court's opinion, the plaintiff employer ran a construction staffing business where it would supply individuals to complete the “punch lists” for newly constructed homes (i.e., drywall repairs, painting, etc.)  It hired the defendant individual/independent contractor in 2013.  He already had 25 years of experience as a handyman and did not receive any training to perform his assignments.  The employer had a large customer and a few smaller ones.   In 2013, it required its employees and contractors to sign a non-compete form which prevented them from competing or providing services to identified customers, including Ryan Homes.  The defendant signed that form and began performing assignments, including for Ryan Homes.   When another court found the form unenforceable, the employer required the contractors to sign an independent contractor agreement which contained a different non-compete clause preventing any competition for one year.    The defendant also signed that agreement, but the employer mysteriously back dated it to 2013. 

The defendant formed his own contracting/handyman business in September 2021 and began performing work for his new business for Ryan Homes as well as for the employer.  He then resigned from the employer in October 2021.  The employer discovered his competition with Ryan Homes and filed suit in March 2022 and obtained a TRO against the competition and was only required to post a $1K bond.   While the magistrate initially enforced the non-competition agreements, the trial court in December ultimately dissolved the TRO and preliminary injunctions, but also rejected the counter claims for abuse of process and tortious interference.   The court also refused to award damages of $115K which the defendant claimed to have lost as income while the TRO and PI were in force and limited the defendant to the $1K bond.  Both parties appealed and the Court of Appeals affirmed.

First, the courts refused to treat the non-compete form and independent contractor agreement clause as integrated.  The employer argued that the defendant should at least be enjoined from working for Ryan Homes because it was specifically identified on the non-compete form.  However, the magistrate and trial found that the clause replaced the form and the employer had failed to appeal that finding.    In any event, the courts concluded that the clause was overly broad because it contained no geographic restrictions.  The employer’s business was concentrated in four counties, but the clause prevented all competition, even outside that area.   

A noncompete covenant is reasonable if (1) its restrictions are not greater than what is required to protect the employer, (2) it does not impose an undue hardship on the employee, and (3) it is not injurious to the public. Id. at 26. In determining the validity of a noncompete covenant, each case must be decided on its own facts. Id. at 25. A plaintiff seeking to enforce a noncompete covenant must establish, by clear and convincing evidence, each of the three elements above.  . . .

In determining whether a noncompete covenant is reasonable, a court should consider the following factors: (1) the absence or presence of limitations as to time and space, (2) whether the employee represents the sole contact with the customer, (3) whether the employee is possessed with confidential information or trade secrets, (4) whether the covenant seeks to eliminate competition which would be unfair to the employer or merely seeks to eliminate ordinary competition, (5) whether the covenant seeks to stifle the inherent skill and experience of the employee, (6) whether the benefit to the employer is disproportional to the detriment to the employee, (7) whether the covenant operates as a bar to the employee's sole means of support, (8) whether the employee's talent which the employer seeks to suppress was actually developed during the period of employment, and (9) whether the forbidden employment is merely incidental to the main employment.

 . . . The Contract's noncompete clause is a statewide, if not worldwide, limitation from employment with any of [the employer’s] home-builder clients for a period of one year. A one-year time period for a noncompete covenant is generally reasonable.  . . . However, in the circumstances of this case, where [the defendant] only performed work for [the employer’s] client, Ryan Homes, in Ohio's four southwest counties, the lack of any geographic limitations makes the noncompete clause unduly restrictive. . . . .

Further, the employer failed to show a protectible interest.  The clause was not tailored to prevent the misuse of confidential or trade secret information.  Further, while such clauses are enforceable to prevent unfair competition and to protect an investment in employees, they are not enforceable to prevent fair competition.  There was no evidence that the employer had invested in any special training of the defendant.  Rather, he was hired because of his extensive prior experience and the employer could not prevent him from using his previously acquired skills to compete against it.   

An employer's legitimate interests in utilizing a noncompete covenant include "prevent[ing] the disclosure of a former employer's trade secrets or the use of the former employer's proprietary customer information to solicit the former employer's customers."  . . .  Another legitimate purpose of a noncompete covenant is the retention of employees in which an employer has invested time and other resources.  . . .  However, this case did not implicate trade secrets or confidential information. Moreover, the record plainly shows that [the employer] did not invest time and money in training [the defendant], and did not play any role in [his] development as a skilled and professional punch-list contractor. Rather, [he] worked as a handyman providing handyman and punch-list services for 25 years prior to his employment with [it]. Stated differently, [his] knowledge and skills were not developed or improved while he was a[n] . .  independent contractor. Noncompete covenants that prevent an employee from using his or her general skills and experience in the marketplace weigh against enforcement.  . . .  In addition, while the record indicates [he] dealt directly with Ryan Homes in scheduling work as a[n]independent contractor, he was not the sole contact with Ryan Homes.

Nonetheless, the Courts found that the defendant was not unduly harmed because the clause had never been enforced to prevent him from using his skills in other contexts, such as a handyman or in other commercial construction.

Despite an employer's interests, enforcement of a noncompete covenant cannot cause undue hardship on a former employee.  . . . "To be sure, any person who is prevented from practicing his profession or trade for a period of time in an area in which it has been practiced, suffers some hardship.  However, the Raimonde test requires more than just some hardship."  . . .  "The public's interest in determining the reasonableness of a noncompete [covenant] 'is primarily concerned with . . . promoting fair business competition.'"   . . .  In highly competitive industries, enforcement of noncompete covenants are often found to not adversely affect the industry or harm the public in limiting the public's options in obtaining goods and services. Id.

[The Defendant] is providing the same type of punch-list services for Ryan Homes now as he did for it when he worked as a[n] independent contractor. The forbidden employment is therefore not merely incidental to the main employment under the ninth Raimonde factor. Although the Contract's noncompete clause prevents [him] from working for or with [the employer’s] home-builder clients for a period of one year, it does not act as a complete bar to his sole means of support or stifle his inherent skills and experience. Fenik testified that [the employer] does not prevent current and former independent contractors from providing general handyman services or landscaping to residential property owners or from working in commercial construction. Fenik stated that many individuals working for [it], in fact, do side work on the weekends or if they have an opening in their work schedule. [The defendant’s] testimony revealed that during the nine months the preliminary injunction was in effect, he did not seek any alternative handyman employment or work in commercial construction. Moreover, although the record shows [he] worked mostly, if not exclusively, for Ryan Homes as a[n]independent contractor, he never inquired of [the employer] if he could work for its other home-builder clients during the nine-month preliminary injunction. The Raimonde test requires more than just some hardship. [He] did not show that he could not readily obtain a position or establish a non-competing practice.  . . .  Thus, the fifth and seventh Raimonde factors weigh in favor of enforcing the Contract's noncompete clause.

In addition, as for the employer’s breach of contract claim – which was tried in 2024, it failed to show that it had suffered any financial losses.  It sought a percentage of the fees which the defendant had earned from  Ryan Homes.  However, it continued to receive the same amount of business from Ryan Homes before and after the period when the defendant competed against it.  Any business he took was from other competitors, not the defendant: “there is no evidence this business would have gone to [the employer].”

The Court also affirmed the dismissal of the defendant’s counterclaims.  It refused to find that the act of filing a lawsuit can constitute tortious interference merely because the employer could not meet the clear and convincing evidence standard of evidence:

Turning to [his] argument, [the employer’s] mere resort to filing a civil lawsuit against [him] and seeking a preliminary injunction does not constitute a tortious interference with a business relationship. To hold otherwise would have a chilling effect on valid lawsuits seeking to enforce contractual provisions such as a noncompete covenant. Moreover, [he] has failed to articulate any damages resulting from [its] alleged tortious interference with a business relationship. Here, [he] was out of work for several months as a result of the magistrate's decision granting [the employer] a preliminary injunction. Thus, [his] claimed loss of income was not caused by [its] filing of the lawsuit and seeking of a preliminary injunction, but by the magistrate granting the preliminary injunction.

The Court rejected the abuse of process claim on similar grounds:

We find there is no genuine issue of material fact regarding [his] abuse of-process counterclaim because [he] failed to present evidence establishing [the employer’s] ulterior motive. That is, there is no summary judgment evidence that [it] had an ulterior motive in seeking injunctive relief. Here, [it] filed a lawsuit against [him] and sought injunctive relief specifically to prevent [him] from competing directly with it. These are not "ulterior purposes" that [it] aims to accomplish but are clearly the stated and primary goals of these proceedings. Furthermore, as plainly shown by its December 12, 2022 decision dissolving the preliminary injunction, it is well within the trial court's jurisdiction to grant or deny a preliminary injunction. . . The trial court, therefore, did not err in granting summary judgment in favor of [the employer] on [his] abuse-of-process counterclaim.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

OFCCP Announces Updated Jurisdictional Thresholds for Affirmative Action for Vets and Disabled

 Earlier this year, President Trump rescinded Executive Order 11246 which required affirmative action by certain federal contractors and subcontractors for women and minorities.  However, there are statutory affirmative action obligations which are still being enforced and apply to federal government contractors and subcontractors to benefit veterans and individuals with disabilities under the Vietnam Era Veterans Readjustment Assistance Act and the Rehabilitation Act. Like most affirmative action obligations, there are two financial and headcount thresholds for basic affirmative action obligations and formal obligations pursuant to a written plan.  These financial thresholds are now updated for inflation every five years and new thresholds became effective as of October 1.

OFCCP announced last month that the threshold for basic affirmative action obligations for individuals with disabilities has risen from $15K to $20K.  Contractors and subcontractors who do not have at least one federal contract of at least $50K (and at least 50 employees) now no longer need to have formal or written affirmative action programs for individuals with disabilities. 

Similarly, the threshold for basic affirmative action obligations for veterans (which includes, among other things, listing most job openings with the local unemployment office) has risen from $150K to $200K.  Contractors and subcontractors who do not have at least one federal contract of at least $200K (and at least 50 employees)  now no longer need to have formal or written affirmative action programs for veterans, which would include conducting availability analyses, and filing an annual report, etc.

As a part of its ongoing contractor assistance efforts, the Office of Federal Contract Compliance Programs developed a new “Jurisdictional Thresholds” infographic and updated its webpage. The infographic helps employers, employees, and other interested parties easily determine when OFCCP’s Section 503 and VEVRAA regulations apply to contractors doing business with the federal government. 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Rejects NLRB's Power To Award Compensatory Relief, But Affirmed ULP Against Starbucks

Last week, a divided Sixth Circuit rejected the NLRB’s right to award compensatory damages as a remedy for unfair labor practices, but unanimously agreed to affirm the finding of an illegal termination by Starbucks during a union campaign.   NLRB v. Starbucks Corporation, No. 23-1767 (6^th Cir. 11-5-25).   The unanimous Court found that the NLRB met its burden of proving that the employer treated the supervisor more harshly because of her union activities because it terminated her for a first policy violation six weeks after it happened, but shortly after it learned about unfair labor practices and other union activities and had not fired other supervisors for the same infraction on a first offense.  However, the Court concluded that statutory and legal history provided that “affirmative action” powers given to the NLRB are limited to equitable remedies, and not the ability to punish or deter or to award monetary relief unrelated to the unfair labor practice (such as child care, credit card fees, etc.).  Moreover the Seventh Amendment requires jury trials for compensatory and punitive damages, meaning a government agency lacks such unilateral authority.

According to the Court’s opinion, the supervisor began a union organizing campaign.  She was fired in April several months later – along with another employee – because she violated company policy by leaving that employee alone in the store (in high crime neighborhood) in February for 30 minutes without previously informing management.  The employee was fired for using profanity in front of customers.  Another supervisor had violated the same policy several times two years earlier before he was fired.  Although the supervisor had reported the policy violation the next day, she was not demoted or suspended pending investigation.  While the manager who recommended her termination was unaware of all of her activities, the legal department could not deny the same.

While the Court found the Board sustained its burden of proof for the ULP, it still rejected some of required relief which Starbucks had been ordered to provide. 

§ 10(c) of the NLRA authorizes the Board to order the employer to “cease and desist” from that practice and to “take such affirmative action, including reinstatement of employees with or without back pay, as will effectuate the policies of th[e] [NLRA.]”  . . .. the Board now reads the phrase “affirmative action” to authorize it to compensate “affected employees for all direct or foreseeable pecuniary harms suffered as a result of the [employer’s] unfair labor practice.” . . .

 . . . the Board then crafted a “myriad of other possible examples” of direct or foreseeable harms: childcare costs, transportation expenses, credit card debt (including interest and late fees thereof), penalties on early withdrawals from retirement accounts, and the loss of a car or home from missed loan and mortgage payments. . . .

  . . .

The question before us is whether Congress used “affirmative action” as a phrase of art referring only to equitable remedies, as Starbucks urges, or instead as a literal phrase encompassing all types of relief, including those legal in nature, as the Board suggests. To our minds, all signs point to the former.

In analyzing the text, the Court determined that legal precedents and legal scholars: “likewise describe “affirmative action” as authorizing relief that is equitable in nature.”

Consistent with this shared understanding, the Board’s authority under § 10(c) to order employers to take “affirmative action” encompasses only equitable remedies. That phrase has a well-established meaning associated with the function or effect of traditional equitable remedies. And “where Congress borrows terms of art in which are accumulated the legal tradition and meaning of centuries of practice, it presumably knows and adopts the cluster of ideas that were attached to each borrowed word.”  . . .  Our conclusion, we note, aligns with the Supreme Court’s NLRA-related recognition that “Congress did not establish a general scheme authorizing the Board to award full compensatory damages for injuries caused by wrongful conduct.” Int’l Union, UAW v. Russell, 356 U.S. 634, 643 (1958). Rather, “[t]he power to order affirmative relief under § 10(c) is merely incidental to the primary purpose of Congress to stop and to prevent unfair labor practices.” . . .

In addition to the textual analysis, the Court concluded that

the structure of § 10, which further confirms the equitable nature of “affirmative action.” Begin with the fact that Congress, in the NLRA, did not make the Board’s remedial orders self-executing. Rather, federal appellate courts must enter a “decree enforcing, modifying and enforcing as so modified, or setting aside in whole or in part the order of the Board.” . ..

 . . . . Congress, when bestowing federal courts with the power to award damages remedies, ordinarily does so only with express limits. . . . .

Finally, the Court noted that the Seventh Amendment reserves for juries the right to award compensatory and punitive damages.   Having recently concluded that the SEC lacks the authority as a government agency to impose damages, “the Supreme Court reaffirmed that the Seventh Amendment encompasses all claims that are “legal in nature,” regardless of whether they derive from statute or common law.”

In any event, the Board seeks to grant monetary remedies at least partly designed to punish or deter employers acting unlawfully. That is the very definition of legal relief.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Columbus Amends Pay Transparency Ordinance To Require Salary Ranges With External Job Postings

 Last week, the Columbus City Council approved amendments to its pay transparency ordinance CCC §2335 which requires all Columbus employers with more than 15 employees to provide job applicants with “a reasonable salary range or scale” with each external job posting.  While the ordinance becomes effective in 30 days, it will not be enforced until 2027 by the City Community Relations Commission.

The key terms of the amendment include:

 D) “Employment posting” means any solicitation intended to recruit applicants for a specific available position, and includes any postings done electronically, or with a printed hard copy, that includes a description of the position and/or qualifications for desired applicants. “Employment posting” does not include a solicitation for recruiting applicants that is replicated and published without an employer’s consent.

  . . .

Employers shall provide a reasonable salary range or scale for potential employment in employment postings. The reasonableness of a salary range or scale shall be based on factors specific to the available position including, but not limited to:

(1) The flexibility of the employer’s budget;

(2) The anticipated range of experience job applicants may have;

(3) The potential variation in the responsibilities of the position;

(4) The opportunities for growth in and beyond the position;

(5) The cost of living for the various locations in which an applicant may work; and

(6) Market research on comparable positions and salaries.

WCMH reported that ““We wanted to ensure that as Columbus grows and more businesses come to Columbus or new businesses start, that they’re not just doing business in Columbus, but doing the business of Columbus,” Columbus City Councilmember Lourdes Barroso de Padilla said.” 

The full ordinance – with redlined amendments – can be found here.   

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Court Enforces Repayment of Hiring Bonus

 Last week, the Cuyahoga County Court of Appeals affirmed the terms of an employer’s hiring bonus when the employee resigned less than a year after starting training and was required to repay the entire amount of the five figure hiring bonus.  CommuteAir, L.L.C. v. Bremer, 2025-Ohio-4843.  The Court rejected the defendant’s argument that he was constructively discharged because there was no evidence that his working conditions were intolerable.  He claimed that he could not complete training because of his wife’s illness and a death in the family, but could not refute the employer’s evidence that it attempted to reschedule his training without his cooperation in communication.  Finally, it rejected his argument that the hiring bonus was a non-forfeitable wage instead of a bonus that could be subject to conditions or that this breach of contract claim was preempted by the Railway Labor Act.

According to the Court’s opinion, the employer hired the defendant for its pilot training program.  He signed an agreement for a hiring bonus of $22K that he had to repay in full if he failed to complete his training or voluntarily resigned or was fired for cause in less than a year and half of the bonus if after one year, but less than two.  He delayed the commencement of his training by more than six months and then resigned less than a year later.  The agreement required him to repay the full amount, plus fees and costs. 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Divided Franklin County Court of Appeals Finds Noose By Itself to Be Sufficiently Severe for Hostile Work Environment

Last week, a divided Franklin County Court of Appeals reversed an employer’s summary judgment on racially hostile work environment and retaliation claims.  Croley v. JDM Servs., L.L.C., 2025-Ohio-4762.  The Court found that the existence of a noose in a vehicle temporarily assigned to a new African-American employee on his second day of work by itself – without any racial comments or other  evidence – was sufficient to create a jury question whether it was intended to harass and intimidate him on account of his race.  Similarly, the later spontaneous shattering of  his assigned vehicle’s windshield – with a pre-existing hole in it – was also sufficient to create a jury question whether it had been shot out without any other evidence of a gun or bullet fragment.  Finally, the employer’s termination of the employee for refusing to permit a sample to be taken from the noose to compare to other rope on the worksite during its investigation of his allegations was found create a jury question of retaliation when the employer had not already gathered rope samples before the employee’s refusal based on his mistrust of the employer.  The Court conceded that there was sufficient holes in the plaintiff's case for a jury to rule in favor of the employer, but felt that the jury should make the decision instead of the trial court. 

According to the Court’s opinion, the plaintiff was hired on January 10 by the employer’s General Manager and began work on January 13. On January 14, the GM directed that the plaintiff be trained on the compacter, which he was by two different employees.  During a ride on the compacter, he grabbed a rope for stability, but did not find it helpful.  Later, while alone in the compactor, he realized that the rope was a noose hung from the rearview mirror and it made him extremely fearful.  He took the noose and hung it from the door of the employee trailer.   That night, he reported it to the employment agency and the next day, January 15, the GM questioned him about it, reiterated that the employer does not tolerate discrimination and commenced an investigation.  The plaintiff put the noose in his truck for safekeeping and refused to turn it over to the employer, although he did let them see it and inspect it.  The following week, the windshield of the vehicle he was operating had a small hole in it and then spontaneously shattered while he was in it.   He believed that the windshield had been shot out by a gun and saw the GM’s vehicle parked up the hill.   A few days later, he was again requested for the noose or a piece of it so that it could be compared to other rope at the work site during the employer’s investigation.  While he allowed the noose to be inspected in his presence, he again refused to turn it over or permit a sample to be taken and was fired for insubordination for impeding the investigation.

After the plaintiff was terminated, the owner reported him for making criminal threats against a co-worker, but the co-worker told the police that he did not feel threatened and nothing came of it.  The employee filed suit in October.  The trial court granted summary judgment to the employer on the discrimination, harassment and retaliation claims.  The Court of Appeals reversed the harassment and retaliation claims, finding sufficient evidence for a reasonable jury to evaluate.

While the Court’s majority conceded that many courts would not find the noose incident – by itself – to constitute a hostile work environment, it disagreed:

The noose is a symbol of this nation’s violent legacy against African Americans and brings them “ ‘the grim specter of racially motivated violence’ that continues today.”  . . . . The noose is “among the most repugnant of all racist symbols, because it is itself an instrument of violence.”

Historically, the noose is forever “linked to lynching, the Ku Klux Klan (“KKK”), and the murdering of thousands of African-Americans.” . . .

 . . . .

 . . . For the reasons above, we conclude the act of hanging a noose on the mirror of an African American’s vehicle is undoubtedly an unwelcome form of harassment based on race.

 . . . .

 . . .  The question becomes whether the act of hanging a noose on the vehicle assigned to an African American male, on his second day of work at the facility, is severe enough conduct to support a hostile work environment claim. We unequivocally answer this question in the affirmative.

 . . . .

 . . . Even in cases where the noose does not appear directed at a particular individual, given the noose’s dark legacy, a reasonable African American employee could be forever altered by such a visceral symbol in the workplace. African Americans who observe such a heinous symbol should not be required to explain the violent history of the noose and how it can invoke fear and anxiety. The threat of a noose is self-evident.3

The Court also believed that the window spontaneously shattering while the plaintiff was inside could also be considered by a jury as evidence of harassment even though no shell casings or bb or pellet was found afterwards that might have explained why it shattered.  It also rejected the employer’s explanation that windshields periodically shatter at the worksite because of the regular vibrations.

As the window incident occurred only a week after the display of the noose, we find, considering the evidence in a light most in favor of the nonmoving party, the incident amounts to threatening conduct that indicates a willingness to act on the statement made by the noose incident. Because the window incident amounts to a physical threat of violence, the implicit threat from the noose is heightened and, based on the close sequence of events, could reasonably be construed to have a racial animus. Finally, there is a dispute of fact as to liability as [the plaintiff] claims that [the GM’s] vehicle was in the immediate vicinity when the glass shattered.

The dissent, realizing that nooses exist for reasons other than lynching, required more evidence than the bare existence of a noose:

The dissent contends that “[o]ther than the noose, there are no credible allegations of any race-based comments or other activity involving race. The noose is not connected to any threatening intent or racial animus by [the employer].”

 . . . .

 . . . At this phase of the case, however, we are limited to determining whether a dispute of fact exists for trial. Given the line of cases that have found that the single display of a noose in the workplace can create a hostile work environment, we find it is the province of the jury to determine whether the alleged conduct in this case is severe or pervasive enough to demonstrate a hostile work environment claim. What the dissent proposes is that, as a matter of law, leaving a noose in the vehicle of an African American male does not constitute a severe enough act, without more, to create a hostile work environment. In good conscience, we cannot support such an approach. While a jury could very well find that the alleged incident was not severe enough conduct to create a hostile work environment claim, the argument that hanging a noose in the excavator that [the plaintiff] was assigned to operate could not, as a matter of law, sufficiently alter the conditions of employment for an African American is untenable.

The Court then found that the employer could be held liable for the noose incident because it was alleged (without any evidence) that the GM had put it there since he was the individual who had assigned the plaintiff to that vehicle on that date.   The Court refused to credit the employer with conducting an investigation – despite its employee interviews – because it had delayed a few hours in retrieving and safeguarding the noose and had not gathered rope samples before firing the plaintiff for refusing to permit a sample to be taken.

It is the province of the jury to resolve whether the [the employer] took reasonable steps to correct the alleged behavior. Furthermore, there is a dispute of fact whether [the plaintiff] unreasonably failed to take advantage of any preventative or corrective opportunities that the employer provided. The [employer] commenced an investigation into the matter and met with [the plaintiff]. [He] agreed to show them the noose but refused to leave the noose or allow it to be cut for comparison with other rope at the worksite. [He]  explained that he did not feel comfortable turning over the noose or allowing them to cut a piece of it because he did not trust [the owner]. It is for the jury to resolve these factual disputes.

The Court rejected certain evidence submitted by the plaintiff to support his hostile work environment claim because he was unaware of the incidents until after he had been fired.  For example, he had been written up (without his knowledge) for improper operation of certain equipment.  They also rejected the police report as part of this claim because it happened after his termination.  ““ ‘Plaintiff cannot use events that happened after his termination to support his hostile work environment claim.’ ”

The Court also concluded that he had produced sufficient evidence that his termination was retaliatory for complaining about the noose incident.   While generally employees may be terminated for refusing to cooperate with a workplace investigation, there are exceptions and the Court found the plaintiff’s distrust of his employer to be sufficiently protected conduct in this situation to let a jury decide whether his distrust was justified and protected.

Considering the evidence in a light most favorable to [the plaintiff], a jury could reasonably determine that turning over evidence to a supervisor you do not trust, or allowing that evidence to be damaged, is a reasonable nonparticipation in the investigative process. This interpretation is bolstered by the fact that when [he] initially informed [the GM] of the noose’s location outside the employee trailer, [the GM] failed to [immediately] retrieve and secure the noose. Furthermore, [the plaintiff], despite his trepidations, repeatedly allowed the noose to be inspected. A jury could reasonably believe [his] explanation that his claim could be hindered if the noose was damaged or not be properly preserved. Conversely, the [employer] have represented that they wanted the noose to aid in the investigation. Given the accusation at issue, there is at least a dispute of fact that [his] fears were justified.

In addition, the plaintiff met several times with the employer and answered their questions.  His only refusal concerned preservation of the integrity and safekeeping of the noose.  Moreover, his termination came only days after his protected conduct in reporting the alleged harassment.

We find that the [the employer] have provided a legitimate, nonretaliatory reason for terminating [his] employment. A reasonable jury could find that failure to turn over the noose, or allow it to be cut, unreasonably impeded the investigation providing a legitimate reason for termination.

The Court then required the plaintiff to show that the employer’s explanation was pretext for retaliation.

[The plaintiff] can demonstrate pretext by introducing evidence that he provided the noose on multiple occasions to further the investigation. [He] had also previously allowed [the GM] to take the noose when he left it outside the employee trailer. [The owner] had not collected any samples of rope from around the worksite to compare it with the noose, did not offer to keep the noose in a neutral location, and never called law enforcement to report the incident.  .. . .  A jury could reasonably believe [the plaintiff’s] explanation for not wanting to turn the noose over to the appellees or allow them to cut a portion of the noose.

There was no discussion in the Court’s retaliation opinion about post-termination conduct of the employer in reporting the plaintiff for alleged criminal threats.  There was also no discussion of the same-actor inference since the alleged harasser was also the same individual who hired him only days earlier.  There was no also discussion of the racial composition of the workforce, which might have put more context in the plaintiff’s paranoia.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Rejects Dismissal of Racial Harassment Claim Where Black Supervisor Called Plaintiffs Monkey A--.

Last week, the Sixth Circuit reversed an employer’s summary judgment on a racial harassment claim brought by two former truck drivers.   Smith v. P.A.M. Transport, Inc. , No. 24-5549 (6^th Cir. 9-25-25).   The  Court found that calling the plaintiffs “monkey a__” or ANY derivative of monkey was as racially derogatory as the n-word, even if it was mostly used against them by their black supervisor.   It also refused to find problems with whether black and African-American can be used interchangeably for evidentiary purposes when comparing the plaintiffs to “white” employees.   It rejected the employers’ evidence for an affirmative defense at the summary judgment stage concerning whether it took reasonable steps to prevent harassment when it promulgated an anti-harassment policy without evidence that it was effectively enforced or followed up with management training.  The Court’s majority also found sufficient evidence of comparative treatment to sustain the disparate treatment allegations. 

According to the Court’s decision, the plaintiff truck drivers both worked out of the Nashville terminal and alleged that they were paid a day rate, but were required to drive more hours and miles per week and in damaged trucks than their white counterparts.   One was fired after two negative performance evaluations, but without prior disciplinary warning.  Both alleged that they were “regularly” called “money a__” by their black supervisor, who was otherwise respectful in communicating with white truck drivers.  They alleged that their supervisor threatened to withhold pay or fire them and regularly demeaned them.  They alleged that they complained with “liaisons” about the mistreatment, but that nothing was done to rectify or stop it.    Their supervisor reported to a white manager.   Both sued under  Title VII and Section 1981.   The trial court granted the employer summary judgment on the grounds that they had failed to produce sufficient evidence of a racially hostile work environment or disparate treatment. 

The Court rejected the district court’s conclusion that derivatives of “monkey” were not plainly racist.

We have recognized that, “[g]iven the history of racial stereotypes against African-Americans and the prevalent one of African-Americans as animals or monkeys, it is [] reasonable—perhaps even [] obvious”—to conclude that the invocation of the term “monkey” against an African American is “intended [as a] racial insult.” . . .

Consequently, circuit courts, including our circuit, have overwhelmingly held that the use of the term “monkey” against an African American employee constitutes evidence of race-based harassment sufficient to support a hostile work environment claim. For example, we have found evidence of racial harassment where, among other things, African American firefighters were assigned to workstations labeled “Monkey Island.” . . .

 . . .

 . . . The term “monkey” and its derivatives, while not overtly racial in isolation, have a long and well-understood history as racial slurs when directed at African Americans.  . . . . In this case, two African American plaintiffs have testified that their supervisors directly and repeatedly called them “monkey” and “monkey ass.” The use of the terms in that context raises a reasonable “inference of discrimination on the basis of” race.  . . . . That suffices to show race-based harassment at the summary judgment stage. The district court’s determination that Plaintiffs’ testimony about the use of these terms does not constitute “evidence of the use of race-specific and derogatory terms,” therefore, was plainly incorrect.

The Court rejected as “frivolous” the argument that being called “money a__” was somehow not racist when being called monkey was inherently racist.

[The employer] offers no reason—and we can think of none—as to why the addition of the word “ass” somehow obviates the racialized nature of the term “monkey.” To the contrary, the “use of the term ‘monkey’ or derivative terms” against African Americans constitutes compelling evidence of racial harassment.  . . .  Simply put, there is no meaningful difference between the terms “monkey” and “monkey ass” when used by a supervisor against an African American employee, as alleged here.

The Court rejected the district court’s conclusion that the racist nature of the term was reduced because the speaker was also African-American.  Just as there can be same-sex harassment, there can be same-race harassment.

To be sure, in some contexts, the fact that the alleged perpetrator is within the same protected class as the alleged victim may be material. But on this record, we see no fact or reason why [the supervisor’s] race undermines the conclusion that a reasonable jury could find his (and his supervisor’s) alleged use of “monkey” and “monkey ass” to be racially derogatory.

The Court also rejected the argument that the plaintiffs were required to prove that the terms were not used against white employees.

The Court also rejected as “deeply flawed” the district court’s conclusion that African-American and “black” could not be used interchangeably, meaning that the African-American plaintiffs failed to carry their burden of proof by comparing themselves to “white” employees, who could also be African-American. 

This reasoning is deeply flawed. It starts from the erroneous premise that “African American” and “Black”—and, in turn, “non-African American” and “white”—are rigid categories of identity that can never be used interchangeably. Contrary to that assumption, our Title VII jurisprudence on race discrimination governs, and we have often used “African American” and “Black” interchangeably and compared “African Americans” with “whites.” . . . . The district court attempted to justify its additional evidentiary requirements by pointing to Title VII’s prohibition on discrimination based on skin color, reasoning that “discrimination based on color is distinct from discrimination based on race.”  . . . . But that distinction does not obviate our well-established caselaw recognizing “Black” and “white” as racial identities.

By relying on this narrow conception of racial identity, unadorned by legal precedent, the district court effectively imposed a heightened burden on Plaintiffs beyond what Title VII, § 1981, and the THRA require. Our circuit has never held that a plaintiff must proffer evidence of a comparator’s racial self-identification or genetic composition to survive judgment in a Title VII case. To the contrary, we have routinely accepted, at summary judgment, plaintiff testimony of disparate, race-based treatment grounded in experience and perception. . . .

The Court’s majority also found sufficient evidence of disparate treatment to also support the claims of racially harassment. 

“[F]acially neutral abusive conduct can support a finding of . . . animus sufficient to sustain a hostile work environment claim when that conduct is viewed in the context of other, overtly . . . discriminatory conduct.”   . . . . Here, given the alleged use of racial slurs by [the supervisor and manager], a reasonable jury could infer that the accompanying (purportedly race-neutral) verbal abuse by both individuals was, in fact, also racially motivated, without regard to Plaintiffs’ testimony that non-African Americans received more favorable treatment.

The Court also rejected the district court conclusion that the evidence was insufficient to show a severe or pervasive ractially hostile work environment.

Our governing precedent, however, requires evaluation of the work environment as a whole, including the broader context in which the terms “monkey” and “monkey ass” were allegedly used.  . . . . As noted, facially neutral abusive conduct, such as screaming, cursing, and threatening, “can support a finding of . . . animus sufficient to sustain a hostile work environment claim when that conduct is viewed in the context of other, overtly . . . discriminatory conduct.”  . . .  By refusing to consider the use of the slurs in conjunction with the accompanying verbal abuse (or, for that matter, the unfavorable employment-related treatment) when assessing severity and pervasiveness, the district court relied on an incomplete picture of the harassment that Plaintiffs allegedly experienced.

 . . .

 . . . our circuit has recognized that even a single incident of racial harassment, including the use of an egregious racial slur like the n-word, “may be so severe as to constitute a hostile work environment.” . . .  Like the n-word, the term “monkey” is “odious” and “degrading and humiliating in the extreme” when used as an insult against African Americans.  . . . . That is particularly true in this case, where [the plaintiffs] were purportedly called the term directly by their supervisors. The utterance of a slur by a manager “greatly increase[s] its severity,” and “harassment will be more severe if offensive comments were directed at a plaintiff.”

 . . . .

  . . .  [The plaintiffs] testified that they were directly called “monkey” and “monkey ass” by their supervisors on multiple occasions over time. Plaintiffs have also proffered evidence that, at least with respect to [one plaintiff], the term “monkey ass” was used in an overtly threatening manner. For example, [he] testified that [his supervisor] once told him, “you’re going to get your monkey A-S-S out there and do the job or . . . I’m going to write you up.”  . . . . Even standing alone, the evidence of these race-specific and derogatory terms very likely suffices to show severe or pervasive racial harassment.

We do not rely on the use of the slurs alone, however, because our governing cases require consideration of the totality of the circumstances in hostile work environment cases.  . . . . As discussed, [the plaintiffs] testified not only that they were directly called egregious, degrading, and humiliating racial slurs by their supervisors on several occasions, but also that they were subjected to sustained verbal use, in the form of threats, demeaning criticism, cursing, and screaming, while non-African American TRR drivers were spared from that same abuse. Plaintiffs also testified that they were consistently forced to work longer hours, drive lengthier routes with longer wait times, and use damaged trucks, unlike their non-African American counterparts. And both testified that the harassment caused them significant anxiety and diminished morale, which made it more difficult to drive on the road.

Viewing the totality of the record in the light most favorable to Plaintiffs, as we must, we conclude that a “reasonable person would have found [their work environment] hostile [and] abusive.” Id. at 309. In turn, a reasonable jury could find, from the totality of the evidence, that [they] were subjected to recurring, severe, and humiliating racial harassment that unreasonably interfered with their employment.

The Court also found sufficient evidence of employer vicarious liability because the employer failed to produce sufficient evidence to support its affirmative defense. 

While the employer points to the fact that it gave [the plaintiffs] a copy of its Anti-Discrimination and Harassment Policy, our caselaw makes clear that the existence and provision of a harassment policy alone are insufficient to show “reasonable care to prevent and correct promptly any racially harassing behavior.” . . . An employer must also show that the policy was reasonable and “effective in practice.”  . . .  [The employer] points to no evidence, and does not even attempt to argue, that it had an effective policy. It makes no mention of the policy’s “requirements” on supervisors or the “training regarding the policy”— both of which are baseline requirements for establishing the existence of a reasonable harassment policy. Id. at 349-50. The record also does not show that [the employer] took reasonable care to promptly correct the alleged harassment. To the contrary, Plaintiffs have testified that they placed [the employer] on notice of the harassment by reporting it to management-level employees, and P[it] has proffered no evidence that it acted to promptly correct the situation. On this record, we cannot say that [the employer] “exercised reasonable care to prevent and correct promptly any racially harassing behavior by its supervisor[s].”

 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.