Friday, October 3, 2008

Ohio’s Minimum Wage to Increase to $7.30 on January 1, 2009.

Because Ohio’s minimum wage is part of the Ohio Constitution (and cannot be easily amended) and contains a provision for automatic increases in the minimum wage tied to the annual Consumer Price Index as of September 30, the Ohio Department of Commerce has announced that the minimum wage will increase to $7.30 on January 1 based on the CPI as of Tuesday, September 30, 2008. The minimum wage for tipped employees will increase to $3.65/hour.

Insomniacs can read the full announcement (along with how it will affect youth wages) at http://www.com.ohio.gov/laws/docs/laws_2009MinimumWage.pdf.

Monday, September 29, 2008

Sixth Circuit: Eligibility Determination for Intermittent Leave Begins With Each FMLA Year Regardless of When FMLA Absence Began.

Today, the Sixth Circuit affirmed dismissal on summary judgment of an FMLA claim where the employee began intermittent leave on December 13 for chronic depression and did not return to work until January 15. Davis v. Michigan Bell Telephone Co., 07-1512 (6th Cir. 9/29/08). Although the employee had been eligible for FMLA leave when she began her absence on December 13, she had not worked 1250 hours in 2004 and, thus, was ineligible for FMLA leave in 2005. When her therapist informed her employer that she was capable of returning to work on January 3, but she did not return until January 15 – despite a warning from her employer, the employer deemed her absence as unexcused and terminated her employment in February for the chronic poor attendance. Although another physician later certified in March that the plaintiff’s continuing absence was related to her chronic depression, the employer determined that she was ineligible under the FMLA because a new leave year began on January 1 and she had not worked 1250 hours in the preceding calendar year. The Court rejected the plaintiff’s claim that she was not given effective notice of her ineligibility.

According to the Court, “[w]hen an employee has a chronic health condition for which intermittent FMLA leave has been approved, the leave commences upon the occurrence of the first absence caused by that condition, and it extends to cover every other absence caused by that condition during the same twelve-month FMLA period.” Thus, once an employee is deemed eligible for FMLA leave, every period of intermittent leave taken during the rest of that FMLA leave year for the same medical condition is deemed to be covered – regardless of the intermittent periods of work and regardless of whether the employee had worked 1250 hours in the twelve months preceding each absence. “In other words, each absence subsequent to the first absence is not treated as a separate period of FMLA leave with its own commencement date. To hold otherwise would render the term “intermittent leave” meaningless and would effectively read it out of the FMLA since a period of intermittent leave “must, by definition, comprise periods . . . in which the employee is present at work.” Id. “Thus, a series of absences, separated by days during which the employee is at work, but all of which are taken for the same medical reason, subject to the same notice, and taken during the same twelve-month period, comprises one period of intermittent leave.”

On the other hand, that intermittent leave, “can only extend to the end of the twelve-month FMLA period in which it began. See id. at 681-83. Once a new twelve-month FMLA period begins, any additional absences caused by that same chronic condition would constitute a new period of intermittent FMLA leave. See id. at 681. Otherwise, there would be no point at which the initial period of intermittent FMLA leave ended and a new period commenced. Under that scenario, employees would never have to reestablish their eligibility for FMLA leave and would therefore be perpetually entitled to twelve weeks of FMLA leave per year based on a single eligibility determination . . . . a period of intermittent leave cannot last beyond the specific twelve-month FMLA period in which it begins. Therefore, absences caused by the same chronic condition, but occurring in different twelve-month FMLA periods, must constitute different periods of FMLA leave. And as different periods of leave, they must have different times of commencement. The clear consequence of this is that [plaintiff’s] unexcused absences
in January of 2005, if approved as FMLA leave, would have constituted a new period of FMLA leave that commenced in January of 2005. Therefore, [plaintiff’s] FMLA eligibility was appropriately reevaluated in January of 2005, and the defendant was correct in determining that [plaintiff] was not eligible for FMLA leave with respect to her unexcused absences.”

The Court rejected “the concept of intermittent leave . . . should be considered a single period of leave simply because it is a continuous period of absence. A period of intermittent leave, however, is not made up of a single continuous absence. As explained above, an employee does not begin a new period of leave with each new absence. An obvious corollary to this rule is that the simple act of returning from an absence does not itself terminate a period of intermittent leave. Since a period of intermittent leave is not terminated solely by the act of returning to work, there is no basis for saying that [plaintiff’s] intermittent leave terminated when she returned to work on January 15. But it is obvious that the period of intermittent leave that began in September of 2004 must end at some point. If the intermittent leave that began in September of 2004 instead ended upon the beginning of a new twelve-month FMLA period, then [plaintiff’s] request for FMLA leave in 2005, if approved, would have constituted a new period of FMLA leave commencing in January of 2005. Thus, the ultimate question presented by [plaintiff’s] argument is whether her intermittent leave in 2004 ended upon the occurrence of a new twelvemonth FMLA period, or whether it ended at some arbitrary point, such as her return to work on January 15. Since the act of returning to work itself does not terminate a period of intermittent leave, there is no principled reason to conclude that [her] intermittent leave should cover absences up to January 15, but not those occurring thereafter. There is, however, a logical basis for concluding that [her] intermittent leave terminated upon the beginning of a new twelve-month FMLA period. Because the FMLA speaks in terms of twelve-month periods, see 29 U.S.C. § 2612(a), the most reasonable conclusion is that a period of intermittent leave terminates when a new twelve-month FMLA period begins.”

The Court based its conclusion on a balancing of the needs of the employee with the needs of the employer. “It would be unduly burdensome on a business’s need to operate efficiently and profitably if the business were required to provide an employee with twelve weeks of intermittent leave per year perpetually based on the fact that the employee was eligible for FMLA benefits on a single day. In order to accommodate the reasonable interests of businesses, it must be possible to reevaluate employees’ eligibility at some point, and the only logical method of finding that point is to conclude that a new period of intermittent leave commences when a new twelve-month period begins.”

The Court also rejected the employee’s equitable estoppel and faulty notice arguments on the grounds that an ineligible employee is not entitled to FMLA leave even if the employer were late in notifying the employee of his or her eligibility.

Insomniacs can read the full opinion at http://www.ca6.uscourts.gov/opinions.pdf/08a0353p-06.pdf.

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.

Thursday, September 25, 2008

Sixth Circuit Reinstates Trade Secret Claim By Lowering Evidentiary Burden for Small Companies.

Last week, the Sixth Circuit reinstated a trade secret claim by lowering the evidentiary burden for small companies who have to show the existence of a statutory trade secret. Niemi v. NHK Spring Co., 07-3536 (6th Cir. 9/19/08). In that case, the plaintiff father-son partnership created “machines and tools to manufacture stabilizer bars for automobiles,” and often conducted business on a handshake. Despite not having written confidentiality agreements, the Court held that a dispute of material fact existed as to whether the plaintiff had taken reasonable steps under the circumstances to protect the secrecy of its alleged trade secret and remanded the case to be decided by a jury.

The plaintiff signed a standard purchase order with the defendant which contained “a statement of standard terms and conditions providing that ‘no other or different terms or conditions shall apply to this order unless specifically agreed to in writing’” by the buyer. The plaintiff company did not insist on a written confidentiality agreement protecting the exclusivity of their designs or processes because he claimed that the defendant buyer assured him “that the new method ‘would remain confidential’ even before he disclosed it. and because plaintiff trusted the defendant-buyer for being “honorable people of integrity I’ve dealt with for thirty years.” A few years later, the plaintiff claimed that the defendant-buyer asked for a written exclusivity agreement (and promise not to share the design with other manufacturers) and he signed the agreement in exchange for a verbal assurance that he would continue to be the exclusive designer of the defendant company and would also receive the opportunity to bid on design work for the defendant’s parent company. A few years later, the plaintiff learned that a new engineering manager at the defendant company was using other designers (in violation of the verbal exclusivity agreement) and sharing details of the trade secret design (in violation of the verbal confidentiality agreement). When the dispute could not be resolved, the plaintiff brought suit for, among other things, violation of Ohio’s trade secret statute and promissory estoppel.

Under the Ohio statute, “trade secret” means “information, including the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, pattern, compilation, program, device, method, technique, or improvement, or any business information or plans, financial information, or listing of names, addresses, or telephone numbers, that satisfies both of the following: (1) It derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use. (2) It is the subject of efforts that are reasonable under the circumstances to maintain its secrecy” It is the second prong of the test which was at issue in the litigation.

While the district court did not believe that the plaintiff took reasonable efforts to protect the secrecy of its designs, the Sixth Circuit found there to be a disputed issue of fact on that issue. In particular, the plaintiff presented evidence that “he maintained complete control over his drawings and blueprints for the new manufacturing process in a secret, locked location in his house . . .. [and] did not disclose them to anyone other than his son and partner . . . , and agents of [defendant]—and to them only after receiving assurances of confidentiality.” Moreover, “[w]hen drawings were transported to and from [defendant’s] place of business in Toledo, they were always personally hand-delivered either by [plaintiff] or his son or by [defendant’s] personnel, who were required to sign for them. . . . No trade secret information was ever communicated by [plaintiff] via electronic media. . . . In addition, [plaintiff] was well aware of the security measures consistently employed by [defendant] at its facility.” The plaintiff also produced evidence “that he created standardized drawings of standardized manufacturing machine parts. This enabled [defendant] to order the fabrication of different tools by different manufacturing or ‘build’ shops without needing to disclose the complete set of prints to any one shop, thereby preserving the secrecy of the trade secret method.” Importantly for the Court, although the defendant attempted to minimize the importance of these facts, it did not present any evidence to refute or contradict them. When the defendant argued that plaintiff was careless in not marking the drawings “confidential,” the plaintiff explained that it was not necessary since no individual drawing alone disclosed the entire process. “Hence, this standardizing technique is said to represent a reasonable and effective effort to preserve secrecy even without labeling the individual drawings ‘confidential.’”

In addition, the plaintiff produced “deposition testimony detailing the conversation he had with [defendant’s manager] in 1993 or ‘94, when he remembers signing the exclusivity agreement and [the manager] reportedly assured him that [defendant] would continue to direct its design needs to him as long as he maintained the secrecy of his new method” In turn, the manager “testified that he is unaware of any such written agreement and he doesn’t recall agreeing that [plaintiff] would be [defendant’s] exclusive designer. However, [the manager] acknowledged that [plaintiff] had been [defendant’s] ‘primary, if not exclusive designer.’ Hence, although [the manager’s] testimony does not directly corroborate [plaintiff’s evidence] that there was an exclusivity agreement, his recollection of the parties’ relationship and course of dealing from 1991 to 1997 affords de facto corroboration.”

The plaintiff also produced expert testimony that “that it is customary in the automotive industry for small companies such [plaintiff] to rely on oral assurances of confidentiality regarding proprietary information when dealing with large automotive companies. . . . . Absent such evidence of customary practice in the industry, reliance on an oral promise could well be deemed not to represent a ‘reasonable effort’ to maintain secrecy.”

The plaintiff also argued that the Sixth Circuit should follow the Seventh Circuit opinion in Learning Curve Toys, Inc. v. PlayWood Toys, Inc., 342 F.3d 714 (7th Cir. 2003) applying Illinois’ version of the Uniform Trade Secrets Act (with an identical definition of trade secret). “Learning Curve teaches simply that whether efforts taken to maintain the secrecy of a trade secret are reasonable under the circumstances depends on the circumstances; that what is reasonable for a small company may be different from what is reasonable for a large company; and that the determination ordinarily represents a question for the jury. Id. at 724-25. The court observed that “only in an extreme case can what is a ‘reasonable’ precaution be determined as a matter of law, because the answer depends on a balancing of costs and benefits that will vary from case to case.” Id. at 725.” In that case, the “court upheld the jury’s verdict based on evidence of an oral confidentiality agreement, coupled with evidence that oral confidentiality agreements were customarily relied on. Id. at 725-26. The court readily acknowledged that PlayWood could and should have done more to protect its secret, but concluded the evidence was sufficient for the jury to determine that PlayWood, the smaller and less sophisticated of the parties, took reasonable precautions under the circumstances. Id.”

In short, the Court concluded that, “except where the evidentiary showing of reasonable efforts could not conceivably support a judgment in favor of the plaintiff, the reasonableness of the efforts is a question for the trier of fact. Because, depending on the credibility of the witnesses, it is conceivable, based on the present record, that a reasonable jury could find that [plaintiff’s] efforts to maintain the secrecy of his trade secret were reasonable, in light of his long term relationship with [defendant] and the relative sophistication of the parties, we conclude that the district court’s summary judgment ruling on the claim for misappropriation of trade secret was in error.”

The Court also found that the plaintiff’s promissory estoppel claim should survive summary judgment and be resolved by a jury.

Insomniacs can read the full decision at http://www.ca6.uscourts.gov/opinions.pdf/08a0349p-06.pdf.


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.

Friday, September 19, 2008

Congress Passes ADA Amendments Act to Abrogate Pro-Employer Supreme Court Decisions.

This week, Congress reached an agreement on amending the Americans With Disabilities Act when both the House and Senate passed the ADA Amendments Act (ADAAA), which President Bush is expected to sign. The ADAAA becomes effective on January 1, 2009 and the EEOC has been tasked with drafting binding regulations interpreting and implementing the new provisions. The ADAAA is intended to reverse many pro-employer decisions by the Supreme Court (including Sutton v. United Air Lines and Toyota Manufacturing v. Williams) which some felt improperly narrowed the reach of the ADA. Among other things, the ADAAA changes existing law as follows:

1) Broadening the statutory definition of “major life activity” to include “caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, and working” and to include “the operation of a major bodily function, including but not limited to, functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions.”

2) Specifically requiring the definition of disability to be construed broadly. “The definition of disability in this Act shall be construed in favor of broad coverage of individuals under this Act, to the maximum extent permitted by the terms of this Act” and an “impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active.”

3) The mitigation measures doctrine has been abrogated. Except for ordinary eyeglasses and contact lenses, a “determination of whether an impairment substantially limits a major life activity shall be made without regard to the ameliorative effects of mitigating measures such as (I) medication, medical supplies, equipment, or appliances, low-vision devices (which do not include ordinary eyeglasses or contact lenses), prosthetics including limbs and devices, hearing aids and cochlear implants or other implantable hearing devices, mobility devices, or oxygen therapy equipment and supplies; (II) use of assistive technology; (III) reasonable accommodations or auxiliary aids or services; or (IV) learned behavioral or adaptive neurological modifications.” This means that the ADA will now cover individuals with controlled chronic conditions, such as diabetes, and asthma, etc.

4) An individual can be regarded as having a disability if he or she proves only that s/he “has been subjected to an action prohibited under this Act because of an actual or perceived physical or mental impairmentregardless of whether “the impairment limits or is perceived to limit a major life activity.” In other words, the individual need only to be regarded as impaired to be regarded as disabled even though to actually be disabled, s/he would have to be substantially limited by the impairment. However, a person will not be treated as regarded as disabled if the impairment is “transitory and minor” (i.e., “an impairment with an actual or expected duration of 6 months or less.”). In other words, having a broken arm would not convert the person to disabled because the impairment is transitory.

5) Employers “need not provide a reasonable accommodation or a reasonable modification to policies, practices, or procedures to an individual” who is only incorrectly regarded as disabled. In other words, only those who are actually disabled (rather than merely regarded as disabled) are entitled to reasonable accommodations.

6) Covered entities “shall not use qualification standards, employment tests, or other selection criteria based on an individual's uncorrected vision unless the standard, test, or other selection criteria, as used by the covered entity, is shown to be job-related for the position in question and consistent with business necessity.”

7) Reverse discrimination claims are prohibited. “Nothing in this Act shall provide the basis for a claim by an individual without a disability that the individual was subject to discrimination because of the individual's lack of disability.”

Employers can take some comfort that earlier provisions of the proposed ADAAA did not survive the Senate version, including versions that would have widened the definition of “disability” to include any mental or physical impairment (like the laws of some states, like Connecticut), a requirement to put the burden of proof on employers, and a per se list of disabilities.

Insomniacs can read the full ADAAA at http://thomas.loc.gov/cgi-bin/query/D?c110:3:./temp/~c110p47TJQ::

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.

Wednesday, September 17, 2008

Emergency Planning Resources

With the recent storm damage, residents and companies in Central Ohio have been faced with testing whatever emergency plans they had in place to keep their businesses running and to get operations up as fast as possible. To the extent that these plans were inadequate or need to be updated, there are a number of resources available to assist in that process.

www.thebci.org/
The Business Continuity Institute Web site contains information and resources for both the business continuity novice and expert, as well as allowing members the opportunity to communicate and network with each other.

http://nonprofitrisk.org/tools/cares/cares.shtml.
The Nonprofit Computer Assisted Risk Evaluation System (Nonprofit CARES) is a web-based tool designed specifically for nonprofits by the Nonprofit Risk Management Center in Washington, D.C.

http://www.contingencyplanning.com/
Contingency Planning & Management. At this site you will find on-line articles, tips, “how-to” manuals, and on-line training in business continuity planning. In addition, you can subscribe to a free on-line magazine, Contingency Planning & Management.

http://www.drj.com/
Disaster Recovery Journal has been publishing information on disaster recovery since 1987 and provides a number of helpful articles regarding disaster recovery and business continuity planning. Under its “tools” page, it also has sample and actual business continuity plans from dozens of institutions.

http://www.disaster-resource.com/
Disaster-Resource.com provides a number of articles, a chat room, business continuity planning supplies, and general support for those who are developing business continuity plans.

http://www.fema.org/
This is the federal government site for emergency and disaster planning/prevention for hurricane, fire, flood, and terrorist action for individuals, families, businesses and other organizations. It is pretty comprehensive in covering the types of emergencies which an organization could face.

http://www.globalcontinuity.com/
A business continuity/disaster recovery (BC/DR) portal service provided by Global Continuity Plc. This site has information and resources on a broad range of topics.

http://www.iprepare.com/survival-kits.html
IPrepare.com sells a number of disaster and emergency kits, both for the home and business. Kits offered for sale include first aid kits, automobile emergency kits, food preparation kits, and many more.

http://www.nonprofitrisk.org/
The Nonprofit Risk Management Center offers many free publications on business continuity, natural disasters and emergency situations; business interruption insurance, information technology, and strategic risk management. It is extremely user-friendly for novices to the subject.

www.nonprofitroundtable.org/Strategic-Priorities/Preparedness-Resources/menu-id-38.
The Nonprofit Roundtable of Greater Washington has a variety of free resources on its website for preparing an emergency preparedness plan, including a plan template.

http://www.npccny.org/info/disaster_plan.htm
The Nonprofit Coordinating Committee of New York provides free information on its website, including comprehensive checklists and templates for developing a business continuity plan.

http://www.osha.gov/SLTC/emergencypreparedness/index.html.
The Occupational Safety & Health Administration provides an informative site for emergency responses and preparedness. This site provides good information regarding creating and maintaining a safe work environment.

www.ready.gov/business/index.html and http://www.ready.gov/business/other/library.html. Help with creating a business continuity plan quickly to get your organization back to business after a terrorist attack, tornado, fire or flood.

http://www.redcross.org/
The American Red Cross site contains a wealth of information regarding disaster and emergency situations, as well as business continuity planning.

http://www.rothstein.com/
Disaster recovery information regarding the industry's principal source for hundreds of books, software tools, videos and research reports.

www.sba.gov/services/disasterassistance/disasterpreparedness/index.html
The U.S. Small Business Administration site addresses disaster assistance and prevention for small businesses.

http://www.score.org/disaster_preparedness.html
Score has numerous local community sites offering small businesses with face-to-face and e-mail counseling for disaster-related events and issues.

http://www.availability.com/
A vendor-neutral site committed to the improvement of Information System processes and information/data management systems, with links to resources to help educate, analyze and remedy business continuity.

http://www.infosyssec.net/infosyssec/security/buscon1.htm
This is a comprehensive computer and network-security resource on the Internet for information system security professionals.