Clermont County Enforces Non-Compete Even After Employee Placed on Paid Administrative Leave for One Year

Earlier this month, a unanimous Clermont County Court of Appeals reversed a trial court decision denying judgment to an employer who sued a former employee and her new employer for violating her non-competition and non-solicitation agreement even after the new employer put her on a paid leave of absence during the non-compete period.  Total Quality Logistics, L.L.C. v. Leonard, 2023-Ohio-2271.  The Court found that the agreement was not merely to protect the unfair poaching of its customers, but also to prevent the poaching of its employees after a significant investment in training them.  By putting the employee on a paid leave of absence, the new employer created an incentive for the employee to leave the plaintiff employer and deprive the plaintiff employer of its investment. “Allowing a competitor to circumvent a noncompete agreement by simply hiring an employee and placing the employee on paid administrative leave for the duration of the noncompete agreement would defeat the purpose of noncompete agreements, reward former employees and the competitors hiring them, and ignore the employer's legitimate business interests.”

According to the Court’s opinion, the plaintiff employer hired an inexperienced employee and spent 22 weeks training her about the industry, its business and how to win and retain loyal customers. She was required to sign a one-year non-compete and non-solicitation agreement which provided that the one-year period would be tolled while she was in violation.    After two years, she transferred to Massachusetts and became personal friends (i.e., after working hours) with employees of a few customers.  She was then recruited away by another company for its new division, which directly competed with her former employer.  She was incorrectly told that her non-compete was not enforceable in Massachusetts (which should have been suspicious when she was required to also sign a non-compete with her new employer).  The former employer learned about this on LinkedIn and brought suit the following month.  She was then placed on paid administrative leave for a year, at which time the new employer requested to dissolve the agreed preliminary injunction.  The trial court agreed, and after a bench trial limited the plaintiff employer’s damages to the $24K profit lost during the six weeks that she actively worked for the competitor and denied it attorneys’ fees as the prevailing party under the agreement.   The Court of Appeals reversed.

Non-compete agreements are only enforced to the extent necessary to protect the employer’s legitimate interest.  The trial court found that the employer’s only interest was to protect its customers from being unfairly poached and that this was sufficiently protected by placing the employee on paid administrative leave.  However, the plaintiff employer argued that it also had a protectible interest in retaining its investment of “substantial time, money, and other resources” in the employee.  It argued that the trial court had turned it into a “farm system” for the identification and training of logistics staff for its competitors.

One legitimate purpose of a noncompete agreement is to prevent 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. . . . . We have recognized that another legitimate purpose of a noncompete agreement is the retention of employees in which an employer has invested time and other resources. (bolding added for emphasis).

                . . .

            In addition to its legitimate business interest in keeping its proprietary customer information and marketing and business strategy confidential, TQL had a legitimate business interest in retaining its employees. [She] obtained her experience and skills as a freight broker in the logistics industry while being trained extensively by and working for TQL. [She] had a proven track record of success, was demonstrably skilled at developing customer relationships, and was a promising broker as evidenced by her promotions through TQL's ranks, and once she began working for Ally, by her being contacted by former TQL customers and the profits she generated for Ally in less than six weeks . . .

The upshot of [defendants’] argument is that the NCA restricts them only from competing with TQL for customers. However, the NCA is not so limited as it also restricts "employment" with a TQL competitor.  Moreover, the purpose of the NCA is to prevent not only unfair competition for customers but also for the human resources necessary to conduct business. The NCA promotes this purpose by, among other things, disincentivizing TQL employees from leaving the employ of TQL to work for a competitor. Adopting [defendants’] narrow construction of the NCA would permit competitors to acquire TQL's key and high-performing employees and placing them on paid administrative leave for a year, thus depriving TQL of the benefit of its investment in the employee and the employee's services while avoiding liability for tortious interference and breach of contract. (bolding added for emphasis).

In light of this construction, the Court also found it was an error to conclude that the employee ceased being employed by a competitor after she was placed on paid administrative leave simply because she conveyed no tangible benefit to her new employer during that time because this conclusion did not give weight to the plaintiff employer’s interest to disincentive its employees to resign for greener pastures.

Trial testimony established that Leonard signed a two-year noncompete agreement on her first day as an Ally employee, and that while on administrative leave, she continued to be on Ally's payroll, was paid her regular salary, paid taxes on her income, and continued to receive benefits. Leonard and Zambo both identified Leonard as a current employee of Ally. It is axiomatic that only an employee can be placed on paid administrative leave. The trial court focused on the fact that although she was paid during her administrative leave, Leonard did not conduct business of any kind on behalf of Ally and that her pay and benefits were "entirely gratuitous on Ally's part." That Leonard was paid for doing nothing during her administrative leave because Zambo purportedly felt responsible for Leonard's situation does not make Leonard a non-employee of Ally for purposes of the NCA.  The fact that Ally paid Leonard her full salary and benefits during her administrative leave shows that it received a reciprocal benefit. It is no different than an employee going on a paid FMLA, jury duty, or military leave and performing no services for the employer during such leave. From the time Leonard was hired to date, nothing in Leonard's status as an Ally employee changed. By being hired by Ally and by continuing to be employed by Ally, Leonard violated the noncompete provision of the NCA prohibiting its employees from being "employed" by a competitor of TQL.

The Court further focused on the fact that the employee continued to socialize with the three employees of her former employer’s customers while she was on paid administrative leave.  It found these contacts – even though purely social – were contrary to her former employer’s economic interests.

The trial court had found that the plaintiff employer had no legitimate interest in rendering the employee unemployed if she was not competing against it in business.   However, the Court found this focused more on the benefit – or lack thereof -- to the new employer and not on the interest of the plaintiff employer to retain its employee.

Ally's retention of [her] was a benefit to Ally from the outset, and a benefit Ally was able to hold onto by maintaining [her] as an employee after November 25, 2020. However, the test established in Raimonde plainly focuses upon the former employer and its legitimate interests and need for protection, not on the competitor's benefit, and thus requires that noncompete agreements be viewed through the interests of the former employer, not the offending competitor.

As discussed in the first assignment of error, TQL has a legitimate business interest in retaining its employees after it has invested time, money, and other resources in them, and preventing its competitors from recruiting those employees away. Before being employed at TQL, Leonard had no prior experience, clients, or contacts in the logistics industry. At TQL, Leonard received extensive training learning how to become a successful freight broker and was promoted due to her recognized leadership qualities. Trial testimony established that Leonard had a proven track record of success, was extremely skilled at developing customer relationships, and was a promising asset in the logistics industry. Ally's hiring of Leonard undermined TQL's legitimate business interest in retaining Leonard as its employee. The trial court erred by ignoring TQL's legitimate business interest in the retention of its experienced and skilled employees after investing time and other resources in them.

The trial court found that "[h]ad [she] been terminated [by Ally] or had she resigned after November 25, 2020, and then been rehired by Ally after a year had elapsed, the effect upon TQL would have been exactly the same as it is in the current circumstances." Not so. While the result of [her] not working for the logistics industry for a year in compliance with the NCA or her sitting out for a year while on paid leave might have been the same in that [she] performed no services in the logistics industry, [she] would have been less inclined to leave employment with TQL if there were no other employment prospects in the industry. Allowing a competitor to circumvent a noncompete agreement by simply hiring an employee and placing the employee on paid administrative leave for the duration of the noncompete agreement would defeat the purpose of noncompete agreements, reward former employees and the competitors hiring them, and ignore the employer's legitimate business interests.  (emphasis  added). 

Ultimately, the Court found that the plaintiff employer was entitled to a permanent injunction to keep the employee from working for another year and was entitled to attorneys’ fees as the prevailing party.

This is exactly the kind of non-compete case to which the NLRB objects -- disincentivizing employees from seeking higher wages and better working conditions.  

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 Rejects Free Speech and Retaliation Claim by Private Sector Employee Fired for Facebook Post

Last month, the Court of Appeals for Auglaize County affirmed an employer’s summary judgment on a wrongful discharge in violation of public policy claim where the employee had been terminated shortly after receiving complaints about a racist meme which she had posted on Facebook in June 2020.  Hall v. Kosei St. Marys Corp., 2023-Ohio-2021.    The Court concluded that employees of private employers are not protected by the First Amendment or the Ohio Constitution and, thus, do not enjoy an unlimited right of free speech.  Further, she could not show that her arguably protected conduct (in reporting another employee for inappropriate comments) motivated her termination when other employees also complained about her Facebook post and could not have been retaliating against her.  The Court also found the passage of 25 weeks between the arguably protected conduct and her termination removed any temporal proximity needed to show causation by itself.

According to the Court’s opinion, the plaintiff had been employed for several years when she posted a meme on her Facebook page which, among other things, compared BLM protestors to monkeys.  She denied that she had seen the entire photo before she posted it and argued that it was more political than racial.   Several of her co-workers and subordinates saw it and complained to Human Resources.  She was then fired and brought suit, claiming that she was fired in violation of the right of free speech.  She pointed out that one of the complaining employees was retaliating against her for reporting them twice to Human Resources in the prior few months for making racially charged comments and allegations (which were unfounded) about her and other employees. 

The Court rejected her argument that she was fired in retaliation for reporting one of her subordinates for making racially charged and inappropriate comments.  She could not show causation when other employees had also complained and lacked the same motive to retaliate against her.  The passage of 25 weeks between her arguably protected conduct and termination also meant that she could not rely on temporal proximity to prove causation. 

As for whether she could show her termination violated public policy, she could not identify any court decisions where such a public policy had been applied to a private employer and at-will employee.   On the contrary, the court cited to a Franklin County Court of Appeals decision finding that the right of free speech under the U.S. and Ohio constitutions only apply to government employers. “[I]n the absence of state action, the free speech protections of the Ohio Constitution do not provide a basis for [plaintiff], an at-will employee, to raise a wrongful termination in violation of public policy claim in this case against [the defendant company], a private employer.”

we have not uncovered a case in which the free speech protections in the Ohio Constitution have been found to provide a legal basis for bringing a wrongful termination in violation of public policy claim against a private employer in the absence of state action. We decline the opportunity to become the first court to reach such a conclusion. As such, [the plaintiff] cannot establish the clarity element of her wrongful termination in violation of public policy claim in this case. For this reason, we conclude that summary judgment was an appropriate method to dispose of this claim.

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.

Franklin County Appellate Court Rejects Discrimination Claims Based on Criminal Conviction and Non-Substantially Limiting Impairments

[Editor's Note:  On August 3, 2023, the Court deleted its original opinion and re-issued it after a request for reconsideration on the issue (noted below) about whether a request for a reasonable accommodation may constitute protected activity for purposes of a retaliation claim.  Without resolving that issue, the Court deleted the paragraph discussing that issue (as noted below) and modified the opinion, but not the result: " In light of appellant’s reconsideration motion and the accompanying amicus brief filed with this court, we reissue our June 20, 2023 decision without original paragraph 102 and with a slight modification to original paragraph 103 (now 102). Whether a request for accommodation constitutes protected activity under Ohio law is a question that warrants full briefing before definitive resolution by this court."]

Last month, a unanimous Franklin County Court of Appeals affirmed an employer’s summary judgment where the plaintiff had alleged that he had been terminated on account of his race, disability and in retaliation for engaging in protected conduct.  Childs v. Kroger Co., 2023-Ohio-2034.  The plaintiff had been hired into a bargaining unit position despite a murder conviction from when he was a juvenile and was ultimately promoted to a salaried assistant manager position before he was fired when management learned about his prior murder conviction.  The Court found that he was unqualified for his position because the company policy at the time of his termination precluded the employment of convicted murderers.

According to the Court’s opinion, the plaintiff was convicted of murder in 1996 from when he was a juvenile.  He was hired by Kroger into an hourly bargaining unit position in 2014.  He had truthfully reported that he had a criminal conviction on his employment application and claimed to have explained the details to his interviewer.  The background check only reviewed the prior 7 years and so did not pick up the earlier murder conviction.   His job history listed his prison employment as well as his current job.  It apparently did not occur to the individuals reviewing his job application that his prison employment was as a prisoner instead of as a private contractor.  In 2015, he applied for and was selected for a management training position.  In 2017, he began suffering panic attacks after the store was robbed and he was physically threatened.  He was given a poor performance evaluation a couple of months later and put on a performance plan.  He then accused his manager a few months later of being racist based on observed favoritism.  A month later, he then submitted a medical statement about his depression and asked to be transferred to another store.  He then complained again in October 2017 about his manager, who was then transferred.  The plaintiff was also transferred from Reynoldsburg to Sunbury in February 2018 and he received a better performance evaluation.

While in Sunbury, the plaintiff learned in April 2018 that an employee had been convicted as a sexual offender.  He recommended termination and participated in the union grievance process that resulted in the employee’s termination as a risk to minor employees.  Shortly thereafter, an employee was searching for information about the plaintiff’s recent motorcycle accident and discovered his 1996 murder conviction.  It was reported to management and he was fired at the end of May 2018 because company policy provided that it was a disqualifying offense.  More than a year later, the plaintiff filed suit alleging race and disability discrimination and retaliation and wrongful discharge in violation of public policy, as well as unlawful aiding and abetting and defamation.  The trial court eventually granted summary judgment to the defendants on all claims and it was affirmed on appeal.  Much of the lengthy appellate decision involves procedural and discovery issues.

The Court concluded that, despite the fact that the plaintiff had worked more than three years at Kroger and been promoted, he could not satisfy his prima facie case and show that he was qualified for his position before being fired because his 1996 murder conviction rendered him unqualified.  The plaintiff “is unable to establish the third element of his prima facie case, because his murder conviction rendered him unqualified for employment at Kroger.” Evidence was presented that the company refused to hire individuals with certain convictions and fired them if a disqualifying conviction was later discovered.   Even if murder was not a disqualifying conviction at the time he was hired, it was at the time he was terminated.

The Court also rejected his claim for disability discrimination, which was based on his depression, anxiety and PTSD.  The Court found that the plaintiff failed to show that his depression substantially limited any major life activities because he admitted that he was able to continue to work and the remaining limitations were relatively insignificant.  Although the plaintiff

 indicated that his depression impacted his ability to sleep and do household chores on some days, he did not claim that his depression affected his ability to sleep or do chores for significant amounts of time. [The plaintiff] presented no evidence indicating that his depression substantially limited his ability to think or otherwise engage in major life activities, and he affirmed that he could hold a job despite his depression. Accordingly, [he] failed to demonstrate that his depression occurred in sufficient duration and with sufficient severity to significantly limit any major life activity.

In any event, even if the plaintiff could show that he were statutorily disabled, he “also could not establish that he was qualified for his assistant store manager position either with or without a reasonable accommodation, because his murder conviction rendered him unqualified for any position of employment with Kroger.”

As for his retaliation claim, the Court initially rejected his argument that he was retaliated against for requesting a transfer as a reasonable accommodation. “A request for reasonable accommodation does not amount to “participation in any manner in any investigation, proceeding, or hearing” or “opposition to an unlawful discriminatory practice” under R.C. 4112.02(I).” In other words, Ohio law does not consider a reasonable accommodation request to be protected activity for purposes of asserting a retaliation claim.  However, the Court withdrew that part of its opinion on August 3, 2023 as noted in the Editor's Note above. 

Similarly, the Court concluded that it was not protected conduct under ORC 4112 to report the sexual offender conviction of a subordinate to management when he asserted that his termination was motivated by reporting the sexual offender despite the store manager’s resistance.

Nonetheless, his other retaliation claim had more merit.  He claimed that he was placed on a performance improvement plan after asking his supervisor if he was racially biased against him.  However, the company contended that it was based on his earlier, year-end performance evaluation.  Sadly for the plaintiff, his own comments on his performance evaluation acknowledged that his performance needed to improve and commented on specific mistakes or shortcomings that he had shown.  He also could not disprove that the company always placed low-performing employees on performance plans.  Therefore, the Court dismissed the retaliation claim.

Because all of his ORC 4112 claims were dismissed, the aiding and abetting allegations against the individual employees and managers were similarly dismissed.

The Court also dismissed the wrongful discharge claim on the basis that his murder conviction motivated his termination and not his earlier report of the sex offender employee.  He could not show that public policy was jeopardized by his reporting of the sex offender to management.  Even if that report had motivated his termination, he could not identify a public policy which was violated by his termination:

[His] termination would not have jeopardized the public policy expressed in R.C. 2950.034(A). The statute prohibits sexually oriented offenders from residing in specific locations; it does not prohibit sexually oriented offenders from working at specific locations.

Finally, the Court dismissed the defamation claim based on the incorrect report that he had failed to previously disclose his murder conviction.  He claimed – without contradiction – that he had disclosed it in his job interview.  However, he could not prove that the HR employee passed that information along to management or that the individuals who allegedly defamed him knew that he had previously disclosed it in a 2014 interview.   Further, management has a qualified privilege to discuss other employees.

Furthermore, “ ‘a communication made in good faith on a matter of common interest between an employer and an employee, or between two employees concerning a third employee, is protected by qualified privilege.’ ” . . . “Once the defense of qualified privilege attaches, a plaintiff can only defeat the privilege with clear and convincing evidence that the defendant made the statements at issue with actual malice.”

Ms. Gray and Mr. Shepard were both managers at Kroger, and their communication regarding [the plaintiff’s] failure to disclose his murder conviction was a matter of common business interest between them. As such, Ms. Gray’s statement to Mr. Shepard was subject to a qualified privilege. Because the evidence demonstrates that [he] failed to disclose his murder conviction to Kroger [in writing], Mr. Childs cannot establish that Ms. Gray made her statement to Mr. Shepard with actual malice.

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.

Supreme Court Increases Burden for Employers to Accommodate Religious Practices and Raises Questions About Affirmative Action

This morning, as the Court nears the end of its term, a unanimous Supreme Court “clarified” the 1977 Hardison “de minimis” standard in religious accommodation cases and, instead, imposed a more onerous standard on employers to accommodate the religious beliefs and practices of their employees unless it imposes a substantial burden on the business.  Groff v. DeJoy, No. 22-174 (6-29-23).   In this case, a postal worker requested to not work on Sundays due to his sabbath beliefs.  His request was accommodated until Amazon began offering Sunday delivery and the employer determined that it was an undue hardship to require his co-workers to work overtime to cover Sundays.   The Court held that “’undue hardship’ is shown when a burden is substantial in the overall context of an employer’s business.”  It also discussed the extent to which the impact of the accommodation on co-workers may be considered: “Impacts on coworkers are relevant only to the extent those impacts go on to affect the conduct of the business.” Finally, the Court concluded that other options – such as permitting shift swapping --   must be considered in evaluating the employer’s burden. 

According to the Court, the plaintiff was a rural mail carrier subject to a collective bargaining agreement.  When he was hired, he was not required to work on Sundays.  However, because of Amazon deliveries, the employer and union agreed to start Sunday mail delivery, first using employees hired specifically for weekend deliveries, then by using volunteers and then by a mandatory rotation among regular employees, like the plaintiff.  When the plaintiff refused to work on Sundays, he received progressive discipline and his shifts were covered by other employees, including the postmaster (who otherwise never delivers mail).  He eventually resigned, believing that he was about to be fired.  The lowers courts ruled in favor of the employer, noting the burden and disruption to his coworkers and the employer.

Title VII initially only prohibited discrimination "because of" religion.  In 1972, Title VII was amended to require employers to accommodate employees’ religious practices unless doing so would constitute an undue hardship on the employer’s business (after courts had rejected accommodation of Sabbath observances as unconstitutional):

“[t]he term ‘religion’ includes all aspects of religious observance and practice, as well as belief, unless an employer demonstrates that he is unable to reasonably accommodate to an employee’s or prospective employee’s religious observance or practice without undue hardship on the conduct of the employer’s business.”

   In Hardison, the Court focused whether the employer’s collectively bargained seniority system required a junior employee to be granted preferential shifts as a religious accommodation.  After concluding that Title VII did not affect collectively bargained seniority systems, the Court noted that Title VII – even as amended -  did not require accommodations that were substantial or more than de minimis. 

In this case, the Court adopted a commonsense understanding of an employer’s obligations.

In common parlance, a “hardship” is, at a minimum, “something hard to bear.” . . . . But under any definition, a hardship is more severe than a mere burden. So even if Title VII said only that an employer need not be made to suffer a “hardship,” an employer could not escape liability simply by showing that an accommodation would impose some sort of additional costs. Those costs would have to rise to the level of hardship, and adding the modifier “undue” means that the requisite burden, privation, or adversity must rise to an “excessive” or “unjustifiable” level.

Refusing to adopt the ADA test, the Court observed: “it is enough to say that an employer must show that the burden of granting an accommodation would result in substantial increased costs in relation to the conduct of its particular business.”

What matters more than a favored synonym for “undue hardship” (which is the actual text) is that courts must apply the test in a manner that takes into account all relevant factors in the case at hand, including the particular accommodations at issue and their practical impact in light of the nature, “size and operating cost of [an] employer.”

With respect to the impact accommodations may have on co-workers, the Court agreed that this could be a consideration, except to the extent that the co-workers harbor a religious (or anti-religious) bias:

both parties agree that the language of Title VII requires an assessment of a possible accommodation’s effect on “the conduct of the employer’s business. . . . As the Solicitor General put it, not all “impacts on coworkers . . . are relevant,” but only “coworker impacts” that go on to “affec[t] the conduct of the business.” . . .  So an accommodation’s effect on co-workers may have ramifications for the conduct of the employer’s business, but a court cannot stop its analysis without examining whether that further logical step is shown in a particular case.

On this point, the Solicitor General took pains to clarify that some evidence that occasionally is used to show “impacts” on coworkers is “off the table” for consideration.  . . . . Specifically, a coworker’s dislike of “religious practice and expression in the workplace” or “the mere fact [of] an accommodation” is not “cognizable to factor into the undue hardship inquiry.”  . . .  To the extent that this was not previously clear, we agree.  An employer who fails to provide an accommodation has a defense only if the hardship is “undue,” and a hardship that is attributable to employee animosity to a particular religion, to religion in general, or to the very notion of accommodating religious practice cannot be considered “undue.”

Finally, the Court found that it is the practice of religion that must be accommodated, not merely the particular request.  In that respect, the parties may have to consider other options.  In this case, that would include not merely requiring other employees to work overtime, but to also permit shift-swapping.

Title VII requires that an employer reasonably accommodate an employee’s practice of religion, not merely that it assess the reasonableness of a particular possible accommodation or accommodations. . . . This distinction matters. Faced with an accommodation request like Groff’s, it would not be enough for an employer to conclude that forcing other employees to work overtime would constitute an undue hardship. Consideration of other options, such as voluntary shift swapping, would also be necessary.

The case was remanded for the trial court to reconsider its opinion in light of the Court’s new guidance.

In other cases, a divided (6-3) Supreme Court struck down the student affirmative action practices of Harvard and North Carolina under Title VI of the Civil Rights Act as violations of the Equal Protection Clause under a strict scrutiny analysis.   Students for Fair Admissions, Inc. v. Harvard, No. 20-1199 (6/29/23).   “Many universities have for too long wrongly concluded that the touchstone of an individual’s identity is not challenges bested, skills built, or lessons learned, but the color of their skin. This Nation’s constitutional history does not tolerate that choice.”  The Court reached this conclusion after reviewing the long history of affirmative action decisions and after finding that the categories the universities considered to be too broad (not distinguishing between East and South Asians, or Hispanics, or even categorizing students of Middle Eastern descent), their goals too vague and that they disadvantaged Asian students.  Finally, it found the programs engaged in negative stereotyping:

Respondents admissions programs are infirm for a second reason as well: They require stereotyping—the very thing Grutter foreswore. When a university admits students “on the basis of race, it engages in the offensive and demeaning assumption that [students] of a particular race, because of their race, think alike.”

Earlier, a divided (5-4) Court also held litigation must be stayed pending appeals of denials of motions to compel arbitration.  Coinbase, Inc. v. Bielski, No. 22-105 (6/23/23). 

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.

Unemployment Claims Denied When Employees Resigned Without Good Cause

This Spring has brought a couple of interesting unemployment compensation decisions.  In the first, the claimant was denied compensation when he resigned because of fear of contracting COVID.  In the second, the claim was denied because the employee resigned his job without discussing his concerns with an offered promotion before turning it down.

Last month, the Franklin County Court of Appeals affirmed the denial of Pandemic Unemployment Assistance benefits, which had been previously approved, based on a warehouse worker’s fear of contracting COVID.  King v. Dir., Ohio Dept. of Job & Family Servs., 2023-Ohio-1724.  The claimant had resigned his position in May 2020 out of fear of contracting COVID.  He was initially awarded and collected approximately $10k in pandemic unemployment benefits over the next year.  However, his benefits were later disallowed and he was ordered to repay the benefits.  His appeal was denied, but the Commission granted his request to waive the overpayment collection.  He still appealed his denial of PUA to the common pleas court, but never filed a brief.  Unsurprisingly, the trial court denied his appeal because it is required to affirm the Commission if there is any competent and credible evidence in the record supporting its decision.  “Here, the evidence before the commission demonstrated, after the COVID-19 public health emergency began, [the claimant] left his employment as an Amazon warehouse worker due to his fear of contracting this disease. But an individual’s general fear of exposure to COVID-19 at the workplace is not one of the listed qualifying conditions set forth in 15 U.S.C. 9021(a)(3)(A)(aa) through (kk).”

In April, the Lucas County Court of Appeals also affirmed the denial of unemployment insurance to a claimant who lost both his full-time job and part-time job during the pandemic, after he turned down or resigned from a new full-time job offered by his previous part-time employer without adequately discussing his objections to the job offer.  Mason v. Emerald Environmental Servs., Inc., 2023-Ohio-1418.  While the hearing officer referenced both issues, she only cited to the statutory section about resigning a job without just cause.

After the claimant had been laid off from his full-time university job, his part-time employer explained that it was restructuring his part-time position offered him a full-time job with benefits, but paying slightly less per hour than his previous part-time job being managed out of a different location.  Feeling that it would involve too much travel away from his sick girlfriend and his five children, he claimed that he turned it down without discussing his specific concerns with the employer.  The employer explained that he had initially accepted the job, but then changed his mind because of his sick girlfriend.  The employer explained that it would not have involved significant travel and would have relayed that information to him if he had previously articulated that concern.  There was also testimony that the employer would have continued to employ him part-time if he had expressed interest. 

Typically, an employee has the right to resign if the employer materially changes their job, but they first need to discuss it with the employer to give the employer the opportunity to correct the situation.  In this case, the Commission determined that the employee quit without just cause because he was offered a full-time job (after losing his full-time university job) when it was explained that his part-time job was being restructured and he declined the full-time job without explanation.  The employee never established that he had been laid off or when he was fired from his part-time job.  Rather, he said that there had just been a series of discussions.  Therefore, there was sufficient evidence in the record to support the Commission’s conclusion that he had resigned and not been fired.

The Commission determined that he lacked just cause to resign his employment when he was offered a position paying $920/week (more than his $250/week part-time wages) and he failed to have any meaningful discussion about the working conditions before turning it down.  Had he discussed his concerns with his employer, he would have learned that his was being paid more  (because of the health insurance and retirement benefits) and would be travelling approximately the same amount or less as he had been. Finally, he would have been able to remain working part-time if that appealed to him more.  Because he was not involuntarily unemployed through no fault or agreement of his own, he was not entitled to unemployment compensation.

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.