Photo of John P. Rodgers

John Rodgers represents public and private employers in employment-related litigation and assists them with employment policies, employee handbooks, workplace investigations, disciplinary actions, and terminations. He actively litigates employment disputes on behalf of employers and has handled discrimination and retaliation, wage and hour, FMLA, and non-compete cases in both state and federal court. He also devotes substantial attention to ERISA litigation and representing individuals and businesses in conservatorship matters. View articles by John

Employers beware: An employee does not have to use “magic words” to complain about discrimination for it to lay the basis for a retaliation claim. The Sixth Circuit made this point in a unanimous opinion in the case of Mumm v. Charter Township of Superior.

Sixth Circuit to Employers: No ‘Magic Words’ Make a Sex Discrimination Complaint Title VII Protected ActivityFacts

Susan Mumm complained to her employer, the Township, about being disciplined for performance-related reasons (she was an accountant, among other duties). After the Township addressed her complaint, Mumm’s supervisor, Ken Schwartz, asked her to withdraw the complaint.

During a subsequent meeting, Mumm stated she would withdraw her complaint only if the Township granted her an immediate pay raise of $10,000 because she was “tired of being underpaid for all these years in relation to Keith Lockie.” Lockie (male) was another Township accountant. Mumm also claims she informed her supervisor that she had consulted a labor attorney, and she intended to file a lawsuit if the Township did not address “the pay discrimination between Keith and me.”

The Township subsequently fired Mumm because it had “lost trust” in her after the meeting, which the Township considered to be the “last straw” in a number of inappropriate actions. True to her word, Mumm filed a lawsuit alleging multiple claims, including a retaliation claim under Title VII. Under Title VII, it is unlawful for an employer to retaliate against an employee for engaging in Title VII-protected activity. The district court granted summary judgment to the Township on all of Mumm’s claims, holding Mumm’s complaint did not constitute Title VII-protected activity. Mumm appealed to the Sixth Circuit.

What the Sixth Circuit Said on Appeal

The Sixth Circuit reversed the trial court. The court held that Mumm’s threat to sue was clear enough to be protected activity and the Township “should have known Mumm was charging the Township with sex discrimination.” The Sixth Circuit sent the case back to the district court for a jury trial.

In reversing summary judgment, the Sixth Circuit found that even though Mumm did not say “sex discrimination” or make clear she believed gender explained the pay difference between her and Lockie, the Township officials knew Lockie was male, knew he occupied a similar position, and knew that he (like Mumm) was an at-will, non-unionized employee.

“Mumm pointed to a specific practice she believed to be unlawful (the pay disparity between her and Lockie) and threatened to sue if the Township did not correct it. . . .It makes no difference that Mumm did not utter the magic words ‘sex discrimination.’”

The Sixth Circuit also held that a reasonable jury could find the Township’s reasons for Mumm’s discharge were pretextual.

Takeaways

This case is a good lesson for employers dealing with employees who raise complaints.

  • Don’t be picky when determining whether an employee has complained about discrimination. As the Sixth Circuit found, an employee does not have to use certain “magic words” to engage in protected activity. If it is a close call, treat it like a discrimination complaint.
  • If an employee complains about something you think could be about discrimination (even if the employee did not expressly say it), treat it accordingly. Investigate that complaint.
  • Don’t retaliate against an employee for bringing it up. You can address issues, discipline if necessary, etc., but don’t base a decision on the fact that the employee complained. Otherwise, you may have to be explaining yourself to a jury.

Employee Quits and Then Slips: Covered Under Workers’ Comp or Not?Is an employee who quits her job then injures herself before she gets out the door still covered by workers’ comp? In a recent Tennessee case of first impression, the court ruled that after an employee says “I quit,” the employee remains employed for a “reasonable period of time” to “effectuate the termination of her employment.” Injuries occurring within that reasonable length of time are covered under workers’ comp.

The Facts

Melissa Duck worked as a clerk at a convenience store. When she clocked in for work one day, her immediate supervisor, Jason Stanford, was defrosting and cleaning an ice cream freezer. Mr. Stanford asked Ms. Duck to work the cash register while he finished cleaning the freezer. Ms. Duck said she did not want to run the cash register. Mr. Stanford then asked if she would like to instead clean the ice cream freezer while he operated the cash register. Ms. Duck refused to do that as well.

Ms. Duck then began gathering her personal belongings. Mr. Stanford asked if she was leaving, and she replied “yes.” Then, Mr. Stanford asked if she was quitting, and she responded “yes!” As she was leaving, Ms. Duck slipped and fell in a puddle of water on the floor next to the ice cream freezer that she had just refused to clean. She felt pain in her lower back, left arm, and her shoulder, and she did not report to work again.

About two months later, she filed a workers’ comp claim. The company’s insurer denied the claim because the injury did not occur during the course and scope of her employment (since she had quit before she was injured). Ms. Duck pursued the claim and the Court of Workers’ Compensation Claims ruled in her favor, finding that she remained in the course and scope of employment “for a reasonable period of time to exit the premises of her employment.” The employer appealed, and the Workers’ Compensation Appeals Board ruled for the company, holding that the injury did not arise in the course and scope of employment because the employment relationship ended before the fall.

The Tennessee Supreme Court’s “Reasonable Time” Approach

Ms. Duck appealed to the Tennessee Supreme Court, and her persistence paid off. The Tennessee Supreme Court’s Special Workers’ Compensation Appeals Panel held that:

“an employee whose employment is terminated remains covered by the Workers’ Compensation statutes for a reasonable period of time for the employee to effectuate the termination of employment, such as by gathering belongings and exiting the workplace.”

In this case, Ms. Duck remained covered by workers’ comp while she was leaving the worksite (1) “because the injury occurred within a reasonable time after termination of her employment” and (2) “because walking to the door of the convenience store to exit the workplace was a normal incident of the employment relation.” The appellate panel recognized in making its decision that this case “involves facts that are arguably not sympathetic to the claimant.”

In adopting this “reasonable time” approach, Tennessee joined a majority of jurisdictions that follow a similar rule (including Alabama, Florida, and Georgia). Some jurisdictions (for example, Nevada) have an “immediate termination approach,” which means that an employee’s workers’ comp coverage “terminates immediately when an employee quits or is fired.” This immediate termination approach is the minority rule, however.

Takeaways

If you have an employee who gets injured while he or she is in the process of quitting, check your state law. In most jurisdictions, including Tennessee, just because an employee quits does not mean that she loses her workers’ compensation rights.

Employers should take safeguards, if possible, to make sure that separated employees leave the premises safely after they have resigned or have been discharged. Otherwise, you may end up paying for an employee’s workers’ comp claim, even after an employee (no matter how disrespectfully) has quit. On balance, that might be better than having to deal with the former employee’s tort claim . . . just sayin’.

Refer to This: Referral Sources Can Be a Legitimate Business Interest for Non-Compete Purposes in FloridaCan relationships with referral sources give rise to a legitimate business interest sufficient to enforce a non-compete? The answer is yes, at least in Florida.

A Little Helpful Background

Generally speaking, non-compete agreements (that prevent a former employee from working for your competitor) are not enforceable unless they protect an employer’s “legitimate business interest.” Non-competes that merely serve to prevent ordinary competition are generally not enforceable because they are simply a restraint on trade. Rather, there has to be something that would give the former employee an unfair advantage in future competition with the employer. This “something more” is oftentimes referred to as a legitimate business interest.

An employer seeking to enforce a non-compete with a former employee must convince the court that it is seeking to protect a legitimate business interest (not just trying to keep the employee from competing). In other words, if there is a legitimate business interest at stake, the court might enforce the non-compete; if there is no legitimate business interest, then the court likely will not. Note that non-compete law is entirely state specific—so check your state statute and caselaw.

What Happened in Florida Last Week (Other than the Hurricane)

Now, back to Florida. Last week, the Supreme Court of Florida ruled that a home healthcare company’s referral sources can be a legitimate business interest. There were two separate cases, both involving a marketing representative for a home healthcare company. Both marketing reps’ job duties primarily consisted of cultivating relationships with referral sources (usually healthcare providers), so those referral sources would refer patients (i.e., paying customers) to the home healthcare companies.

Both of the marketing reps signed non-competes prohibiting them in one way or another from soliciting referral sources for competing home healthcare companies. During their respective employments, the marketing reps developed relationships with referral sources, presumably using their employer’s funds to do so. Subsequently, both of the marketing reps resigned their employment, went to work for competitors, and solicited the referral sources that they had worked with during their prior employment. The former employers said this behavior violated their non-competes (with one even alleging that the employee “absconded” with the referral source list).

The original employers suffered a loss in new patient referrals and revenue, and they filed suit. Florida’s lower courts split on this issue. One court dismissed the case finding that referral sources did not constitute a legitimate business interest. The other court entered a temporary injunction in the employer’s favor, with an implicit finding that referral sources did constitute a legitimate business interest.

The Supreme Court of Florida construed Florida’s non-compete statute and held that it did not exclude referral sources from being a potential legitimate business interest. The court further held that home health service referral sources can be a protected legitimate business interest under Florida’s non-compete statute because they are a home health company’s “most important business asset.” In its unanimous opinion, the court wrote:

“Moreover, it seems obvious that allowing an employee to work for a short period, receive pay to cultivate referral sources using a [home health company’s] resources, and then remove advantageous information to a direct competitor to solicit those same referrals – all of which was precluded by a non-compete contract that the employee signed – would not only condone but actually encourage unfair competition.”

The issue of whether referral sources are legitimate business interests may be hotly contested under many states’ non-compete laws. The Florida high court was quick to caution, however, that its ruling was industry-specific and depended on the facts and circumstances of each non-compete case.

Employers should be cautious not to interpret this decision as a ruling that all relationships with referral sources can give rise to a legitimate business interest sufficient to enforce a non-compete. As lawyers are fond to say, it all depends.