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MA Pregnancy Accommodation Bill Gains Momentum

On Tuesday, April 4, 2017, the Joint Committee on Labor and Workforce Development held a public hearing on the proposed law called the Pregnant Worker Fairness Act which, if passed into law, will provide new workplace accommodations for expecting and new mothers.

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Federal Appeals Court Holds That Sexual Orientation Discrimination is Prohibited by Title VII

In a landmark decision that is sending shockwaves through the employment law bar, the 7th Circuit Court of Appeals (the federal appeals court located in Chicago, IL, which covers the states of Indiana, Illinois, and Wisconsin), issued a decision which holds that discrimination based on one's sexual orientation is prohibited under the Title VII of Civil Rights Act of 1964. This ruling is the first time that a federal appeals court has held that Title VII protects workers against discrimination...

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One Year Away from Mass Pay Equity Law – What Should Employers Be Doing Now?

The new law, the “Act to Establish Pay Equity,” was signed by Governor Charlie Baker on August 1, 2016. It replaces Massachusetts’ existing pay equity law, M.G.L. ch. 149 § 150A, in an effort to eliminate the gender pay gap by broadening the meaning of “comparable work” and implementing new rules on employees’ salaries. The new act also creates an affirmative defense for employers who conduct a self-evaluation of their pay practices. The law will not take effect until July 1, 2018, giving...

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Court Refuses to Find Target’s Discipline Policy was an Enforceable Contract

On June 5, 2017, the 1st Circuit Court of Appeals (the federal appellate court located in Boston, which covers Massachusetts, New Hampshire, Maine, Rhode Island, and Puerto Rico) decided Grant v. Target Corporation. Grant sued Target for breach of contract based on Target’s alleged failure to follow a disciplinary policy before firing him. The court found that Target’s disciplinary policy could not be relied upon as an employment contract and dismissed Grant’s claim.

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Alleged Use of Phrase “Mack Daddy” in the Workplace Enough For Race Discrimination Case to Proceed

On June 15, 2017, the United States District Court for the District of Massachusetts (the federal trial court in Boston) denied the defendant’s motion to dismiss in Campbell v. Bristol Community College. The plaintiff, Campbell, sued her former employer, Bristol Community College, alleging discrimination and retaliation on the basis of race.

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SJC Provides Additional Clarity About the Scope of the Massachusetts Wage Act

On June 26, 2017, the highest court in Massachusetts, the Supreme Judicial Court (“SJC”), decided George, et al. v. National Water Main Cleaning Company, et al. This class action law suit stems from uncertainties about assessment of certain damages under the Massachusetts Wage Act (G. L. c. 149 §§ 148, 150).

Whitney Law Group Adds Capacity in NH

WLG is pleased to announce that Marcie Vaughan has joined the firm as Of Counsel. Marcie brings many years of employment law experience to WLG. She is a cum laude graduate of Bates College (B.A.), a cum laude graduate of Suffolk University's Sawyer School of Management (M.S.), an received her J.D. from Suffolk Law School in 2006, also cum laude. Marcie's addition to WLG adds much needed additional capacity to WLG's growing practice, especially in NH.

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Marijuana Legalization in Massachusetts - Fears of Increased Federal Enforcement (Updated 1/21/18)

Status of Mass State Efforts to Roll-Out Retail Sales

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Mark Quoted in Recent Article About Severance Agreements

Mark Whitney was recently quoted in an article appearing in Massachusetts Lawyers Weekly concerning severance agreements and their impact of release language on equity rights of senior executives. The article entitled "Severance terms extinguished exec’s right to shares, options" discussed a recent Massachusetts Appeals Court decision which ruled against a former executive of a software company.

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NH Legislature Seeks to Limit Noncompete Agreements

NH follows the vast majority of states in the US with respect to the enforcement of non-competition agreements (“NCAs”). NH courts will enforce NCAs that are narrowly drawn to protect employers’ business interests in protecting confidential information and goodwill (or, business relationships).

MA Pregnancy Accommodation Bill Gains Momentum

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On Tuesday, April 4, 2017, the Joint Committee on Labor and Workforce Development held a public hearing on the proposed law called the Pregnant Worker Fairness Act which, if passed into law, will provide new workplace accommodations for expecting and new mothers.

The bill provides pregnant women reasonable accommodations including "more frequent or unpaid breaks, time off to recover from childbirth with or without pay, acquisition or modification of equipment, seating, temporary transfer to a less strenuous or hazardous position, job restructuring, light duty, break time and private non-bathroom space for expressing breast milk, assistance with manual labor, or modified work schedules” as long as the accommodation “would not impose undue hardship on the employer.”  You can view the House bill here: H.1038; and the Senate bill here: S.1023.

Last year a similar bill was opposed by business groups  However, this year the Associated Industries of Massachusetts announced last month that it reached an agreement with an advocacy group (MotherWoman) and that bills filed by Sen. Joan Lovely and Rep. David Rogers represent their consensus legislation.

As reported in the AIM Blog, the following concerns were reconciled between AIM and MotherWoman in the current version of the draft bill:

  • "Provides clarity regarding definitions and terms related to current employees in need of accommodations related to pregnancy.
  • Aligns state and federal laws regarding reasonable accommodation as it relates to the essential functions of the job.
  • Provides flexibility rather than a mandating specific types of accommodations for employers and employees.
  • Provides a reasonable mechanism for employees and the employer to achieve a reasonable accommodation by engaging in a defined process, eliminating a concern by businesses that an employee could reject multiple reasonable offers of accommodation.
  • Adds language allowing the employer to evaluate undue hardship of an accommodation and the ability of employee to perform the essential functions of the job as it relates to an employer’s program, enterprise or business.
  • Provides opportunity for an employer to request documentation for certain cases to ensure that accommodations are reasonable for both employees and employers.
  • Limits provisions to current employees instead of employees and job applicants.
  • Reduces unnecessary burdens and allows for electronic or other means other than a “poster” for notifying employees.
  • Allows for certain accommodations to be either paid or unpaid."

At this point, there appears to be substantial support for the bill in both the House and the Senate, it has the backing of House Speaker Robert DeLeo, and recently Governor Charlie Baker announced that he expects he would sign the bill.

Federal Appeals Court Holds That Sexual Orientation Discrimination is Prohibited by Title VII

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In a landmark decision that is sending shockwaves through the employment law bar, the 7th Circuit Court of Appeals (the federal appeals court located in Chicago, IL, which covers the states of Indiana, Illinois, and Wisconsin), issued a decision which holds that discrimination based on one's sexual orientation is prohibited under the Title VII of Civil Rights Act of 1964. This ruling is the first time that a federal appeals court has held that Title VII protects workers against discrimination due to their sexual orientation.

Title VII of the Civil Rights Act of 1964 makes it unlawful for employers to discriminate on the basis of a person’s “race, color, religion, sex, or national origin … .” The question before the 7th Circuit was whether discrimination on the basis of sexual orientation is a form of discrimination on the basis of “sex,” and, therefore, prohibited by Title VII.

Facts of the Case

The case, Hively v. Ivy Tech Community College, involved an openly gay professor named Kimberly Hively, who claimed that Ivy Tech, located in South Bend, Indiana, discriminated against her because of her sexual orientation. Between 2009 and 2014, Hively applied for at least six full-time positions but was not selected for any of them. In late 2013, Hively filed a charge with the EEOC, alleging that she was being discriminated against on the basis of her sexual orientation in violation of Title VII for being denied a full-time position. Then, in July 2014, Ivy Tech did not renew Hively’s part-time contract. Hively subsequently sued in federal court.

Prior Court Rulings

Ivy Tech sought to dismiss the lawsuit on grounds that Title VII did not protect against sexual orientation discrimination. The district court agreed, and dismissed Hively’s lawsuit. On appeal, a 3-judge panel of the 7th Circuit initially affirmed the trial court's decision, but in doing so the panel cautioned that it found the prior case law from the 7th Circuit to be dubious and urged further review by the entire 7th Circuit panel of judges. Hively requested an "en banc" review (a review by the entire 7th Circuit panel of judges), which the court permitted. 

7th Circuit Groundbreaking Ruling

The en banc panel heard oral argument in November 2016 and issued its decision on April 4, 2017.  In the 8-3 ruling written by the Chief Judge, the en banc panel overturned the lower court and its own prior precedent and held that Title VII protects all homosexual employees from discrimination based on their sexual orientation.  The vote was 8-3, and, interestingly, 5 of the justices who joined the majority opinion were appointed by Republican presidents.  In so holding, the 7th Circuit embraced the view long-held by the EEOC that sexual orientation discrimination is a form of "sex" discrimination, thus bringing the claim within the coverage of Title VII. 

The en banc court held that discrimination on the basis of sexual orientation is impermissible “sex stereotyping.” The 7th Circuit stated that Hively “represents the ultimate case of failure to conform to the female stereotype (at least as understood in a place such as modern America, which views heterosexuality as the norm and other forms of sexuality as exceptional): she is not heterosexual.”

The court also found that discrimination on the basis of sexual orientation is a form of associational discrimination based on sex. In Hively’s case, if the sex of her partner (female rather than male) led to her being treated unfavorably in the workplace, then that distinction is “because of sex.” The court stated: “No matter which category is involved, the essence of the claim is that the plaintiff would not be suffering the adverse action had his or her sex, race, color, national origin, or religion been different.”

Explaining the 7th Circuit's rationale in a separate (concurring) opinion, Judge Posner explained:

"[I]t has taken our courts and our society a considerable while to realize that sexual harassment, which has been pervasive in many workplaces (including many Capitol Hill offices and, notoriously, Fox News, among many other institutions), is a form of sex discrimination. It has taken a little longer for realization to dawn that discrimination based on a woman’s failure to fulfill stereotypical gender roles is also a form of sex discrimination. And it has taken still longer, with a substantial volume of cases struggling and failing to maintain a plausible, defensible line between sex discrimination and sexual-orientation discrimination, to realize that homosexuality is nothing worse than failing to fulfill stereotypical gender roles."

What does this ruling mean for Massachusetts and NH?

This ruling is clearly a huge victory for the LGBTQ community, as it represents a significant and thoroughly-reasoned departure from holdings in all other federal courts of appeal.  The 7th Circuit's ruling may represent a tipping point in federal court interpretation of Title VII, which could have a significant impact on homosexual employees in the many states throughout the United States where sexual orientation is still not a protected class under workplace discrimination law. 

For employers located in Indiana, Illinois, and Wisconsin, the 7th Circuit’s decision is binding precedent. However, the 1st Circuit Court of Appeals -- which covers ME, MA, NH, Puerto Rico, and RI) -- has thus far declined to hold that sexual orientation discrimination is prohibited by Title VI. It is important to note that both MA and NH prohibit discrimination based on sexual orientation under state law (Mass. Gen. Laws ch. 151B; N.H. R.S.A. sec. 354-A).

Click here to see the 7th Circuit's decision

Click here to listen to recordings of the oral arguments before the 7th Circuit

One Year Away from Mass Pay Equity Law – What Should Employers Be Doing Now?

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The new law, the “Act to Establish Pay Equity,” was signed by Governor Charlie Baker on August 1, 2016. It replaces Massachusetts’ existing pay equity law, M.G.L. ch. 149 § 150A, in an effort to eliminate the gender pay gap by broadening the meaning of “comparable work” and implementing new rules on employees’ salaries. The new act also creates an affirmative defense for employers who conduct a self-evaluation of their pay practices. The law will not take effect until July 1, 2018, giving employers time to evaluate their policies.

The new law defines “comparable work” as “work that is substantially similar in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions.” The old pay equity law interpreted comparable work as being “of comparable content” as well as substantially similar skill, effort and responsibility. This will presumably broaden the definition and offer more protection to employees by creating more situations where two positions can be considered comparable work.

The new law also contains a list of reasons for pay disparity that are not prohibited; a difference in pay will not be prohibited if it is based on: “(i) a system that rewards seniority with the employer; provided, however, that time spent on leave due to a pregnancy-related condition and protected parental, family and medical leave, shall not reduce seniority; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production, sales, or revenue; (iv) the geographic location in which a job is performed; (v) education, training or experience to the extent such factors are reasonably related to the particular job in question; or (vi) travel, if the travel is a regular and necessary condition of the particular job.”

Other than broadening the definitions of the previous pay equity statute, the Massachusetts Act to Establish Pay Equity will add new prohibitions that aim to further close the pay gap. First, the act makes it unlawful for employers to require, as a condition of employment, that employees refrain from inquiring about or discussing their own wages, or the wages of a fellow employee. With that said, the law does not create an obligation for an employer to disclose an employee’s wages to another employee.

Second, the statute makes it unlawful for an employer to seek wage or salary history from a prospective employee or their current/former employer. A prospective employee may voluntarily provide their salary history, and the prospective employer may contact the current or former employer to confirm that information. A prospective employer may also seek out salary history after an offer of employment with compensation has been negotiated and made to the prospective employee.

Third, an employer may not discharge or retaliate against an employee for opposing an act made unlawful by the statute, bringing a complaint, or engaging in any other protected conduct. Finally, the statute states that an employer cannot lower the wage of one employee to comply with the law.

The new act creates an affirmative defense for employers who have completed a self-evaluation of their pay practices and have made “reasonable progress” towards closing pay disparities based on gender. The affirmative defense will also be applicable to any pay discrimination claims arising under section 4 of MGL chapter 151B. The statute is vague in what it considers a valid self-evaluation, stating that it may be of the “employer’s own design, so long as it is reasonable in detail and scope in light of the size of the employer.” A self-evaluation may not be used as an affirmative defense if it is not reasonable in detail and scope, even if the employer has shown that they have made progress toward remedying pay disparity. With that said, even if the employer is not availed of the affirmative defense, they will not be liable for liquidated damages so long as the good faith evaluation was completed within three years prior to an alleged complaint.

The statute also states that evidence of a self-evaluation or any steps taken by an employer in accordance with the law is not admissible as evidence of a violation if alleged violation occurred before the self-evaluation or occurred either (1) six months after the self-evaluation or (2) within two years of the self-evaluation if the employer can show that they have developed/implemented a plan to address the pay differentials based on gender. No negative inference can be made against an employer for not conducting a self-evaluation. The statute also notes that an employer may not enter agreements with their employees to avoid compliance or make themselves exempt from claims under this law.

An employee may bring a claim against their employer either individually or as a class action suit; the Attorney General may also bring an action against an employer for unpaid wages, liquidated damages, court costs, and attorney’s fees. Plaintiffs are not required to file a claim with the Massachusetts Commission Against Discrimination before filing in court, as they are with any claims arising under ch. 151B.

An employee must bring a claim within three years of the alleged violation. The statute clarifies this by stating “a violation occurs when a discriminatory compensation decision or other practice is adopted, when an employee becomes subject to a discriminatory compensation decision or other practice or when an employee is affected by application of a discriminatory compensation decision or practice.” This means that the statute of limitations will reset every time an employee who has a potential claim receives a paycheck.

Employer Roadmap for Compliance

The first step toward compliance for any employer should be determining whether to conduct a self-evaluation of pay practices. While the new pay equity statute provides an affirmative defense to claims, the defense currently only exists under state claims, not federal claims. The Massachusetts law states that no negative inference shall come from an evaluation, but there is no way to tell, at this point, whether the same will go for any federal pay equity claims that may arise.

Other than an official self-evaluation of pay practices, employers should focus on the new law’s prohibitions and make sure their practices are in line with the new rules. Most importantly, employers should look at their hiring practices to determine whether there are any questions about pay history contained in the initial application process. Employers should also think about possibly updating their employee handbooks to make sure their policies regarding employees discussing compensation comply with the new law.

Employers should also consider training any management about the new law’s prohibitions, especially if management oversees compensation decisions.

Good-Faith Self-Evaluations

Although the Attorney General has not provided any guidance on exactly how to conduct a self-evaluation of pay practices, it is important to remember that it must be reasonable in detail and scope, which will presumably be different for every employer. Larger sized employers may also want to think about hiring a labor statistician or another qualified data analyst to conduct the evaluation; you will want someone who is familiar with the concept of pay equity and the best ways to identify pay disparity. The main goals of these self-evaluations should be to determine if there are any pay differentials among employees of different genders, determine whether the reasons for those pay differentials are prohibited under the new pay equity statute, and to identify the root causes of the differentials in order to implement internal policies to stop them.

For an in-depth self-evaluation, an employer should consider all aspects of their pay decisions. There are factors that go into all pay decisions, such as starting pay, merit-based pay increases, and promotional pay increases. The self-evaluation should consider every factor used in the salary decision making process to determine what the driving forces for each decision have been in the past.

Depending on the results of the data analysis, there are certain corrective actions that may help remedy pay equity moving forward. These may include reducing managerial discretion, providing an in-depth written record of salary decisions, and using lump-sum bonuses instead of annual merit-based salary increases (but it is important to remember that recommended corrective actions will be based on an employer’s individual self-evaluation).

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Court Refuses to Find Target’s Discipline Policy was an Enforceable Contract

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On June 5, 2017, the 1st Circuit Court of Appeals (the federal appellate court located in Boston, which covers Massachusetts, New Hampshire, Maine, Rhode Island, and Puerto Rico) decided Grant v. Target Corporation. Grant sued Target for breach of contract based on Target’s alleged failure to follow a disciplinary policy before firing him. The court found that Target’s disciplinary policy could not be relied upon as an employment contract and dismissed Grant’s claim.

Facts of the Case

Grant was a former Store Team Leader at Target in Haverhill, Massachusetts. Target is an “at-will” employer, which means that Target or any of its employees may terminate the employment relationship at any time, for any reason, or no reason at all (except for an unlawful reason, such as because of one’s race, age, gender, etc.). After he was hired, Grant received a copy of Target’s Counseling and Corrective Action policy which set forth “guidelines for disciplinary or corrective action for team members with performance issues.” Grant did not sign the policy, nor did he assent to its provisions or negotiate its terms. The policy explicitly stated that it is meant to be reference tool, it did not create an employment contract, and it did not define the employment relationship. An incident occurred at the Haverhill store in April 2015 and Grant was terminated shortly after. Grant filed suit alleging breach of contract stating that Target terminated him without first following the protocols set forth in the Counseling and Corrective Action policy. On appeal, the 1st Circuit Court of Appeals examined the legal question of whether Target’s policy constituted an enforceable employment contract.

Ruling of Law

The court ruled that Target’s Counseling and Corrective Action policy was not an enforceable employment contract and was therefore non-binding for both parties. In arriving at this decision, the court considered in detail the holdings of several previous employee handbook/employment contract. In particular, the court focused on two cases that arose in Massachusetts.

The first case listed several factors that should be considered in determining whether personnel manuals can constitute enforceable contracts:

  • Whether the manual allows the employer to unilaterally amend the terms of the policies at-will;
  • Whether the manual states that it provides only “guidance” as to the employer’s policies;
  • Whether there were any negotiations over the terms of the manual;
  • Whether the manual stated a term of employment;
  • Whether the employer called any “special attention” to the manual; and
  • Whether the employee was required to sign, assent-to, or acknowledge the manual’s policies as a condition of employment.

The second case explained that the factors listed above do not constitute an exhaustive or rigid list, but rather showcased examples of what courts will consider when determining if a binding contract existed. Additionally, the court will consider whether the employee believed the personnel manual or policies were part of the terms or conditions of employment which were equally binding on both parties and whether the employee’s belief was reasonable or not.

In the Grant case, the court found that Grant failed to provide enough “evidence that the policy and the relevant circumstances surrounding it created an objectively reasonable belief that it was a mutually binding agreement.” The court was influenced by the fact that the policy repeatedly stated that it was created for guidance purposes only, that Grant did not have to sign nor consent to it, and that Target did not call any “special attention” to it. Therefore, the court held that the policy was non-binding on both parties because Grant could not have reasonably relied on the policy as a condition of employment.

Impact in Massachusetts and New Hampshire

Because Grant was decided by the 1st Circuit, the federal courts in Massachusetts and New Hampshire are bound by this ruling. In other words, they must follow what the 1st Circuit Court of Appeals decided. While state courts can also use this ruling as a source of logical reasoning to evaluate the enforceability of personnel manuals or policies, they are not bound by this ruling.

This ruling should be a wake-up call to employers who "assume" -- without giving it much thought or investigation -- that their personnel manuals or policies are not enforceable contracts. Employers consider reviewing their policies with counsel to determine if amendment or clarification is warranted to reflect the company’s intentions and potentially reduce future liability for contract breach claims.

A full copy of the court opinion can be found here.

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Alleged Use of Phrase “Mack Daddy” in the Workplace Enough For Race Discrimination Case to Proceed

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On June 15, 2017, the United States District Court for the District of Massachusetts (the federal trial court in Boston) denied the defendant’s motion to dismiss in Campbell v. Bristol Community College. The plaintiff, Campbell, sued her former employer, Bristol Community College, alleging discrimination and retaliation on the basis of race.

Facts of the Case

The complaint alleged that, in early fall of 2012, the president and dean of Bristol Community College, along with others, repeatedly referred to a large educational grant as the “Mack Daddy” grant. Campbell alleged that the phrase “Mack Daddy” is a racially offensive slur used to describe "a black man who pimps out women." Campbell’s complaint alleges that she complained to her superiors about the choice of words and she then suffered adverse consequences including an increased workload, denial of resources, and termination. Campbell filed suit alleging discrimination and retaliation in violation of Title VII of the Civil Rights Act of 1964.

Motion Ruling

In its motion to dismiss, the defendant argued that the phrase “Mack Daddy” was objectively race-neutral and that it fell within the “stray remarks” doctrine. This legal doctrine provides that “stray remarks” made by decision makers that were unrelated to the decisional process (i.e., the decision to take adverse employment actions against the plaintiff) are normally insufficient to prove discriminatory animus.

The court denied the defendant’s motion to dismiss the case because it found that Campbell alleged enough facts in the complaint to show that high-ranking employees at Bristol Community College made a statement with racially discriminatory intent and that she stated a “plausible claim for relief.” The court referenced several 1st Circuit Court of Appeals cases (the federal appellate court located in Boston, which covers Massachusetts, New Hampshire, Maine, Rhode Island, and Puerto Rico) which explain that statements alone may not be enough to prove the employer’s discriminatory intent, but when statements are connected and related to the employer’s action, the statements may be relevant to understanding an employer’s intent. Additionally, the court stated that it is possible that the statements made were not intended to be racially charged, but more facts are needed before a complete analysis can be done.

As a result of the ruling, the case proceeds into the lengthy and expensive discovery (investigation and evidence exchange) phase.

Takeaways for Employers and Potential Plaintiffs

This case illustrates how casual or colloquial statements made in the workplace can cause big problems. While it is possible that the statements were made without racial animus, they certainly were received by Campbell as discriminatory. Managers should be on the lookout for this type of loose talk in the workplace and encourage employees to speak professionally. Employers should ensure that they have appropriate policies in place that instruct employees about the use of offensive or insensitive language. Ideally, employers should conduct training of its employees and managers on these issues.

If individuals encounter the use of similar words or phrases in the workplace and are offended by them, consult your employer’s policies and utilize the employer’s internal complaint process. If no action or investigation is taken by the employer in response to the complaint, then be aware of any retaliatory actions that the employer may take against you, similar to those alleged by Campbell above.

A full copy of the court opinion can be found here.

SJC Provides Additional Clarity About the Scope of the Massachusetts Wage Act

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On June 26, 2017, the highest court in Massachusetts, the Supreme Judicial Court (“SJC”), decided George, et al. v. National Water Main Cleaning Company, et al. This class action law suit stems from uncertainties about assessment of certain damages under the Massachusetts Wage Act (G. L. c. 149 §§ 148, 150).

More specifically, the SJC considered the following question: is the statutory interest (12%) under two Massachusetts statutes (G. L. c. 231 § 6B and 6C) still available when triple damages are awarded under the Wage Act? The answer to this question was broken down into two separate parts. The first part states that plaintiffs are entitled to prejudgment statutory interest of 12% for their lost wages and other benefits damages. The second is plaintiffs are not entitled to 12% interest on their liquidated (i.e., triple) damages.

Brief History and Facts of the Case

Prevailing plaintiffs in Massachusetts have been able to recover a prejudgment 12% interest on damages in many different types of cases including “for personal injuries to plaintiff or for … damage to property [G. L. c. 231 § 6B] … and in all actions based on contractual obligations [G. L. c. 231 § 6C].” In 2008, the Massachusetts Legislature amended the Wage Act to mandate triple damages to prevailing plaintiffs, but expressly stated that such triple damages were to be considered as “liquidated” damages. The term “liquidated damages” means damages agreed upon by the party or a reasonable expectation of damages in the event of a breach. When the Legislature amended the Wage Act to mandate triple damages, it opened the question of whether the prejudgment interest of 12% was to be added to only lost wages and other benefit awards or if it was to be added to the tripling of such amount as provided in the Wage Act.

Many employees of National Water Main Cleaning Company filed a class action lawsuit against the company and its parent company, Carylon Corporation, alleging nonpayment of wages in violation of the Massachusetts Wage Act. The class action was approved and resolved by the United States District Court of the District of Massachusetts (federal trial court) except for one question which was referred to the SJC: can plaintiffs receive the prejudgment 12% interest on all damages awarded, including the triple damages, or only part of the damages? The SJC broke the answer to this question into two parts in their decision.

Ruling of Law

In arriving at its ruling, the SJC was required to focus upon the intention of the Massachusetts Legislature when it amended the Wage Act. The defendant wanted the SJC to follow federal law, specifically the Fair Labor Standards Act (FLSA), which states that prevailing plaintiffs under that statute will receive an additional equal amount in liquidated damages. Additionally, federal law does not mandate any prejudgment interest, it is awarded by a judge. The SJC declined to infer that the Massachusetts Legislature intended to rely on the same reasoning as Congress and the Supreme Court under the FLSA. The SJC instead believed that it was the Legislature’s intent for the prejudgment interest to stay the same even after it amended the Wage Act to mandate triple damages.

Impact on Massachusetts Employers and Employees

This ruling is a King Solomon-type result for employers and employees. It appears the court sought to balance the interests of both parties. Prevailing plaintiffs are guaranteed an additional 12% on lost wages and other benefits but lose out on 12% interest for the triple, liquidated damages. Employers are mandated to pay 12% interest on lost wages and other benefits but do not have to do so for liquidated damages.

The following example illustrates how this ruling will affect employers and employees in Wage Act cases: After trial, the jury awards a plaintiff $100 in lost wages and other benefits. The Wage Act mandates that the prevailing plaintiff receive three times that amount, totaling it to $300. If we assume that 12 months passed from the time the wages were owed until the final judgment, then the plaintiff will also be owed 12% (per annum) prejudgment interest on the base amount, or $12. This would then be added to the tripled amount, arriving at a total award of $312.

It is important to remember that the Wage Act is a powerful tool for employees to seek unpaid wages and benefits and employers pay a heavy price if they violate it. In addition to the triple damages and prejudgment interest, a prevailing plaintiff is also entitled to have their full attorneys’ fees paid by the losing employer. With this recent decision, now there is further clarity about how prejudgment interest impacts the plaintiff’s recovery. The moral of the story for employers is to make sure they are in compliance with the Massachusetts Wage Act.

A full copy of the court opinion can be found here.

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Whitney Law Group Adds Capacity in NH

WLG is pleased to announce that Marcie Vaughan has joined the firm as Of Counsel. Marcie brings many years of employment law experience to WLG.  She is a cum laude graduate of Bates College (B.A.), a cum laude graduate of Suffolk University's Sawyer School of Management (M.S.), an received her J.D. from Suffolk Law School in 2006, also cum laude. Marcie's addition to WLG adds much needed additional capacity to WLG's growing practice, especially in NH.

Marcie is based in Portsmouth, NH.  For more information about Marcie, click here.

Marijuana Legalization in Massachusetts - Fears of Increased Federal Enforcement (Updated 1/21/18)

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Status of Mass State Efforts to Roll-Out Retail Sales

Massachusetts voted to legalize recreational marijuana use in the November 2016 election. After months of debate, Governor Charlie Baker signed the long-awaited marijuana bill into law in July 2017. The new law taxes marijuana between 17 and 20 percent, depending on where the marijuana is purchased. The new law also created the Cannabis Control Commission (“CCC”) which is comprised of five-member panel that oversees the implementation of the new marijuana law.

The CCC must create concrete parameters around the sale of marijuana before any sale can happen. On Monday December 11, 2017, the CCC approved the establishment of “cannabis cafés” which allows a person to go a café, buy marijuana, then consume it right there. It is not yet clear whether people will be able to smoke in thecafés, as the CCC continues to examine issues such as second hand smoke and workplace safety. The CCC decided that they will issue “social use” licenses to businesses like spas that wish to sell or use cannabis infused lotions as well as the new cannabis cafés. Massachusetts is the first state to allow this. The CCC also plans on accepting applications for social use licenses for micro-businesses and craft cannabis cultivators. The CCC to work out the details but they hope to make a decision on the licenses by October 2018.

The CCC held a number of public meetings and voted on specific regulations relating to the sale of marijuana during the week of December 11th. The hot topics of debate included: local control; cannabis cafés; delivery services; and advertising and packaging. The CCC voted on and approved a draft set of regulations in late December 2017 and filed the draft with the Secretary of the Commonwealth’s Office. (To see the draft regulations, click here.) The CCC plans on holding more public hearings relating to the sale of marijuana throughout the beginning of 2018. State law mandates that the regulations must be finalized by March 15, 2018.

Recent Developments at the Federal Level Call State Legalization Efforts into Question

On January 4, 2018, U.S. Attorney General Jeff Sessions announced the end of an Obama Era policy which instructed prosecutors not to interfere with state regulated marijuana laws and policies. (For a complete text of the announcement, click here.) Sessions explained that the Justice Department would allow individual U.S. Attorneys to decide on the enforcement of federal marijuana laws in their states. Marijuana remains illegal under federal law despite eight states legalizing recreational use. U.S. Attorneys across the country are weighing their options after Sessions’ made his announcement.

Colorado U.S. Attorney Bob Troyer explained that his office would not change their current enforcement policies. Many Massachusetts advocates of marijuana legalization called on Massachusetts U.S. Attorney Andrew Lelling to follow in Troyer’s footsteps.

In early January 2018, Lelling gave somewhat of a mixed message regarding Sessions’ announcement. He pledged that his office will continue to prosecute marijuana crimes but indicated that it will go after bulk traffickers and criminal gangs as opposed to organizations that are acting within the state regulatory framework. Lelling justified his decision by explaining that his priority is to keep communities safe from drug crimes. He stated that his office will work with state and local law enforcement to help communities who have been devastated by drug related violence and the opioid crisis. (To read the complete text of Lelling's announcement, click here.) A spokesperson for the Marijuana Policy Project stated that the people of Massachusetts voted to legalize marijuana and disrupting an emerging market could impact new tax revenue and would allow criminals to continue selling marijuana illegally. Since Sessions’ announcement, the CCC has not changed their position on implementing the regulatory process. Its priority remains with protecting the public’s safety and developing regulations that comply with Massachusetts state and local laws.

In response to Lelling's statement, many marijuana dispensaries were forced to stop accepting debit and credit cards for payments after a key processessing company pulled out of the Massachusetts cannibus market. Governor Baker issued a statement encouraging the US Attorney to focus drug enforcement efforts on the opioid crisis.  

Mark Quoted in Recent Article About Severance Agreements

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Mark Whitney was recently quoted in an article appearing in Massachusetts Lawyers Weekly concerning severance agreements and their impact of release language on equity rights of senior executives. The article entitled "Severance terms extinguished exec’s right to shares, options" discussed a recent Massachusetts Appeals Court decision which ruled against a former executive of a software company. 

In MacDonald v. Jenzabar, Inc., et al., the court found that the broad terms of a severance agreement acted to extinguish the former executive's rights to valuable stock options and preferred shares. A copy of the court's opinion may be found here. The MLW article may be found here (subscription required). 

NH Legislature Seeks to Limit Noncompete Agreements

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NH follows the vast majority of states in the US with respect to the enforcement of non-competition agreements (“NCAs”). NH courts will enforce NCAs that are narrowly drawn to protect employers’ business interests in protecting confidential information and goodwill (or, business relationships).

While the applicable law in NH comes from common law -- i.e., is contained in written decisions issued by judges -- instead of statutes, NH has enacted one law concerning the administration of NCAs and the Legislature is currently considering another law that will limit the use of NCAs.

2012 Legislation Requires Advance Notice of NCAs

In July 2012, NH enacted legislation designed to ensure that employees who are asked to sign NCAs have sufficient notice of the NCA. The law requires any employer to provide a “noncompete” or “non-piracy” agreement before or at the time of an offer of employment or an offer of change in job classification. The law is quite brief. The entire statute is two sentences:

“Prior to or concurrent with making an offer of change in job classification or an offer of employment, every employer shall provide a copy of any non-compete or non-piracy agreement that is part of the employment agreement to the employee or potential employee. Any contract that is not in compliance with this section shall be void and unenforceable.” See NH RSA 275:70.

None of the terms in the statute are defined, which will leave room for courts to interpret their meaning in the future. For example, the term “non-piracy agreement” is not a term that is commonly used in the context of restrictive covenants. Likewise, the term “change in job classification” is also vague.

To be safe, companies seeking to bind employees to NCAs or confidentiality or nonsolicitation restrictions should be careful to provide those restrictions at or before an employment offer is extended, or at or before any substantial job change or promotion is implemented.

New Bill Introduced that Will Prohibit Use of NCAs for “Low-Wage” Workers

On January 3, 2018, a bi-partisan group of state senators introduced a bill titled “An act relative to noncompete clauses for low-wage employees.” The full text of the bill can be found here: SB 423. The bill is currently referred to the Commerce Committee.

If passed in its current form, it would prohibit employers from entering into a NCA with “low-wage” employees. The bill defines a low-wage employee as someone earning $15.00 per hour or less.

This bill may be focusing too much on a lesser problem associated with NCAs. In general, employers often do not bother utilizing NCAs for low-wage workers. Employers are also less likely to expend resources enforcing a NCA against a low-wage worker. Ultimately, prohibiting NCAs for low-wage, hourly workers could benefit the few low-wage employees who are subject to NCAs.