Employment and Labor Law

Implied Duty to Not Disclose Accounts and Trade Secrets and Exceptions to the Rule

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Booth Waltz Enterprises v. Kimlingen, 2004 Conn. Super. LEXIS 2682

Booth Waltz Enterprises was an automotive and industrial lubricant distributor based in Hartford, Connecticut that transacted with auto dealers, fleet owners, and public entities.  Mr. Kevin Kimlingen worked for Booth Waltz as a sale representative from April 2000 to October 2003.  Booth Waltz’s management was impressed by Mr. Kimlingen’s practice of “rolling”, the art of convincing his customers to follow him to a new employer.  He “rolled” forty-five accounts to Booth Waltz within his first month at the company.

Booth Waltz took advantage of Mr. Kimlingen’s talents to acquire many new clients when the company hired him but it was very cognizant that it would have to take measures to protect its interests given his history of mobility and “rolling” within the industry.  In the summer of 2003, Booth Waltz prepared a non-solicitation agreement for its employees to better regulate the activities of its sales staff.  Mr. Kimlingen expressed great reluctance to sign the restrictive covenant when he received it in October 2003 and Booth Waltz assumed he resigned from its employ when he failed sign the agreement or attend a mandatory staff meeting.

Customer Solicitation 

Mr. Kimlingen began to work for U.S. Lubes, a direct industry competitor, and he began “rolling” his Booth Waltz accounts to his new employer.  Booth Waltz sued Mr. Kimlingen in Connecticut state court and sought injunctive relief to prevent any further solicitations of its customers.  Booth Waltz argued that although Mr. Kimlingen may not have breached an actual restrictive covenant, his actions violated the Connecticut Uniform Trade Secrets Act, which by default prohibited certain competitive activities.

The company argued that the customer lists Mr. Kimlingen took with him to his new employer was Booth Waltz’s sensitive and proprietary information.  Former employees may compete with a former employer in the absence of a non-compete agreement, but he or she is still bound by a duty to not disclose trade secrets or confidential information acquired during his or her employment to the detriment of the former employer.

The Court’s Decision

The court ultimately held that Mr. Kimlingen did not violate a covenant or implied duty by “rolling” clients from Booth Waltz to U.S. Lube.  A vast majority of these accounts had long-standing relationships with Mr. Kimlingen that pre-dated his employment with Booth Waltz.  The court concluded that these customer relationships were not property of Booth Waltz and the company had no authority or legal right to label the contact information as its proprietary information.

The court noted, “in the absence of a covenant not to compete, an employee who possessed the relevant customer information prior to the former employment is free to use the information in competition with the employer after termination of the employment relationship” (Restatement (Third), Unfair Competition § 42, comment f), and denied Booth Waltz’s request for an injunctive in light of no legally binding restrictive covenant or an implied duty.

The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment and corporate law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County.  If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

Court Grants Motion for Transfer to California District Court in Non-Compete Agreement Dispute

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United Rentals, Inc. v. Pruett, 296 F. Supp.2d 220

United Rentals, Inc. was a Delaware corporation with headquarters in Connecticut that employed Mr. Lawrence Pruett from May 2001 until August 2003 in its San Juan Capistrano, CA office.  He first worked as a salesperson and then the company promoted him to branch manager.  Mr. Pruett signed an Employment Agreement after verbally accepting the branch manager position wherein he agreed to restrictive covenants preventing employment with a competitor, soliciting the company’s customers, or from disclosing trade secrets.  The agreement contained a choice of law provision that stated Connecticut law would govern legal disputes arising from the agreement and that courts (federal or state) in Fairfield County had exclusive jurisdiction.

Mr. Pruett abruptly resigned in August 2003, began to work for one of United’s competitors, Brookstone Equipment Services, and allegedly solicited United’s customers.  United Rentals sued Mr. Pruett in federal court for violation of the non-compete agreement and requested that the United States District Court of Connecticut enforce the provisions of the agreement.  Mr. Pruett however submitted motions to dismiss and to transfer the case to a court in California, where he lived and worked.

Motion to Dismiss

The court denied Mr. Pruett’s motion to dismiss but granted his motion for transfer, handing the case over to the Central District of California.  The central issues of the case were the enforceability of the forum selection clause and the court’s ability to transfer the case to another district court.  Mr. Pruett argued that it was unenforceable because he “lacked notice of its existence, because the clause is unreasonable, and because it was the product of United’s overreaching”.

The court mentioned two United States Supreme Court cases, M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972), and Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991) to establish the federal judicial system’s attitude toward forum selection clauses and their enforceability.  In Bremen, the court held that the clauses are valid and enforceable so long as there is no showing that it would be unreasonable or unjust.  This case reversed American courts’ “long-standing hostility to forum selection clauses”.  In Carnival, the court held that a forum selection clause was enforceable only if both parties were aware of its existence.

In the current case, the court denied the motion to dismiss and found that the clause was reasonable and that the written contract had indeed provided Mr. Pruett with adequate notice of its existence.

Motion for Transfer

The court did however grant Mr. Pruett’s motion for transfer under 28 U.S.C. 1404(a) which authorizes district courts to transfer civil action to other districts “for the convenience of parties and witness, [and] in the interest of justice”.  In reaching this decision, the court analyzed the convenience of the parties, the existence of the forum selection clause, and factors of systemic integrity and fairness.

Mr. Pruett bore the burden of proof to show that the transfer was in the best interest of justice and the court concluded that he meant his burden.  All the witnesses for the case lived in California, the actions that led to the suit took place in California, and the vast majority of documentary evidence (sales records, advertising information, customer lists, etc.) was in California.  With regard to justice, United Rentals asserted that a transfer to a district court in California would deprive it of uniform treatment of its employment contracts.

The court recognized that Connecticut and California law greatly differ on their treatment of non-compete agreements but concluded that California had a materially greater interest in the case “because the impact of this litigation will be felt entirely in California”.  Furthermore, the court noted that California had a right to apply its own laws in order to protect its residents from anti-competitive measures by out-of-state employers that are contrary to California’s established public policy.

This case demonstrates that the convenience of the parties and the interests of justice can at times outweigh a contractual forum selection clause.  The court analyzed these factors and concluded that the facts surrounding the case favored a transfer of venues to a district court in California.

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The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment and corporate law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County.  If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

Firing to Prevent Pension Vesting, Without More, Does Not Violate ADEA

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In this economy, companies are terminating employees in an effort to increase share value or simply improve the bottom line.  Often it is the older, more senior, and more costly employees that are the first to go.  The question sometimes arises: “Can my employer fire me to prevent my pension from vesting (thereby saving itself money) without violating the Age Discrimination in Employment Act?”  The short and surprising answer is “yes,” assuming the absence of other critical allegations necessary to sustain an ADEA claim.

A Relevant Case

In a case out of the Second Circuit Court of Appeals, a Connecticut employee alleged in his Complaint only that “he was fired by defendants because he was nearing the age of retirement.”  The lower court dismissed this claim and the appellate court affirmed because this was the only fact alleged in the Complaint as evidence of age discrimination.  The United States Supreme Court has held that the firing of an employee to prevent his pension benefits from vesting does not, without more, violate the ADEA.

What essential allegations were missing?  In order to prevail, the plaintiff had to allege facts evincing that his employer was using pension status as a proxy for age, in order to discriminate on the basis of age.  How could he do that?  One way would be to plead and prove that his pension vested due to age and not years of service.  While age and years of service are empirically connected, the Supreme Court has said that they are “analytically distinct.”  What the Complaint lacked were additional allegations supporting a claim of age discrimination, for a successful ADEA plaintiff must prove that age actually motivated the employer’s decision.

The take-away from this case is that victims of age discrimination should consult with an experienced employment law litigator to ensure that an actionable claim is properly alleged in a Complaint.  In the case referred to above, it is impossible to say whether the plaintiff would have prevailed with a more artfully crafted Complaint.  What we do know is that his bare-bones Complaint was dismissed as insufficient without ever being heard on its merits.

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The employment law attorneys in the Westport, Connecticut office of Maya Murphy, P.C. have extensive experience in the negotiation and litigation of all sorts of employment-related disputes and assist clients from Greenwich, Stamford, New Canaan, Darien, Norwalk, Westport and Fairfield in resolving such issues. Please contact our Westport office at 203-221-3100.

Court Invalidates Non-Compete Agreement for Excessive Restraint of Trade

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CT Cellar Doors, LLC v. Palamar, 2010 Conn. Super. LEXIS 3247

CT Cellar Doors was a Connecticut company owned by Mr. Claude Raffin that designed and installed custom metal basement entry doors, windows, and other accessories.  Mr. Raffin hired Mr. Stephen Palamar in January 2006 as an installer and later promoted him to operations foreman on August 21, 2007.  The promotion involved a substantial pay raise conditioned on Mr. Palamar signing a “non-competition-non-disclosure agreement”.  The parties executed the restrictive covenant wherein Mr. Palamar agreed to not compete with CT Cellar Doors anywhere within the state of Connecticut for three years following his termination from the company.

Mr. Palamar voluntarily terminated his employment on May 24, 2010, registered himself as a home improvement contractor with the Connecticut Department of Consumer Affairs, and began doing business as Custom Cellar Doors.  His new company advertised and performed the same services he performed while in CT Cellar Door’s employ.

The Dispute 

CT Cellar Doors sued Mr. Palamar in Connecticut court for “irreparable harm to its goodwill, reputation, and name” and requested injunctive relief because there was no adequate remedy at law.  Both parties agreed that the central issue of the case was “whether the agreement was enforceable under Connecticut law”.  The court and parties likewise recognized that CT Cellar Doors had the burden to show that both parties signed the agreement and that Mr. Palamar had violated its provisions.  Once/if those were established, then Mr. Palamar bore the burden to show that the agreement was unenforceable.

The parties did not dispute, as a matter of fact, that the agreement was signed and that Mr. Palamar violated its terms.  The dispute is over whether, as a matter of law, the agreement is valid and enforceable.  The court ultimately found in favor of Mr. Palamar and held that the agreement executed by the parties was unreasonable and unenforceable.

The Defense’s Argument

Mr. Palamar presented two arguments to address whether the agreement was reasonable under Connecticut law: 1) the agreement had inadequate consideration and 2) it was an unreasonable restraint of trade.  The court rejected the first argument, noted the substantial pay raise Mr. Palamar received, and held that it constituted adequate consideration.

Although that defense failed, the court agreed with Mr. Palamar that the agreement was an excessive restraint of trade and the agreement was unreasonable because it denied him the right to earn a living in his chosen profession that he had had for twenty-five years.  The court also noted that CT Cellar Doors did not present adequate evidence to demonstrate that they had experienced or were likely to experience irreparable harm.  At the time that litigation began, CT Cellar Doors had fifty clients while Mr. Palamar only had two.  CT Cellar Doors was not able to articulate a claim and present evidence that Mr. Palamar’s actions had damaged its business operations.

While CT Cellar Doors had a legitimate business interest to protect, the provisions of the non-compete went too far and placed oppressive occupational restraints on Mr. Palamar and excessively restricted his ability to secure future employment in his chose profession.  This lack of balance between the interests of the parties ultimately led the court to find the restrictions unreasonable and for it to invalidate the non-compete agreement.

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The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment and corporate law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County.  If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

What Is the Law Controlling Drug Testing in the Workplace or in Public Schools in Connecticut?

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Among employees, there are a variety of times in which they may legally be drug tested in the workplace.  Employees are often tested prior to being hired to prevent employers from hiring people who use illegal drugs.  After an employee is hired, if an employee’s supervisor has reasonable suspicion that the employee is under the influence of drugs or alcohol, they may test the employee for illegal drug use.  Employees in a workplace may also be tested post-accident to determine whether drugs or alcohol contributed to the event.

Lastly, employers may choose to conduct random testing to deter drug use.  However, Connecticut law prohibits private-sector employers from requiring employees to undergo random drug tests.  An employer must have a reasonable suspicion that the employee is under the influence of drugs or alcohol that is affecting or could affect, his/her job performance before he/she may require a test.

Who is Protected Against Drug Testing?

State and municipal employees are not covered by the state law that prohibits random drug testing, however they are protected by the Fourth Amendment which prohibits the government from carrying out unreasonable searches.  The Supreme Court has ruled that urine tests are searches and that the Fourth Amendment applies to governments acting as employers.

Federal law and regulations also require the operators of commercial vehicles over a certain size to undergo drug tests before they are hired, after serious incidents, and when there is a reasonable suspicion.  In the private sector, pre-employment drug testing is fairly common.

There are no federal or state statutes that cover drug testing of students in public schools.  Students do not have the same level of constitutional rights as adults.  A 2002 Supreme Court decision permits schools to conduct random drug testing of students who participate in extracurricular activities, but drug testing cannot be a condition for attending school.

If you have any questions regarding employment law in Connecticut, please contact Joseph C. Maya, Esq. at (203) 221-3100 or e-mail him directly at JMaya@Mayalaw.com.

Hurdles Employees Must Jump in Filing a Claim for Unlawful Discrimination

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Here in Connecticut and across the nation, employees from all walks of life routinely face unlawful discriminatory practices and treatment in the workplace. Depending on the nature of the claim, he or she may file civil lawsuits under Title VII (which prohibits employment discrimination on the basis of race, color, religion, sex, and national origin) or the Connecticut Fair Employment Practices Act (CFEPA).

However, employees need to keep in mind that before they seek recourse with the courts, they must first exhaust all of their administrative remedies. “The exhaustion requirement exists to afford the administrative agency the opportunity to investigate, mediate, and take remedial action.”[1] Failure to do so will result in dismissal of the case (see, for example, this previously-discussed case).

CFEPA Title VII

Furthermore, employees must pay attention to statutory time restrictions for filing administrative charges under Title VII and CFEPA:

To sustain a claim for unlawful discrimination under Title VII in a deferral state such as Connecticut, a plaintiff must file administrative charges with the EEOC [Equal Employment Opportunities Commission] within 300 days of the alleged discriminatory acts.[2] … CFEPA requires that a complainant file the administrative charge with the CCHRO [Connecticut Commission on Human Rights and Opportunities] within 180 days of the alleged discriminatory act.[3]

Courts are particularly cognizant of these requirements and endorse “strict adherence… [as] the best guarantee of the evenhanded administration of the law.”[4] As a result, the time bar will begin running for each individual adverse employment action against the employee on the date it occurred. Failure to timely file a claim may prevent it from being reviewed by the EEOC or CCHRO.

However, employees often endure discriminatory practices over a prolonged period of time, so even if alleged conduct falls outside of the charging period, it may be reviewable. An important exception to strict adherence is the continuing violation exception, which involves incidents occurring both within and outside the time bar. A continuing violation occurs “where there is proof of specific ongoing discriminatory policies or practices, or where specific and related instances of discrimination are permitted by the employer to continue unremedied for so long as to amount to a discriminatory policy or practice.”[5]

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As an employee, it is imperative that you understand Connecticut’s statutory scheme surrounding hiring, evaluation, and termination processes, as well as the requirements for filing a lawsuit under State and federal anti-discrimination law. The attorneys at Maya Murphy, P.C., assist clients in Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, and Westport.

If you have any questions regarding any employment law matter, please do not hesitate to contact Attorney Joseph C. Maya. He may be reached at Maya Murphy, P.C., 266 Post Road East, Westport, Connecticut (located in Fairfield County), by telephone at (203) 221-3100, or by email at JMaya@mayalaw.com.

 

[1] Stewart v. United States Immigration and Naturalization Service, 762 F.2d 193, 198 (2d. Cir. 1985).

[2] Flaherty v. Metromail Corp., 235 F.3d 133, 136 n.1 (2d Cir. 2000).

[3] Connecticut General Statutes § 46a-82e.

[4] Mohasco Corp. v. Silver, 447 U.S. 807, 826 (1980).

[5] Cornwell v. Robinson, 23 F.3d 694, 704 (2d Cir. 1994).

Preemptive Effect of LMRA Extends to Suits Alleging Liability in Tort

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Collective Bargaining Agreements (CBA)

Labor relations between an employer and a union are typically defined in a Collective Bargaining Agreement (“CBA”) between the two.  The CBA sets forth the parties’ respective rights and obligations with respect to such things as wages, hours, and other terms and conditions of employment.  The Labor Management Relations Act (“LMRA”) grants jurisdiction to the federal district courts for “[s]uits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce.”

If resolution of a state law claim turns upon interpretation of the CBA, the claim is preempted and subject to dismissal by the federal court.  But “when the meaning of contract terms is not the subject of dispute, the bare fact that a collective-bargaining agreement will be consulted in the course of state-law litigation plainly does not require the claim to be extinguished.”

A Relevant Case

A decision of the Second Circuit Court of Appeals pointed out the fuzzy line that can sometimes exist between a preempted claim and one that is not.  In Adonna v. Sargent Mfg. Co., 2012 U.S. App. LEXIS 10343 (2d Cir. May 23, 2012), a union employee brought claims against his employer for intentional and negligent infliction of emotional distress.  The employer conduct complained of included reassignment, suspension, reduction in pay, and demands not imposed on any other employee.

The Court of Appeals concluded that whether or to what extent this conduct was wrongful could be determined only by examining the CBA provisions relating to the employer’s right to manage, direct, and discipline the workforce, and set employee wages.  Because the employee’s claims were “inextricably intertwined” with the terms of the CBA they were preempted and properly dismissed by the trial court.

Employers and employees alike should be aware of the extensive preemptive effect of the LMRA.  It is the rare state-law tort claim that will not require not only the consultation, but also the interpretation of the relevant CBA, thereby resulting in preemption at the federal level.

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The employment law attorneys in the Westport, Connecticut office of Maya Murphy, P.C. have extensive experience in the negotiation and litigation of all sorts of employment-related disputes and assist clients from Greenwich, Stamford, New Canaan, Darien, Norwalk, Westport and Fairfield in resolving such issues. Please contact our office at 203-221-3100.

Court Grants Legal and Equitable Relief in Breach of Non-Compete Agreement

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National Truck Emergency Road Service, Inc. v. Peloquin, 2011 Conn. Super. LEXIS 2393

National Truck Emergency Road Service, Inc. (National Truck) was a Massachusetts corporation that engaged in interstate commerce by providing emergency road service to heavy and medium duty trucks and vans for local and national fleets.  The company hired Mr. Barry Peloquin on August 25, 2008, to work as a customer service representative.  The next day, the parties executed a non-compete agreement that prohibited Mr. Peloquin, for five years following termination, from working at a competing company within five hundred miles of the company’s headquarters located at 320 Main Street, Southbridge, MA.

The agreement also stated that Mr. Peloquin was obligated to return any company property upon termination and contained a non-disclosure provision.  Most importantly however, the covenant not to compete stipulated that in the event of a breach, National Truck would be entitled to “remedies allowed by law and equity”, therefore permitting National Truck to receive monetary damages and injunctive relief.

National Truck terminated Mr. Peloquin on October 20, 2009 and he soon found employment with a competing company in Connecticut and began servicing National Truck’s customer YRC.  The company sued Mr. Peloquin for illegally appropriating company lists and other protected intellectual property in conjunction with violating the non-compete agreement executed by the parties.

The company asked the court to enforce the provisions of the non-compete and to order Mr. Peloquin to return all proprietary documents he took home during his employment with National Truck.  The court found in favor of National Truck and granted both equitable and legal relief, although the injunction only addressed returning.

The Court’s Decision 

The court heard expert witness testimony and concluded that National Truck had $32,493.00 in damages directly attributable to illegal competition from Mr. Peloquin.  The company experienced an unusual and dramatic drop off in business from YRC commencing shortly after Mr. Peloquin’s termination.  Mr. Peloquin’s action created adverse financial consequences for National Truck, visible in the company’s lost profits and incurred expenses.

While damages are not generally awarded in cases involving breach of a non-compete agreement, the agreement itself specifically stipulated that the employer (National Truck) would be entitled to them should the employee (Mr. Peloquin) violate the covenant.  The court awarded National Truck the $32,493.00 in damages plus attorney’s fees and court costs.

The court was only willing to grant a portion of the injunctive relief sought by National Truck.  It ordered that Mr. Peloquin return all National Truck documents within thirty days and abide by the non-disclosure clause.  The court’s ruling however did not prevent his further employment with his current company because the court concluded that National Truck did not present adequate evidence to show that Mr. Peloquin violated the non-compete since litigation began or that he was likely to do so in the future.  Without demonstrating the imminent threat of irreparable harm, National Truck was not entitled to injunctive relief with this specific matter.

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The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment and corporate law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County.  If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

Court Denies Enforcement Due to Inconsistencies & Absence of Valid Contract

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Luongo Construction & Development, LLC v. Keim, 2008 Conn. Super. LEXIS 1182

Luongo Construction & Development was a limited liability corporation organized under Connecticut law with headquarters in Wallingford, CT that was engaged in the modular home industry.  The company employed Mr. Melvin Keim at its office and allegedly executed a “Non-Compete Agreement” with him on March 15, 2006.

The agreement prohibited Mr. Keim from competing with Luongo by engaging in the modular home industry within fifty miles of Wallingford, CT for a period of five years following his termination.  Luongo brought an action against Mr. Keim to enforce the provisions of the non-compete agreement when he began to work for another company in the same industry.

The Employment Agreement

The court rejected Luongo’s request for injunctive relief and enforcement of the agreement because it concluded that there was no valid or enforceable contract executed by the parties.  Luongo submitted the non-compete agreement to the court in two forms: first as an attachment to its application for preliminary injunctive relief (hereafter referred to as “Attachment”) and then as “Exhibit A” for evidence during the hearings regarding its application for an injunction (hereafter referred to as “Exhibit”).

The court noted that while the documents had similarities, there were many significant differences.  Firstly, the court identified that the documents were both photocopies since the originals could not be located, they were generic agreements that did not specifically mention Mr. Keim’s name, were dated March 15, 2006, and bore the same three signatures (Mr. Michael Luongo, Mr. Keim, and Mr. Robert G. Wetmore, the witness and Commissioner of the Superior Court).

The court went on to identify the numerous differences between the two documents and concluded that they were material differences that substantially affected the nature of the agreement’s obligations and validity.  The following differences were cited as damaging to the agreements’ integrity and enforceability: Attachment contained a different provision concerning working for a competing business, Attachment prohibited engagement in the “financial planning business” while Exhibit prohibited engagement in the “modular home business”, and the documents had significant drafting differences with respect to their provisions and formatting.  Furthermore, the court noted that the parties were never in each other’s presence to actually witness the other party sign the agreements.

The Court’s Analysis and Decision

After an in-depth analysis of the agreements and taking testimony from both side, the court held that there was not a valid and legally enforceable contract executed by the parties.  The court specifically stated that “The inconsistency of these two agreement also militates toward the court’s finding that there is insufficient evidence to support a probable cause finding of a bona fide agreement signed by the parties”.

In order for parties to create a valid contract, there has be an offer and acceptance between the parties based on a mutual understanding of the terms and obligations.  Courts have long held that mutual assent or a meeting of minds is required for a valid and legally binding contract.  In this case, the court concluded that there was not an enforceable employment contract between the parties and subsequently denied Luongo’s request for injunctive relief to enforce the provisions of the non-compete agreement.

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The lawyers at Maya Murphy, P.C., are experienced and knowledgeable employment and corporate law practitioners and assist clients in New York, Bridgeport, Darien, Fairfield, Greenwich, New Canaan, Norwalk, Stamford, Westport, and elsewhere in Fairfield County.  If you have any questions relating to your non-compete agreement or would like to discuss any element of your employment agreement, please contact Joseph C. Maya, Esq. by phone at (203) 221-3100 or via e-mail at JMaya@Mayalaw.com.

Employee Handbook Alert: Seemingly Neutral Work Rule May Violate NLRA

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The National Labor Relations Act (“NLRA”) gives private-sector employees the unqualified right to engage in “protected concerted activity” which includes discussing among themselves such things as wages, hours and other terms and conditions of employment.  An employer cannot promulgate a work rule that tends reasonably to chill employees’ exercise of that statutory right.

Karl Knauz Motors, Inc. owned and operated a BMW dealership.  Its employee handbook contained the following (apparently common sense) rule:

(b) Courtesy: Courtesy is the responsibility of every employee.  Everyone is expected to be courteous, polite, and friendly to our customers, vendors and suppliers, as well as to their fellow employees.  No one should be disrespectful or use profanity or any other language which injures the image or reputation of the Dealership.

The Board’s Decision

In a September 28, 2012 decision, the National Labor Relations Board for two reasons found the rule unlawful “because employees would reasonably construe its broad prohibition against ‘disrespectful’ conduct and ‘language which injures the image or the reputation of the Dealership’” as including employees’ protected statements objecting to and seeking improvement of terms and conditions of employment.

First, there was nothing in the rule that would reasonably suggest to employees that such protected communications were beyond the rule’s broad reach.  Second, an employee would reasonably assume that the employer would “regard statements of protest or criticism as ‘disrespectful’ or ‘injur[ious] [to] the image or reputation of the Dealership.’”

The Board took particular offense to the second section of the rule as specifically proscribing certain types of conduct and statements.  The Board construed these as workplace “lines” that a Karl Knauz Motors’ employee may not safely cross.  In the Board’s estimation, the second section of the rule prohibits not merely a manner of speaking, but rather the actual content of employee speech—content that would damage the employer’s reputation.

Consequently, a reasonable employee would conclude that protected communications about the employer’s allegedly unlawful terms and conditions of employment would expose the employee to employer sanctions for violation of its handbook rule.  Stated differently, the Board felt that compliance with the first section of the rule offered no assurance against sanctions under the second section of the rule.

Final Takeaway

Historically, NLRB decisions have ebbed and flowed depending upon the current occupant of the White House, who appoints the Board’s members.  Lately, the pendulum has continued to swing in the direction of further limiting employer rights to regulate threatening or offensive employee speech, leading one commentator to question whether at-will employment will be relegated to a historical artifact.

The takeaway from the Board’s decision vector is for employers to examine employee handbooks to compare and contrast their language with that found by the NLRB to be unlawful.  The cost of an amendment pales in comparison with the cost of an NLRB investigation and proceeding.  Remember that the NLRA protects  all private sector employees, irrespective of whether or not they belong to a union.

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The employment and labor law attorneys in the Westport, Connecticut office of Maya Murphy, P.C. have extensive experience in the counseling, negotiation and litigation of all sorts of employment-related issues and assist employers from Greenwich, Stamford, New Canaan, Darien, Norwalk, Westport and Fairfield in ensuring compliance with the applicable law. Contact Joseph Maya and the other experienced employment law attorneys at Maya Murphy, P.C. at (203) 221-3100 or JMaya@Mayalaw.com to schedule a free initial consultation.