Our “Top Five to Ten” List of Important Recent and Upcoming Cases
As we turn the page on 2020, we offer a brief look back at several significant employment decisions over the past year.
At the federal level, the U.S. Supreme Court issued a landmark decision in Bostock v. Clayton County, 140 S.Ct. 1731 (2020), recognizing that sexual orientation and gender identity are protected by Title VII. Click here to read more on the decision.
In Our Lady of Guadalupe School v. Morressey-Berru, 140 S.Ct. 2049 (2020), the U.S. Supreme Court also weighed in on the scope of the ministerial exception under federal anti-discrimination laws. At issue before the Court was whether the First Amendment of the U.S. Constitution prohibits courts from intervening in employment disputes (e.g., discrimination claims under the ADA and ADEA) involving teachers at religious schools. The Supreme Court ruled that “[w]hen a school with a religious mission entrusts a teacher with the responsibility of educating and forming students in the faith, judicial intervention into disputes between the school and teacher threatens the school’s independence in a way that the First Amendment does not allow.”
Interestingly, the scope of the ministerial exception and its application remain open issues that the Massachusetts Supreme Judicial Court (“SJC”) will likely address in 2021. Keep reading for our Cases to Watch.
Also at the state level, the SJC issued several important employment decisions. In Hlatky v. Steward Health Care Sys., Inc., 484 Mass. 566 (2020), the SJC affirmed a $10 million breach of contract damage award in favor of a medical researcher, finding that the damages in question, including the loss of her laboratory, equipment, and cell samples, were not too speculative and constituted the loss of her “life’s work.”
In Parker v. Enernoc, 484 Mass. 128 (2020), the SJC clarified that commissions are wages under the Massachusetts Wage Act (and subject to treble damages when unpaid) as soon as the employee completes the work. The SJC also suggested that treble damages may be available where an employer terminates an employee to avoid paying such commissions. Click here to read more.
Not all important decisions from 2020 came from the highest courts in the land. Below are a few important 2020 cases that may have flown under the radar, as well as a few to keep an eye on in 2021.
Ever since Massachusetts enacted statutory non-compete reform in 2018, courts have been casting a critical eye towards post-employment restrictions – even those not expressly covered by the new law (i.e. non-solicitation provisions). As the SJC re-affirmed in Automile Holdings, LLC v. McGovern, 438 Mass. 797, 808 (2020), a post-employment restriction is “only reasonable, and thus enforceable, if it is (1) necessary to protect a legitimate business interest, (2) reasonably limited in time and space, and (3) consonant with the public interest.”
Below are a few recent examples where Massachusetts courts have refused to enforce over-reaching restrictions.
New Employer’s Solicitation Not a Violation by Former Employee
Townsend Oil Co., Inc. v. Tuccinardi, C.A. No. 04024 (Suffolk Sup. Ct. Jan. 16, 2020)
When Tuccinardi left his employment with Townsend Oil in 2019, he was bound by a post-employment restriction that stated he could not “solicit or attempt to solicit, directly or indirectly” any client or customer of his employer. Two weeks later, he joined Devaney Energy. After Devaney Energy sent out a mailer to potential customers, listing Tuccinardi as the contact-person, Townsend Oil sued for breach of Tuccinardi’s non-solicit obligations.
The court declined to enforce the restrictions. Noting that Tuccinardi was not involved in the mailers’ design or distribution, the court found no evidence that Tuccinardi engaged in prohibited “indirect solicitation.” Further, relying on the dictionary definition of “solicit,” the court held “it is not at all clear that Tuccinardi would violate his non-solicitation obligations by accepting [a call from a former customer] or explaining Devaney’s current offer to new customers.” The court also reiterated a well-established principle that a post-employment restriction is enforceable only “to protect the employer’s good will, not to appropriate the good will of the employee.”
Former Employer May Not Harass and Threaten Enforcement in Bad Faith
Eaton v. Veterans Inc., 435 F. Supp. 3d 277 (D. Mass. 2020)
When Eaton was hired by Veterans, she signed a two-year non-competition and non-solicitation agreement. When she was later promoted, she was not asked to sign a new agreement. She was unhappy in her position and left for a similar position elsewhere. A few days later, Veterans called her and asked if she had accepted the new position. Eaton alleged that after she confirmed her new position, Veterans made no effort to ask whether she would be using their confidential information or trade upon its goodwill, nor did Veterans “identify any legitimate business reason that would support the enforcement of the non-compete agreement so as to preclude Ms. Eaton from continuing her work at [new employer].”
Instead, Veterans immediately called Eaton’s new employer and threatened to take legal action if it did not sever its relationship with her. Because of this call, Eaton’s new employer fired her. Eaton brought claims against Veterans, including for tortiously interfering with her new employment. The court allowed Eaton’s claims to proceed—and denied Veteran’s motion to dismiss—noting “the reasonable inference that [Veterans] threatened legal action in bad faith and did not seriously consider initiating any judicial proceeding against” Eaton or her new employer.
The law is clear that officers, directors, and high-level executives owe their employers fiduciary duties and must protect their employers’ interests, including by not actively competing with their employers during their tenure, even without an express covenant so providing. What is less clear, however, is whether fiduciary duties apply to employees farther down the chain of command.
Not All Managers Are in a “Position of Trust and Confidence”
MAP Installed Building Products of Seekonk, LLC v. Ivie, C.A. No. 1807 (Suffolk Sup. Ct. Apr. 17, 2020)
While still employed as a Production Manager at MAP, Ivie decided to start his own company to compete with MAP, and began taking steps to create a new company, including buying equipment, filing paperwork with the state, and soliciting other employees to come work at his new venture. The court held that notwithstanding his title as “manager,” there was scant evidence that Ivie, as a Production Manager, occupied “a position of trust and confidence” necessary to create a fiduciary duty. In the absence of such a duty, the court found that Ivie did not take any steps that were actionable by his former employer.
The court reiterated that there is no bright-line rule around which employees owe fiduciary duties. Any employee planning to compete with his or her employer should be cautious, but as this case illustrates, planning to compete can be done lawfully in certain circumstances.
Layoffs, RIFs, and Reorganizations
It is important to remember that neither a global pandemic nor an economic recession shield an employer’s unlawful employment practices. Rather, as the SJC has noted, that an employer may be required to “reduce its workforce does not mean that it is free to make its employment decisions on impermissible grounds: ‘even during a legitimate reorganization or workforce reduction, an employer may not dismiss employees for unlawful discriminatory reasons.’” Sullivan v. Liberty Mut. Ins. Co., 444 Mass. 34, 41–42 (2005). One recent decision from the Massachusetts Commission Against Discrimination (“MCAD”) highlights a re-organizing employer’s obligation to take into account reasonable accommodations when transferring a disabled employee.
Right to Reasonable Accommodation in Connection With a Transfer / Reorganization
Cooper v. Raytheon, MCAD No. 11-BEM-01635 (Full Comm’n June 29, 2020)
Cooper, an employee with a traumatic brain injury, performed his job well – with certain reasonable accommodations – for eight years, at which point his business unit was reorganized and he was transferred to a new position where he was not provided accommodations. Thereafter, he was fired for alleged poor performance. After Cooper proved his case before an MCAD Hearing Officer, Raytheon appealed, arguing it had the right to alter or expand a disabled employee’s job duties.
On appeal, the MCAD conceded that, generally, an employer has such a right, “but of course that is not the full story.” As the MCAD pointed out: “An employer does not have the right, however, to terminate an employee with a known disability by transferring them to a different job with new duties without any consideration of reasonable accommodation.”
Cases to Watch in 2021
The Scope of The Ministerial Exception
Boyd v. Gordon College, 2020-P-0614 (Mass. Supreme Judicial Court)
At issue in this case, currently before the SJC, is the scope of the ministerial exception and whether it applies to all employees of religious institutions or only a subset. Professor DeWeese-Boyd is a social work professor at Gordon College (an evangelical Christian liberal arts college), and was denied a promotion to full professor after her vocal advocacy on behalf of LGBTQ+ individuals and against the college’s anti-LGBTQ+ policies. She asserted discrimination and retaliation claims under Massachusetts law. The College argues that it is protected from application of the state law because it is a religious institution and Professor DeWeese-Boyd is a ministerial employee. This argument relies on the ministerial exception under the First Amendment, which shields religious institutions from liability for employment discrimination against their employees who are “ministers.” Whether Gordon College is a protected institution and whether a social work professor is a “minister” are issues to be decided by the SJC.
Discriminatory Remarks – When They Become Actionable
Robert Collier v. Dallas County Hosp. Dist. d/b/a Parkland Hlth & Hosp. Sys., 19-10761 (U.S. Supreme Court)
Under Massachusetts law, a single, isolated comment may be actionable as creating a hostile work environment. The issue is not numerosity but, rather, whether the discriminatory comment had such a humiliating, stigmatizing, and intimidating effect on the employee that it interfered with the employee’s ability to fully participate in the workplace. It is clear that some words are so offensive that a single utterance may give rise to violations of the Massachusetts anti-discrimination statute.
The standard under Title VII is less clear. At issue before the U.S. Supreme Court in Robert Collier v. Dallas County Hosp., is whether an employee’s exposure to the N-word in the workplace is severe enough to send his Title VII hostile work environment claim to a jury, and whether and in what circumstances racial epithets in the workplace are “extremely serious” incidents sufficient to create a hostile work environment under Title VII, rather than nonactionable “mere utterances.”
Unfair and Deceptive Practices – M.G.L. c. 93A in the Employment Context
Governo Law Firm v. Kendra Bergeron, et al., SJC-12948 (Mass. Supreme Judicial Court)
Massachusetts has strong statutory protection against unfair and deceptive business practices, see M.G.L. c. 93A (“Chapter 93A”), which provides for both multiple damages and attorney’s fees awards. However, it has long been understood that Chapter 93A protections and remedies do not extend to the employee-employer relationship. A case currently before the SJC is seeking to revisit that understanding.
The case involves a Chapter 93A claim brought by a law firm against its former employees, attorneys who allegedly took electronic data from the firm while employed there. The case raises the issue of whether an employer may assert a viable Chapter 93A claim against an employee who engaged in unfair business practices (a) while acting outside the scope of employment, and (b) in direct competition with the employer.