Professional Service Agreement

Week in Review

June 15, 2015

Staples settles suit for failing to give fired executive notice of FMLA rights
Staples and one of its subsidiaries have agreed to pay $275,000 in wages, benefits, and damages to a furniture sales executive who was never notified of his rights under the FMLA when he needed to take leave to care for his critically ill wife. For two years he used personal, sick, and vacation days and worked remotely so that he could care for his wife, but was ultimately fired for failing to meet his job responsibilities, according to the DOL’s Wage and Hour Division. In September 2010 and over the months that followed, the executive told his employer, Staples Contract and Commercial, Inc., that he needed to take leave to care for his critically ill wife. He was at that time working at the company’s Columbia, South Carolina office. Although the executive was eligible for FMLA protections for those coping with the illness of a family member, no one at Staples notified him of those rights as the law requires, the WHD said in a June 4, 2015 statement. For two years, the executive used his personal, sick and vacation days, and worked remotely as needed to balance his work obligations with his need to care for his wife. In January 2012, supervisors decided that the executive wasn't meeting his job responsibilities, according to the WHD, and the company fired him. As a result, he was left without an income and critical health benefits when he most needed both. Under the court-approved consent decree resolving the litigation, Staples Inc. and Staples Contract and Commercial Inc. have agreed to pay the executive $137,500 in lost wages and benefits, plus an equal amount in liquidated damages. “When an employee must be away from work to care for a loved one, there are no second chances to get it right,” remarked WHD Administrator Dr. David Weil in the statement. “For more than 20 years, the Family and Medical Leave Act has been a critical safety net for working families. It ensures that no one should have to choose between the job they need and the family they love.”

EEOC files suit contending financial services company discriminated against transgender employee

Deluxe Financial Services Corp, a Minnesota-based check-printing and financial services corporation, violated federal law by subjecting a transgender employee to sex discrimination, the EEOC charged in a lawsuit filed by the agency on June 5. It’s the third lawsuit filed by the agency of late alleging discrimination on the basis of gender identity/transitioning status. According to the EEOC's suit, the employee had performed her duties satisfactorily in the company’s Phoenix offices throughout a lengthy tenure there. However, after she began to present at work as a woman and informed her supervisors that she was transgender, Deluxe refused to let her use the women’s restroom. Supervisors and coworkers subjected her to a hostile work environment, including hurtful epithets and intentionally using the wrong gender pronouns to refer to her. The EEOC filed suit in U.S. District Court for the District of Minnesota after first attempting to reach a pre-litigation settlement through its conciliation process. The suit seeks both monetary and injunctive relief. The latest lawsuit is part of the EEOC's ongoing efforts to implement its Strategic Enforcement Plan, which includes "coverage of lesbian, gay, bisexual and transgender individuals under Title VII's sex discrimination provisions" as a top enforcement priority.

Senate bill would ban non-compete agreements for lower-wage workers
In response to reports that Jimmy John’s sandwich shops and other retailers require their low-wage workers to sign non-compete agreements, Senators Chris Murphy (D-Conn.) and Al Franken (D-Minn.) have introduced the Mobility and Opportunity for Vulnerable Employees (MOVE) Act, which they say “will enable low-wage workers to seek higher-paying jobs without fearing legal action from their current employer.” The MOVE Act will ban the use of non-compete agreements for employees making less than $15.00 per hour, $31,200 per year, or the minimum wage in the employee’s municipality, and will require employers to notify prospective employees that they may be asked to sign a non-compete agreement. Washington Democrats have been circling the issue for some time now. In October 2014, Reps. Joe Crowley (D-N.Y.) and Linda Sánchez (D-Cal.), in a letter signed by 35 colleagues, asked the DOL and Federal Trade Commission to investigate Jimmy John’s hiring practices after media reports of the sandwich chain’s mandatory non-compete agreements came to light. Non-compete agreements are typically reserved for high-ranking executives, the representatives told the federal agency chiefs, and usually for the purpose of protecting company proprietary information—not “to intimidate low-wage workers.”

Insurer must defend nursing home in suit alleging sexual assault by employee
A Rhode Island state court has ruled that an insurer was required to defend a nursing home against negligence claims arising from an alleged sexual assault of a resident by an employee. From the viewpoint of the nursing home, the sequence of events that allegedly took place appeared to be both unexpected and unforeseen. Thus, the negligence claims potentially constituted an “occurrence,” triggering the insurer’s duty to defend the employer. A 56-year-old woman suffering from Huntington’s disease and residing at the Charlesgate Nursing Center claimed that she was the victim of a sexual assault perpetrated by a Charlesgate employee. She subsequently passed away, and her son, in his capacity as administrator of her estate, asserted an assault and battery claim against the employee (not at issue in this case) and negligence claims against Charlesgate, its partners, and two other employees. According to the complaint, the resident had cried out for help during the assault, but the defendant employees failed to respond. The complaint also alleged that Charlesgate continued to employ the attacker even after the resident informed several employees of his misconduct. The complaint set forth the following negligence claims against the nursing home defendants: (1) failure to properly supervise, train, or screen its employees; (2) failure to provide proper security measures; (3) failure to report that a resident had been abused or mistreated within 24 hours in accordance with state law; and (4) failure to discipline its employees following the alleged sexual assault. Charlesgate’s insurance policy from Medical Malpractice Joint Underwriting Association of Rhode Island (JUA) included commercial general liability coverage. JUA asserted that there was no coverage under the CGL portion of the policy because the alleged sexual assault did not constitute an “occurrence.” Rather, the insurer urged the court to view all of the facts alleged in the underlying complaint as averring “a violent, intentional sexual assault.” However, the court declined to take such a narrow view, as the complaint also included independent factual allegations offered in support of the negligence claims against the nursing home defendants. Moreover, the nursing home defendants were the insureds seeking coverage under the policy—not the employee who allegedly raped the resident. Because there were no allegations of intentional or sexual activity on the part of the nursing home defendants, the court focused its attention on the factual allegations of negligence against them. The essence of the insurer’s arguments was that, because of the intentional nature of the alleged sexual assault by the nursing home’s employee, there was no “accident” and, therefore, no “occurrence.” In the court’s view, however, this contention ignored the policy’s exclusions for sexual acts and intended injury. These exclusions would serve no purpose if all intended injuries and injuries arising out of sexual acts were excluded in the first instance by the terms of the policy itself. The insurer effectively was advocating for this result by claiming that the factual allegations of negligence did not constitute an “accident.” Because this interpretation would render the exclusions not relevant, the court declined to endorse such a reading. Accordingly, the underlying negligence claims potentially constituted an “occurrence,” triggering the insurer’s duty to defend the nursing home employer.