Employer Defenses to Protect Your Business from Employment Disputes

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The Coronavirus (or “COVID-19”) crisis is generating seismic changes throughout the economic landscape of many, if not all countries throughout the world. Such changes force business owners and employers to consider how they manage their business operations, which in turn make it difficult to manage their employees. This translates to a number of employment disputes as an aftermath of furloughing, reassignment, remuneration and the like.

Employers need to ponder about how they can manage such heightened levels of not only legal but also reputational risks as employment claims are predicted to rise as the world deals with the pandemic. Having some knowledgeable output from a team of professionals who are adept in labor and employment law would be a safety net for any employer that might face such claims.

I. Employer Disputes: Breach Of Contract

The employment contract is probably the most important thing in any employment process. The contract contains all the vital aspects of an employee’s time with the company. Disputes concerning employment contracts can arise just as they can arise with any other type of contract. Employment disputes may be a result of a breach in the employment contract when either the employer or the employee didn’t fulfill their end of the bargain without a legitimate, lawful excuse. The following are common types of employment contract breaches.

Types of Contract Breaches

A. Minor or Partial Breach

This type of breach simply means that a portion of one of the terms in the contract is not fulfilled or implemented correctly. The breach may be insignificant such that the contract can still be completed; or, though it may not affect the entirety of the contract, a minor breach may be a big deal too.

B. Material Breach

A breach is likely material if it results in significant damage for the nonbreaching party. This means that the contract violation is so severe that it hinders the nonbreaching party from fulfilling his duties with regards to the fulfillment of the contract. This type of breach is also often referred to as fundamental breach of a contract. This breach may be too damaging for one party that they can terminate the contract or sue for damages incurred.

C. Anticipatory Breach

This type of breach arises when one party realizes that the other party may not be able to hold up their end of the contract in the future. This breach entitles the nonbreaching party to terminate the contract and sue for damages before the breach happens. An anticipatory breach is bad news for a business owner or employer as these breaches can waste both money and time, not to mention the frustration it can bring to everyone involved.

D. Actual Breach

Contrary to anticipatory breach, an actual breach occurs when one party refuses to either partly or completely uphold their side of the bargain when the contract is already in effect.

Defenses for a Breach of an Employment Contract

A. Common Defense

If the violation of the contract is brought by a unilateral mistake, which is made by only one party, then there is no reason for a contract to be void. Unless the other party is aware of the said mistake, then there is a high possibility that the court will not honor the termination of the contract. However, there are instances where the court may order a contract reformation as a remedy to correct the unilateral mistake.

B. Duress

Duress is when an individual is forced to act against their free will by use of threat or force. This can be a defense for employment contracts as it prevents a party from being forced to enter unwillingly into a contract through any form of blackmail, physical harm, or other forms of force. Courts will deem a contract unenforceable if there is any indication of any type of duress.

C. Undue Influence

A lesser form than duress occurs when a person takes advantage of a position of power over another individual, and this position of power causes them to feel pressured. Courts tend to look at the power relationship between the parties to determine whether it is reasonable to enforce the contract between two parties.

D. Unconscionability

An unconscionable contract is extremely unjust or overwhelmingly one-sided, and usually is in favor of the one who holds the more superior bargaining power between two parties. Typically, these types of contracts are held to be unenforceable due to its unfairness.

E. Misrepresentation

This usually occurs when one party makes a mistake in misrepresenting a material matter, such as vital information and the other party believes and relies on it. This can also be an omission or concealment of pertinent facts and information. Fraud is a more severe form of misrepresentation as an individual intentionally misrepresents or holds back facts and information vital to the contract, thus making it unenforceable.

F. Impossibility or Impractical

This is usually a situation where one party fails to fulfill the terms of the contract due to those terms being either impossible or impractical. Courts will determine if there is indeed an impossibility for the concerned party to fulfill their end of the contract.

G. Frustration of Purpose

Frustration of purpose occurs when an unexpected event or unforeseen circumstances threaten a party’s principal purpose for entering into a contract.

Since contracts are so common in today’s world, employers and business owners are likely to encounter them at some point in time. Breach of contract might be overwhelming, but it doesn’t have to be. Being well-informed about contract breaches and defenses can help you easily navigate around the legal landscape. It also helps if you have someone knowledgeable about contract and employment law. Contact Trembly Law Firm for all your contract and employment law concerns.

II. Americans With Disabilities Act (ADA) Defense

The Americans with Disabilities Act (ADA) is a civil rights law which prohibits discrimination against people with disabilities. ADA eliminates the barriers to the participation of people with disabilities in several areas of living and working in America including employment, public accommodations, transportation, and access to national and local government programs and services.

America’s promise of equal access to opportunity for every citizen was the foundation of ADA. This federal law is also beneficial for businesses because being inclusive of people with disabilities gives them a competitive advantage.

A claim of a disability discrimination by an employee to an employer is a weighty accusation. However, there are a number of ways an employer can defend themselves against such claims.

A. Undue Hardship

Undue hardship is an accommodation action that causes significant difficulty or expense on the employer. This can include actions that are unnecessarily expensive, extensive, substantial, disruptive, or those that would essentially alter the employer’s business operations. Under the ADA, an ADA-covered employer has no responsibility to make accommodations that would impose an undue hardship on their part.

According to the Equal Employment Opportunity Commission (EEOC), which enforces workplace anti-discrimination laws, determination of undue hardship should be based on several factors, including, but not limited to the following:

• The nature and cost of the accommodation needed;
• The overall financial resources of the facility making the reasonable accommodation, the number of persons employed, and the effect on expenses and resources;
• The overall financial resources, size, number of employees, and type and location of facilities of the employer (if the facility involved in the reasonable accommodation is part of a larger entity);
• The type of operation of the employer, including the structure and functions of the workforce, the geographic separateness, and the administrative or fiscal relationship of the facility involved in making the accommodation to the employer;
• The impact of the accommodation on the operation of the facility.

However, an employer cannot claim undue hardship based on other employees’ or customers’ fears or prejudices toward the employee’s disability, or that the provision of such accommodations might have a negative impact on the morale of other employees.

Reasonable accommodation which won’t cause undue hardship applies to:

• The hiring process
• Benefits and privileges of employment
• Working conditions, including:
  • Leave requests
  • Changes in work schedule or part-time requests
  • Reassignment
  • Changes in workplace policies, testing or training
  • Job restructuring
  • Obtaining or modifying equipment
  • Accessibility changes to facility
  • Work at home requests

B. Direct Threat

Under the direct threat defense, an employer has the option to refuse to hire an applicant or fire an employee who poses a direct threat to the workplace, and no reasonable accommodation available can negate the threat.

An employer’s assessment of whether an individual poses a direct threat should be based on reasonable medical judgment and not based on fears, misconceptions, and stereotypes of the disability. Employers should consider the following factors in determining whether an individual poses a direct threat:

• The duration of the risk
• The nature and severity of the potential harm
• The likelihood that the potential harm would occur
• How soon the potential harm may occur

For example, an employee with a history of uncontrolled epilepsy and frequent seizures who operates heavy machinery might pose a direct threat not only to themselves but to other people in the workplace as well.

III. Workplace Discrimination Defense

Discrimination is the act of distinguishing people based on several factors such as ethnicity, gender, skin color, disability, religion, or sexual orientation. Discrimination occurs when a person or a particular group of people are treated less favorably than the way other people are usually treated. Workplace discrimination is a serious matter. Most employees fall into some protected class, and discrimination against them in the workplace is illegal by federal and state laws.

The EEOC is responsible for the protection against employment discrimination. The law enforced by the EEOC protects employees from discrimination when it involves the following actions:

• Unfair treatment
• Harassment
• Denial of a reasonable workplace change necessary because of religious beliefs or disability
• Improper questions about or disclosure of genetic information or medical information
• Retaliation due to a complaint about job discrimination or assistance to a discrimination proceedings

Defenses for Workplace Discrimination

Prevention is the best course of action against a workplace discrimination claim. However, even with the most meticulous prevention strategy, there are still instances where employers face a discrimination claim. So, how can employers counter such claims? There are several defenses in employer discrimination claims, including:

A. Bona Fide Occupational Qualification (BFOQ)

The BFOQ recognizes that in some extremely rare circumstances, the very nature of a job may require an employer to make employment decisions based on several qualities or attributes that would be discriminatory when considered in other contexts. However, in order to use the BFOQ exception, an employer must prove that no member of the group they are discriminating against could perform the job and that the BFOQ is reasonably necessary to the operation of the business in order to avoid liability for potential discrimination.

For example, a religious institution or school may only hire members of their church and reject those from other religions. Another instance is the mandatory retirement age requirement for airline pilots because of safety concerns. Research shows that older pilots are significantly less safe when they reach a certain age, and so mandatory retirement age requirements have been deemed acceptable.

B. Business Necessity

While the EEOC prohibits the use of hiring criteria, the concept of business necessity can be used by an employer to justify their decision to use such criteria that may affect a particular group in the assumption that there is a legitimate business reason to do so. These employment criteria are allowed on the condition that they are job related and consistent with business necessity.

An employer must consider the following elements to establish the business necessity defense:

• The ultimate business goal must be essential to the business.
• The tasks for which the practice measures ability are substantial to achieving the business ultimate goal.
• Workers selected for the said positions must have the capability to perform the tasks associated with the positions.
• The selected practice is necessary to measure the ability to perform the tasks.

C. Seniority System

The Age Discrimination in Employment Act (ADEA) prohibits an employer from discriminating against an individual on the basis of age. Moreover, the Florida Civil Rights Act provides additional protection with regards to age including the following:

• An employer cannot limit, segregate, or classify employees or job applicants in a way that deprives them of employment opportunities or affects their status as employees solely on the basis of age.
• Employment practices cannot fail or refuse to hire someone for employment because of their age.
• Labor organizations cannot exclude an individual from membership on the basis of age.
• Employers, employment agencies, labor organizations, and other related entities cannot publish or print notices or advertisements for employment that contain discriminatory clauses on the basis of age.

However, one defense that employers can utilize is the seniority system. This employment system grants rights and benefits to employees according to the length of their service. It offers rewards, opportunities, and other employment advantages to employees who have been with the company for a longer period of time. Simply put, a seniority system relates to length of employment. While it may seem discriminatory to some, it is not in any way meant on a discriminatory basis.

IV. Fair Labor Standards Act (FLSA) Defense Litigation

The Fair Labor Standards Act (FLSA) imposes standards for minimum wage, overtime pay, child labor, and recordkeeping affecting employees in the private sector as well as in federal, state and local governments. Defending a claim against the FLSA such as unpaid overtime is often an uphill battle. However, several potential defenses might help limit or avoid liability.

A. FLSA Doesn’t Apply

While the FLSA applies to most private sector employees, there are instances where businesses that are small and highly localized may argue that the FLSA doesn’t apply to them. However, this could be challenging to prove since almost all businesses regardless of size engage in interstate commerce.

B. Good Faith Defense

Employers may contend that it wasn’t their intent to violate the law and that they acted in good faith to handle the situation in the most appropriate way. In the case of a minimum wage or overtime pay violation, employers must be able to either prove that they acted in accordance with a written ruling from the Wage and Hour Division of the U.S. Department of Labor, or that they believed that they handled the situation with reasonable grounds and that they were not violating any law.

C. Exemption Applies

Probably the most common defense to a violation of an FLSA overtime claim, is that the employee was deemed as exempt from overtime requirements of the FLSA. Such exemptions have two requirements:

1. The employee must be paid a fixed salary each pay period that is not subject to reduction because of variations in the quality or quantity of work performed.
2. The employee must regularly and customarily perform certain types of duties.

Additionally, an employee may qualify for the following exemptions:

a. Executive Exemption

Requirements for this exemption are as follows:

• Management is the employee’s primary duty;
• The employee regularly and customarily directs the work of at least two full-time employees; and
• The employee has the authority to hire and fire employees.

b. Administrative Exemption

In order to be exempted, an employee’s primary duty includes office/non-manual work directly related to the management or general business operations of the employer or the employer’s customers, and the employee’s primary duty should include the exercise of discretion and independent judgment with respect to significant matters.

c. Professional Exemption

A learned professional must have a primary duty that must perform work requiring knowledge of an advanced type, and the advanced knowledge must be in a field of science or customarily be acquired by a prolonged course of specialized intellectual instruction. Additionally, a learned professional must involve the consistent exercise of discretion and judgment.

A creative professional must have a primary duty that involves the performance of work requiring invention, imagination, originality, or talent in a recognized field of artistic/creative endeavor, as opposed to routine mental, manual, mechanical, or physical work.

d. Computer Exemption

This exemption applies to an employee whose primary duty consists of the application of systems analysis techniques/procedures to determine hardware, software, or system functional specifics; the design, development, documentation, analysis, creation, testing or modification of computer systems/programs based on and related to user or system design specifications; the design, documentation, testing, creation or modification of computer programs related to machine operating systems; or a combination of the aforementioned.

e. Outside Sales Exemption

To qualify for this exemption, the employee’s primary duty must be making sales or obtaining orders/contracts for goods/services, and the employee must be customarily and regularly engaged away from the employer’s place of business while performing their primary duty.

D. Employee Did Not Work the Hours Claimed

Employees may not fully understand what makes them eligible for overtime. Additionally, they may not have worked the hours needed to qualify for overtime, or that the hours claimed are not compensable as “hours worked” under the FLSA such as rest and meal periods, travel time, on-call time, or certain waiting time. Employers must provide evidence such as time and pay records to prove their claim.

V. Wrongful Termination Claims

Wrongful termination is a situation where an employee’s employment contract has been terminated by the employer for an illegal reason or if the company policy is violated during the process of dismissal. These illegal reasons could be a breach in the employment contract, or a violation of a statutory provision or rule in employment law.

Florida is an “at-will” state, which means an employer is authorized to fire, demote, hire, promote, and discipline employees for any nondiscriminatory or non-retaliatory reason, or no reason at all. Without a contract which states otherwise, an employee is presumed to be working under an at-will arrangement in Florida. Wrongful termination claims generally do not exist in Florida. However, there are exceptions and ways to claim a wrongful termination based on the violation of other employment laws.

What Makes a Termination “Wrongful”?

• Violation of federal and state anti-discrimination laws
• Termination as a form of sexual harassment
• Violation of oral and written employment agreements or breach of contract
• Violation of labor laws, including collective bargaining laws
• Firing in retaliation for a filed employee’s compensation claims
• Firing in retaliation for whistleblowing

Employers need to know that they have the right to defend their actions and work towards a satisfactory resolution either by mediation or litigation. Employers need not be defenseless against wrongful termination lawsuits. Here are several ways employers can protect themselves against such allegations.

A. Documentation

While it doesn’t seem like much, having documentation regarding interactions between employees and employers, as well as each employee’s job progress can be very worthwhile. In fact, having a properly documented termination can often save employers from a lawsuit.

The key is in the paper trail. Employers should provide an employee handbook reflecting the company’s policies and procedures, and have it signed by all employees upon joining the company. Additionally, if the employee has had any negative evaluations, disciplinary actions, any form of warnings, altercations with other employees, or other similar occurrences documented, then it only shows that the employer has reasonable grounds in terminating the employee. Such documentation in itself is a strong defense in the event of a wrongful termination claim.

B. Same Actor Defense

Many wrongful termination claims arise when hiring, firing, and disciplinary decisions are made by multiple supervisors. That is why having a centralized decision-maker for any adverse employment action could help defend employers against wrongful dismissal claims. So, when the same decision-maker is responsible for both the hiring and firing of an employee within a short period of time, there is a strong assumption that there was no discriminatory motive for the employee’s termination. The rationale behind the same actor principle is that it doesn’t make sense to hire an employee from a protected minority status that one dislikes, or that the individual who hired the employee suddenly develops a strong aversion towards the employee to decide to fire them. This is a very strong defense, and it often leads to the dismissal of the lawsuit even before trial.

C. Equal Enforcement of Company Policies and Procedures

Employers should ensure that their disciplinary policies are equally enforced among employees. A wrongful termination claim can still arise even when an employee admits to committing a terminable offense and was dismissed, but points out that an employee who engages in similar conduct was not similarly terminated. So, employers should refrain from having double standards, special reactions, and overreactions.

D. Replacement Defense

In order to dismiss discrimination claims, employers can replace the fired employee with someone of the same minority status. This action demonstrates that it was the terminated employee’s conduct or performance that brought about the dismissal and not because they belong to a protected minority class.

V. Misappropriation of Confidential Information by an Employee

Trade secrets and pertinent confidential information are the lifeblood of any business. However, this information is easily misappropriated, and companies tend to overlook them as intellectual property assets.

The Defend Trade Secrets Act of 2016 (DTSA) allows the owner of a trade secret which has been misappropriated to bring a civil action in federal court. Additionally, the Florida Uniform Trade Secrets Act (FUTSA) allows a trade secret owner to file a misappropriation of confidential information in a state court. This only means that a trade secret owner can bring parallel state and federal claims.

Even with the presence of a non-disclosure agreement or employment contract, misappropriation can still happen. So, what can employers do in the event of a misappropriation of trade secrets and confidential information by an employee?

A. Breach of Employee Confidentiality

Having a non-disclosure agreement or confidentiality agreement helps protect valuable business information. When confidential information is disclosed to a third party or used in violation of such agreements, the owner has a claim for a breach of contract. Examples of breaches include:

• Data theft
• Disclosure of information from a former employer to a new employer
• Sending emails from a work email account to a personal email address
• The use of information for purpose outside the bounds of what is permitted

To support a claim for breach of contract, the employer or business owner must present the following:

• The existence of a contract between the involved parties
• The employer’s performance or excuse for non-performance under the contract
• Evidence of a breach by the employee
• Resulting damage

B. Injunctive Relief

Employers or business owners can obtain an injunction prohibiting the actual or threatened misappropriation. Though an injunction will be terminated when the trade secret ceases to exist, the injunction may be continued for an additional period of time (of reasonable length) in order to eliminate any commercial advantage derived from the misappropriation.

There are instances where an injunction may grant future use of such information upon payment of a reasonable royalty for no longer than the time frame for which use could have been prohibited. Such instances include a material and prejudicial change of position prior to acquiring knowledge, or reason to know of misappropriation that may render a prohibitive injunction inequitable.

C. Damages

Employers are entitled to recover monetary damages for misappropriation. Damages may include both the actual loss caused by the misappropriation and the unjust enrichment that is not taken into account in computing actual loss. In lieu of damages measured by any other methods, the damages caused by misappropriation may be measured by imposition of liability for a reasonable royalty for the employee’s unauthorized distribution or use of the information.

D. Criminal Statutes

Several state and federal criminal statutes prohibit trade secret misappropriation. Since misappropriation of trade secrets and other important business information is considered as theft, it is only typical that it falls under criminal offense. There are some state and federal statutes that subject the perpetrator to criminal penalties when they are proven guilty of committing a trade secret misappropriation, or if they offer anyone a bribe in order to commit the offense. Given the variety of criminal remedies, business owners and employers are often more interested in pursuing them.

VI. Employer Retaliation

Retaliation is the most common type of discrimination, and the number of employer retaliation claims have become prevalent over the years. Workplace retaliation can be devastating, and it can break the law, making retaliation claims popular among employees. This is because even if an underlying claim of discrimination has little to no merit at all, employees can still win retaliation lawsuits if they were disciplined after bringing a reasonable complaint. This is why employers need to be prepared to demonstrate that any disciplinary action taken was unrelated to the employee’s protected conduct.

Two common defenses that employers can use in order to counter a retaliation claim:

• An employer can demonstrate that it is not in their knowledge that the employee is engaged in a protected activity. Employers must be aware of the protected activity in order to retaliate against the employee with regards to the said activity. It is impossible to retaliate on something that you don’t have any knowledge of.

• An employer can show that they had a legitimate, non-retaliatory reason (or reasons) for the treatment that the employee is charging them with. Such reasons can include poor performance, inadequate qualifications for the position sought, operational downsizing, etc. In addition, if an employer can prove that a supervisor or manager treated their employees poorly albeit equally, and regardless if they complain about discrimination, then this is enough to defeat a claim of illegal retaliation.

Legal problems can arise anytime and are an inevitable part of owning and running a business, so employers and business owners need to be prepared in dealing with such problems. Having an experienced business law firm which is conversant with employment and labor law on your team is your best defense against any unexpected trouble. Let the Trembly Law Firm assist you in any employment-related issue that you might face.