Non-Solicitation Agreement, Non-Compete, Restrictive Covenant
Defendant, former employer, sued its former employee for a preliminary injunction enforcing restrictive covenants contained in plaintiff's employment contract with defendant. Turnell v. Centimark Corp., No. 14-2758 (7th Cir. July 29, 2015). The non-solicitation and non-compete provisions prohibited the plaintiff from soliciting defendant's actual and prospective clients or from being employed by defendant's competitor for two years.  The District Court entered the injunction. The Seventh Circuit affirmed.

The Seventh Circuit held that the record showed likelihood that the covenants could be enforced against plaintiff (who had become employed by one of defendant's competitors) if those covenants were limited to the plaintiff selling only specific products that defendant sold, and if the plaintiff was precluded only from selling said products to defendant's actual customers in actual region that defendant had managed while working for defendant. Additionally, the defendant had legitimate interest in preventing the plaintiff, as former high ranking manager, from using defendant's customer relationships and proprietary business information for competitor's benefit. The Court further noticed that the fact that the covenants were in fact too broad did not require that District Court void those covenants in their entirety instead of limiting their scope.

 
 
U.S. Veteran
Private employers in Illinois can now give preference to veterans when hiring new workers.

Gov. Bruce Rauner signed the Veterans Preference in Private Employment Act into law on July 28, 2015. The new Illinois law permits private employers to voluntarily adopt hiring policies that give preference to those who served in the military, whether on active or reserve duty, including the Illinois National Guard. 


The employer's veterans preference policies must be in writing and publicly posted at the workplace or on the employer's website, as well as on job applications.

A similar state law is already in place for public employers.

 
 
Picture
Plaintiff police detective brought a claim  against his former employer for  failure to accommodate him under the Americans with Disabilities Act of 1990, as amended. Swanson v. Village of Flossmoor, No. 14-3309 (7th Cir. July 24, 2015). The District Court granted summary judgement for the employer and the 7th Circuit affirmed.

The record showed that the plaintiff suffered two strokes. After the first, he requested a reasonable accommodation under the ADA (working a desk job). Flossmoor provided him with a reasonable accommodation (allowing him to use his paid time off to work part-time, per his physician's instructions). After the second stroke, he was unable to perform his essential job duties and resigned. Thus, the 7th Circuit held that his failure to accommodate claim was without merit. The employer reasonably accommodated  him after his first stroke. Because he was unable to perform his essential job functions after his second stroke, the employer was no longer required to accommodate him.

The plaintiff had also filed other discrimination claims under Title VII. However, they were time-barred because his Charge of Discrimination had not been filed with theEEOC within 300 days.


 
 
EEOC Seal
On July 15, 2015, the United States Equal Employment Opportunity Commission ("EEOC") ruled that employment discrimination based on sexual orientation is actionable as sex discrimination under Title VII.  Baldwin v. Foxx, No. 0120133080.  

The EEOC's ruling is contrary to several U.S. Appellate Court decisions, which held that sexual orientation discrimination is not actionable as sex discrimination under Title VII.  While federal law on this point is unclear, in Illinois, sexual orientation is recognized as an a protected class under the Illinois Human Rights Act.


 
 
Restrictive Covenants, Non-Solicitation, Non-Compete Contracts
Plaintiff-employer sued former employees for breaching their restrictive covenants. Instant Technology LLC v. DeFazio, Nos. 14-2132 & 14-2243 Cons. (7th Cir. July 14, 2015). The former employees had agreed not to (1) solicit business from Instant’s clients, (2) not to recruit Instant’s employees to other jobs, and (3) not to disclose the firm’s sensitive information to outsiders. After a bench trial, the District Court found, that the former employees of plaintiff did not breach terms of restrictive covenants. The Seventh Circuit affirmed.

The Seventh Circuit held that the Plaintiff failed to establish that the Defendants accessed Plaintiff's proprietary information about its clients after they were fired. 

Furthermore, while the Defendants admitted to breaching their covenants not to solicit their former employer's staff or recruit its clients, the District Court could properly find that those covenants were unreasonable, as the record showed that: (1) tech-staffing firms generally do not build relationships with its clients; (2) information about those clients could be found in other public forums; and (3) the plaintiff could not rely on its interest in a "stable workforce" to justify covenant not to recruit.

 
 
Test
Employees sued, alleging that their employer retaliated against them by denying them the opportunity to take a test that was required for promotion, because they had filed earlier complaints of racial discrimination. Burks v. Union Pacific Railway Co., No. 14-2707 (7th Cir. July 13, 2015). The district court granted summary judgment for Union Pacific. The Seventh Circuit affirmed.

The Seventh Circuit held that the record showed that: (1) certain individuals responsible for giving one plaintiff information about application process were unaware of any prior protest of race discrimination; and (2) there were no available positions within said plaintiff's district while said plaintiff had application on file. Also, second plaintiff could provide only speculation that defendant's losing of his application was motivated by prior complaint of race discrimination. He also failed to submit any evidence that anyone providing him with information regarding application process was aware of his prior complaint of discrimination.

 
 
Employee or Independent Contractor
The U.S. Department of Labor noted that employees who are misclassification as independent contracts is a problem in an increasing number of workplaces. Thus, the DOL issued additional guidance regarding the application of the standards for determining who is an employee under the Fair Labor Standards Act (FLSA) to aid in curtailing misclassification on July 15, 2015. No 2015-1.

The guidance points out that the FLSA defines “employ” broadly as including “to suffer or permit to work.” 29 U.S.C. 203(g). Thus, courts use the multi-factorial “economic realities” test to determine if a worker is an employee or independent contractor where all of the factors must be considered. Those factors are:

A. Is the work an integral part of the employer’s business?
B. Does the worker’s skill affect the worker’s opportunity for profit or loss?
C. How does the worker’s relative investment compare to the employer’s investment?
D. Does the work performed require special skill and initiative?
E. Is the relationship between the worker and the employer permanent or indefinite?
F. What is the nature and degree of the employer’s control?

Most workers are employees under the FLSA’s broad definitions and the "economic realities" test. Of course, the factors should not be analyzed mechanically or in a vacuum, and no single factor, including control, should be over-emphasized. Instead, each factor should be considered in light of the ultimate determination of whether the worker is really in business for him or herself (and thus is an independent contractor) or is economically dependent on the employer (and thus is its employee). The factors should be used as guides to answer that ultimate question of economic dependence. The correct classification of workers as employees or independent contractors has critical implications for the legal protections that workers receive, particularly when misclassification occurs in industries employing low wage workers.


 
 
Plaintiffs-truck drivers sued, seeking a determination as to whether they were employees or independent contractors of defendant under the Kansas Wage Payment Act (KWPA). Craig v. FedEx Ground Package Systems, Inc., No. 10-3115 (7th Cir., July 8, 2015). FedEx moved for summary judgment and the District Court granted it. However, the Seventh Circuit reversed and remanded.

The Seventh Circuit certified the question as to the employment status of plaintiffs under the KWPA to Kansas Supreme Court, which found that the plaintiffs were indeed employees as matter of law. Thus, the Seventh Circuit reversed, as Kansas Supreme Court's response to certified question should be regarded as authoritative and binding statement of state law.

Misclassification of employees as independent contractors has been a growing trend in the workplace. However, the Courts and Department of Labor's Wage and Hour Division have been actively correcting these issues. In fact, the DOL issued a new interpretive guidance on independent contractors on July 15, 2015, Administrator’s Interpretation No. 2015-1. See our blog entry here.
 
 
Stethoscope Affordable Care Act
College moved for a preliminary injunction to bar the defendant from enforcing provisions of Affordable Care Act (ACA) that require the College to: (1)  inform the government that it is claiming religious exemption to ACA; and (2) to supply the government with names of the College's insurers so that the College's students and employees (so those individuals could receive emergency contraception health insurance coverage with respect to fertilized ovum.) Wheaton College v. Burwell, No. 14-2396 (7th Cir. July 1, 2015). 

The District Court did denied College's motion. The Seventh Circuit affirmed.

The Seventh Circuit held that the injunction was properly denied as: (1) the College failed to show that delaying any judgment in its favor until case on merits had been resolved would cause the College any harm; and (2) the College's position that the ACA improperly "uses" plaintiff's health plans to provide emergency contraption coverage to its students and employees, was not factually supported by record.

 
 
Gavel and Money Attorneys Fees
Plaintiffs won their suit for defendant's failure to timely notify class members of their COBRA rights. Pierce v. Visteon Corp., No. 14-2542 (July 1, 2015). Class counsel then contended that he was entitled to fees from class members under "common fund" theory. However, the District Court only awarded only $303,000 in fees, counsel's hourly rate. The Seventh Circuit affirmed.

The Seventh Circuit held that counsel was not entitled to any additional fees, where counsel's initial fees were received pursuant to fee-shifting statute. The Court further noted that additional fees would be unwarranted as class counsel: had filed untimely notice of appeal as to other aspects of underlying case; and sought remand of case based, in part, on a claim that certain class members had received too much compensation. 

Two factors that largely informed this ruling include the fact that counsel:

1) had not entered into a contingency-fee contract. 
2) sought both statutory fees AND a contingency fee. 

The Seventh Circuit said, "we do not see a good reason why, in the absence of a contract, counsel should be entitled to money from the class on top of or in lieu of payment by the losing litigant."  Thus, class counsel 
should enter into a contingency-fee contract with the named plaintiff and use the fee award to partially offset the contingent fee, counsel would be successful.  See Venegas v. Mitchell, 495 U.S. 82 (1990).

Furthermore, the court did not foreclose a percentage of the common fund approach under those circumstances based upon its language that "even if it were sometimes appropriate to give a lawyer a slice of the class’s recovery on top of a fee-shifting award, this would not be the case to do it in."