When employees and employers are approaching the end of an employment relationship, they should consider their existing rights and how their conduct may impact those rights. A recent decision from the Minnesota Court of Appeals demonstrates how one hasty email can change everything.
Beginning on January 1, 2010, LifeSpan of Minnesota, Inc. employed the plaintiff in the case, Mark Sharockman, as its chief financial officer and executive vice president. Mr. Sharockman’s three-year employment agreement with LifeSpan provided, among other things, that he would receive annual pay increases that were at least equal to the average pay increases granted to the other two executive officers.
In our last post, we discussed the case of Wiest v. Tyco, in which the Third Circuit held that an employer’s investigation of unrelated wrongdoing by an employee insulated it against the employee’s Sarbanes-Oxley whistleblower retaliation claim. Now, we tackle another piece of the Wiest decision: the court’s holding that Wiest’s protected activity did not contribute to the adverse action against him.
To establish a Sarbanes-Oxley claim, an employee must show that there was a causal connection between his or her whistleblowing and an adverse employment action. If the employee can’t show that link, then he or she can’t prevail. In the Wiest case, the court assumed that Wiest did in fact engage in protected whistleblowing activity. But it held that Wiest didn’t have evidence to show that the whistleblowing caused the employer to take action against him.
An employee who has blown the whistle on wrongdoing is not immune from discipline or termination simply because she has engaged in protected activity.
The Third Circuit’s recent decision in Wiest v. Tyco Electronics provides a good example of how an employer can terminate an employee without legal repercussions, even when it is undisputed that the employee was protected against whistleblower retaliation.
When an executive has an employment agreement and his company doesn’t pay, the company might offer a number of excuses based on contract law. One of these contractual defenses is called “impossibility of performance.” Under this defense, when a party enters into a contract and circumstances later change such that the party can’t perform it, the party can be excused from performing.
The Virginia Supreme Court’s recent decision in Hampton Roads Bankshares, Inc. v. Harvard provides a timely example of how this defense actually works in practice. In the Hampton Roads case, the organization established a relationship with government regulators that affected its ability to pay severance. The court held that this change made it impossible for the company to perform an employment agreement, excusing performance.
When the 2015 college football season started, Steve Sarkisian was a rising star in the coaching firmament. He had led the University of Washington Huskies and his current team, the University of Southern California Trojans, to winning records and bowl games.
In late August, however, reports surfaced that Sarkisian had behaved inappropriately at a booster event, the Salute to Troy. And by mid-October, USC had terminated Sarkisian “for cause,” with athletic director Pat Haden explaining that Sarkisian’s use of alcohol had impaired his performance of his job.
This week, Sarkisian struck back, filing a 14-count complaint against USC in Los Angeles Superior Court.
It’s an obvious best practice to put the terms of an employment agreement in writing. Equally obvious is the notion that the writing should be complete, whether in a single document or with reference to other items, such as employee manuals or company-wide incentive plans.
However, it’s not always obvious which documents make up an employment agreement.
Consider the recent decision issued by the United States District Court for the District of California in the case of Lenk v. Monolithic Power Systems, Inc.
As the United States gears up for next year’s presidential election, it’s always fun to check in with PolitiFact’s Truth-O-Meter on the days following debates or periods of political grandstanding to see who is really telling the truth and whose pants are on fire.
Since we’re all human – yes, politicians are, too – some of us admittedly engage in the occasional white lie or embellishment in the work place. While we don’t have PolitiFact to fact-check our boardroom meetings, one employee recently alleged that his CEO tried to snuff out lies using a portable lie detecting machine.
A contract between an executive and an employer does not always have to be in writing.
Sometimes, employees can enforce oral promises. Agreements can also be implied based on the parties’ conduct, even when no one made a promise, either in writing or orally.
But contracts that aren’t in writing can be much harder to enforce, as the Third Circuit’s recent decision in Steudtner v. Duane Reade, Inc. shows.
When an executive and a company enter into a lucrative severance package, those benefits aren’t necessarily ironclad.
As we covered in this June 2014 post, when a company declares bankruptcy, its trustee can ask the court to allow the company to avoid its executives’ severance rights.
F-Squared Investments Inc. is now seeking to do precisely that. In late October, F-Squared moved to reject its separation agreement with former CEO Howard Present, seeking authority “to avoid the financial burden” of making a $500,000 payment to him and to cease the accrual of his COBRA payments.
Mr. Present and F-Squared have had a troubled couple of years.
Facebook is as public a forum as they come, yet it’s ironic how intimate some posts can be, as if the user is thinking out loud for everyone to hear.
Posts can be funny, political, or just plain weird, while others allow us to commiserate, empathize, or laugh out loud as we take that ultimate step of “liking” them. Sometimes liking another person’s thoughts can carry a high cost, especially if those thoughts disparage one’s employer.
Triple Play Sports Bar and Grille, the disparaged party in this example, took issue with the Facebook activity of two of its employees. Employee Vincent Spinella, a cook, “liked” this statement of a former employee:
“Maybe someone should do the owners of Triple Play a favor and buy it from them. They can't even do the tax paperwork correctly!!! Now I OWE money...Wtf!!!!”
Bartender Jillian Sanzone added the comment, “I owe too. Such an asshole.”
Triple Play’s management noticed the online behavior and discharged Spinella and Sanzone for violating company policy relating to prohibited internet activity.
In many respects, employees with employment agreements seem to have made it to the corporate “Promised Land.”
Through skill and hard work, these employees have distinguished themselves enough to merit individualized attention to the various types of compensation they will receive. However, these agreements may also contain land mines that spring into action when the relationship between the employee and the employer sours.
In my last post, I boldly predicted a possible winner—a dark horse if you will—emerging from the new Department of Justice policy announced by Deputy Attorney General Sally Yates and immortalized in the so-called Yates memo.
But this post is less optimistic. Today, I’m talking about the sure loser post-Yates: the upper-middle executive.
Or, as Ms. Yates memorably described to The New York Times, the Vice President in Charge of Going to Jail.
What does the Yates memo do to squeeze the upper-middle executive like never before?
In the corporate world, the treats offered to executives can be as sweet as stock incentives and cash bonuses. But the tricks can be as sour as individual liability for wrongdoing and salary disgorgement.
NJ Supreme Court Makes It Easier For Employers To Take Back Executive Salaries
Lately, we’ve been discussing the Yates Memo and the alarms it must be sounding in corporate board rooms across the country. In a similar vein, the New Jersey Supreme Court offered little comfort to spooked executives when it recently decided to broaden the remedies available to employers who seek disgorgement of former high-level employees’ salaries.
When a company sues an executive, one question is who will pay the legal bills. As we covered earlier this year, that’s been an issue in Dov Charney’s ongoing legal battle with his former employer, American Apparel. Specifically, after American Apparel sued Charney for violating their standstill agreement by getting involved in shareholder suits and commenting to the press, Charney sued American Apparel in Delaware for indemnification and advancement. He claimed that the suit was brought “by reason of the fact” that he had been CEO, and thus fell within the indemnification provisions in various corporate documents.
On September 9, 2015, Deputy Attorney General Sally Q. Yates issued a memorandum to all Department of Justice attorneys concerning “Individual Accountability for Corporate Wrongdoing.” Referred to as the “Yates Memo,” the memorandum consolidates several statements from other DOJ officials over the past year, memorializes new policy, and reiterates long-established practices. Significantly, the Yates Memo recognizes what every American has understood since the inception of our legal system: living, breathing individuals commit crimes or engage in civil misconduct, not the business entities (fictional “persons”) on behalf of which the individual acts.
The Justice Department issued a memo to United States attorneys nationwide that might have Wall Street executives shifting nervously in their seats. The memo signifies a new focus as it instructs both civil and criminal prosecutors to pursue individuals, not just their companies, when conducting white collar investigations. According to The New York Times, the memo is a “tacit acknowledgement” that very few executives who played a role in the housing crisis, the financial meltdown, and other corporate scandals have been punished by the Justice Department in recent years. Typically when a company is suspected of wrongdoing, the company settles with the government after supplying the authorities with the results of its own internal investigation. This paradigm has led to corporations paying record penalties, while individuals usually escape criminal prosecution. Deputy U.S. Attorney General Sally Q. Yates authored the memo and articulated the Justice Department’s new resolve. “Corporations can only commit crimes through flesh-and-blood people. It’s only fair that the people who are responsible for committing those crimes be held accountable.” To achieve this end, U.S. attorneys are directed to focus on individuals from the beginning, and will refuse “cooperation credit” to the company if they refuse to provide names and evidence against culpable employees. And don’t think about naming a fall guy to take the blame. Ms. Yates said the Justice Department wants big names in senior positions. “We’re not going to be accepting a company’s cooperation when they just offer up the vice president in charge of going to jail.” We’ll have more on the Yates Memo and its potential implications in weeks to come.
The famous scientist Nikola Tesla was prolific not only in his scientific writings and experiments, but he has also become quite the posthumous eponym. From 80s rock bands to electric car manufacturers, the Tesla name continues to find its way into the headlines. Nikola’s more recent namesake, Tesla Motors (named for Mr. Tesla’s patented AC induction motor), was allegedly the target of a former disgruntled employee, Nima Kalbasi. Prosecutors say that Mr. Kalbasi, a Canadian national and mechanical engineer, hacked the company’s servers. According to The Washington Times, Mr. Kalbasi was terminated on December 3rd of last year, but not before he was able to ferret out his boss’s email credentials. For the next few weeks, according to allegations in Mr. Kalbasi’s criminal case, Mr. Kalbasi repeatedly accessed Tesla’s corporate server to retrieve employee reviews and at least one consumer complaint against the company, which he published online along with some other disparaging commentary. Ironically, Mr. Kalbasi allegedly used in his computer hacking the wireless technology that many credit to Mr. Tesla himself.
Normally, in litigation between executives and employees, the executive will bring suit after he or she is fired, alleging wrongdoing by the former employer. This makes sense: the employer, after all, is the one who took the adverse action against the exec. And it’s the one that caused the damage, assuming that the executive can prove his or her claims.
The case of Stephen Stradtman, former CEO of Otto Industries North America, Inc., was not a normal case. For one thing, Stradtman wasn’t fired – he quit. And Stradtman didn’t sue Otto – he sued two other companies (Republic Services, Inc. and Republic Services of Virginia, LLC) and one of their employees.
We cover a broad range of issues that arise in employment disputes. Occasionally, we also spotlight other topics of relevant legal interest, ranging from health care to white-collar defense to sports, just to keep things interesting.
Led by Jason Knott and Andrew Goldfarb, and featuring attorneys with deep knowledge and expertise in their fields, Suits by Suits seeks to engage its readers on these relevant and often complicated topics. Comments and special requests are welcome and invited. Before reading, please view the disclaimer.