The Inbox - What Would Woody Guthrie Think?

| O'Neill, Ashley

Putting an imperious spin on a Woody Guthrie classic, I imagine Jimmy John’s singing, “This land is my land, this land is my land, from California to the New York island.” The sandwich giant has garnered a meaty amount of press (and congressional scrutiny) lately over the breadth of its non-compete agreements with its employees. The language, as written, would essentially prevent employees, from management down to the hourly sandwich builder, from seeking employment with a competitor for up to two years following the employee’s departure. The non-compete, although not universally utilized by Jimmy John’s franchisees, further defines a competitor as any business that derives more than 10% of its revenue from sandwiches, wraps, hoagies, etc., and is within a 3 mile radius of a Jimmy John’s location.  According to HuffPost, Jimmy John’s has yet to enforce the clause against a minimum wage-earning sandwich maker or delivery truck driver, but The Atlantic’s CityLab map demonstrates the potential impact on the departing employee who might wish to make sandwiches elsewhere.

Comcast may have found an enemy for life in a former cable-subscribing customer. Comcast recently received a novel form of public scrutiny when Conal O’Rourke, a PWC accountant, accused it of causing his termination from PricewaterhouseCoopers. O’Rourke alleged in a complaint filed in California federal court that Comcast’s Controller, Lawrence Salva, contacted a PWC principal, alleging that O’Rourke invoked his position at the accounting firm to gain leverage in his ongoing arguments with Comcast over billing issues and equipment charges. According to Bloomberg, the Philadelphia office of PWC billed Comcast around $30 million for its accounting services, thereby giving Comcast leverage to potentially request the action from PWC. PWC, in its defense, claimed that O’Rourke was fired for violating company policy covering employee conduct. O’Rourke allegedly accused Comcast of questionable accounting practices during his (what I am sure were “spirited”) telephone exchanges with Comcast customer service representatives.

The anti-poaching litigation stemming from the relationships of the Silicon Valley tech giants just grew by one when a former employee of alleged that the company colluded with Google to keep salaries in check by not pursuing or courting each other’s director level and higher employees. We have blogged previously on these anti-poaching (or no cold-calling) agreements and the effect they have on worker mobility and salary potential in the market place. Some cases have reached settlement, while others are in limbo as judges weigh the fairness of the settlement figures, according to Law 360. Google has both admitted and defended the practice, claiming that while they agreed to not directly recruit individuals, they have successfully employed other companies’ people by using resources like LinkedIn, job fairs, and internal referrals. We will follow the outcome of this most recent complaint to see if it, too, reaches settlement before getting to the crux of the issue which is whether these no “cold-call” agreements pass legal muster.

A recent Second Circuit decision in favor of Fujifilm Medical Systems USA Inc. allowed the introduction of after-acquired evidence in an employment discrimination matter.  According to Law 360, the plaintiff alleged he was terminated for not being Japanese, and the company responded that the former executive was fired, not on the basis of his race and national origin, but for his financial mismanagement of company business dealings.  The Second Circuit confirmed the lower court’s ruling that after-acquired evidence of the financial mismanagement was admissible to prove the nondiscriminatory intent behind the firing. The Fujifilm case is a departure from the norm in employment discrimination cases. According to Marc Bernstein of Paul Hastings LLP, counsel for Fujifilm, “There aren't that many appellate court rulings on the admissibility or nonadmissibility of after-acquired evidence with respect to the issue of liability and showing nondiscrimination.” The issue has surfaced, however, at the damages phase of litigation. A 1995 Supreme Court ruling, McKennon v. Nashville Banner Publishing Co., allows defendants, who have admitted liability, to use after-acquired evidence to limit damages, essentially arguing that the employee would have eventually been fired.

Information provided on InsightZS should not be considered legal advice and expressed views are those of the authors alone. Readers should seek specific legal guidance before acting in any particular circumstance.

As the regulatory and business environments in which our clients operate grow increasingly complex, we identify and offer perspectives on significant legal developments affecting businesses, organizations, and individuals. Each post aims to address timely issues and trends by evaluating impactful decisions, sharing observations of key enforcement changes, or distilling best practices drawn from experience. InsightZS also features personal interest pieces about the impact of our legal work in our communities and about associate life at Zuckerman Spaeder.

Information provided on InsightZS should not be considered legal advice and expressed views are those of the authors alone. Readers should seek specific legal guidance before acting in any particular circumstance.

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