Fire Your Employee for His Noxious Memo? Not So Fast.

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Is an employer free to fire an employee who circulates to co-employees a memo expressing ideas that are noxious to the employer’s efforts to avoid prohibited discrimination?  Perhaps surprisingly, the answer can be, “No.”

A good example is the recent event in which Google fired James Damore, an engineer, for circulating a memo, or “manifesto,” explaining a basis for gender bias among computer engineers.  His memo, entitled, “Google’s Ideological Echo Chamber – How bias clouds our thinking about diversity and inclusion,” purported to be a personal response to what he viewed as the shaming and silence of those in his field who have differing views about gender in the workplace, and whose views are inconsistent with Google’s “dominant ideology.”  In the memo, Damore provided what he called “biological” explanations for why there is a gender gap in technology, such as: women are more neurotic and thus tend to pick less stressful jobs; women are more “directed towards feelings and aesthetics rather than ideas;” and men have a higher drive for status.  Damore posted this screed to Google’s internal messaging board.  It was a message to his co-workers, and hostile to his employer’s position.

As Damore acknowledged, engineering at Google requires collaboration and teamwork.  Damore’s statement put Google’s management in a difficult place – how can Damore continue to work on any team that involves women? Further, Google’s employee review process emphasizes peer reviews, particularly by high-level engineers such as Damore.  Damore’s expressed biases could cause questions as to the fairness of his reviews, and his position as a supervisor could be argued to create a hostile work environment for the female minority with whom he works.  It is not surprising, then, that Google employees reacted by demanding Damore be disciplined or terminated.  Google agreed, and Damore was terminated.

But Damore seems to have anticipated that reaction, and took steps to protect his own interests.  As quoted by the New York Times, Damore included in his memo an unusually lawyerly statement:  “I have a legal right to express my concerns about the terms and conditions of my working environment and to bring up potentially illegal behavior, which is what my document does.”  After the termination, Damore submitted a complaint to the National Labor Relations Board (NLRB) claiming that Google’s upper management was “misrepresenting and shaming me in order to silence my complaints,” and reminding Google that it is “illegal to retaliate” against an NLRB charge.

Was Google’s action defensible?  The National Labor Relations Act Sections 7 & 8(a)(1) (29 U.S.C. Section 157 & 158(a)(1)) makes unlawful violating employees’ rights to engage in “protected concerted activities.” “Concerted activities” are broadly defined to include “the right to self-organization, to form, join or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection….” Most often, “concerted activities” are associated with union activity, but the NLRB protects activity that is not specifically union oriented.  This can include communicating with coworkers regarding wages and working conditions, and expressing preferences for political candidates who support favorable labor issues such as higher wages for hourly workers.  In doing so, employees are permitted to use company bulletin boards, both electronic and physical, and company email, on non-working time.

The effect of this protection is that, if Damore challenges his termination, he will likely argue that Google’s decision to terminate him curtailed his rights to discuss his political beliefs and to engage like-minded employees about his view that the hiring and promotions practices at Google are unfair to men.

Because Damore works in California, there are additional considerations under state law.  California Labor Code §1101 provides that “No employer shall make, adopt, or enforce any rule, regulation, or policy: (a) Forbidding or preventing employees from engaging or participating in politics or from becoming candidates for public office; or (b) Controlling or directing, or tending to control or direct the political activities or affiliations of employees.”  While this may not control an adverse employment decision by an employer against a single individual, once coworkers learn that an employee was fired based on his speech or political activities, those coworkers may perceive that action as a threat or policy.  As the Supreme Court has recognized, employees’ economic dependence on the employer can reasonably lead them to pick up even subtle signals when their jobs are at stake.  NLRB v. Gissel Packing Co., 395 U.S. 575, 617 (1969).  Here, Damore’s like-minded coworkers could interpret his firing as a threat to their employment should they express views similar to his.

The unfortunate upshot for Google is that Damore’s termination seems like a retaliation claim ripe for filing.  Though many may personally disagree with Damore’s views on gender in the workplace, and he may have absolutely no factual or evidentiary basis for his position, he could argue in an action against Google that he was attempting to organize a group of like-minded workers to oppose what he believes are Google’s gender biases or an unfair reverse discrimination policy. His “manifesto” appears to structured for this very argument.

It is ironic that the policies of the NLRB and California Labor Code, which protect political organization and prohibit retaliation, are what may ultimately force Google to suffer legal liability for Damore’s termination for expressing disagreement with Google’s anti-discrimination policies.

As these events demonstrate, the application of employment law and policies in real world situations can be challenging.  Protection of one worthwhile policy can seemingly conflict with others, and well-meaning employers can find themselves having to make very difficult choices.  Employers should consult counsel experienced in the sometimes complex issues that can arise in many different employment circumstances.

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Manufacturers, Distributors and Reps Must Be Familiar with California’s Sales Rep Act

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Independent sales representatives are a vital part of many industries, from beauty products and electronics to simple plumbing materials like tankless water heater valves.  Independent sales reps often develop considerable expertise in both the customer base in their territories and their manufacturers’ or distributors’ products, while saving resources that the principal can better use toward product development and customer service after the sale.  Conkle, Kremer & Engel attorneys have extensive experience on behalf of both representatives and manufacturers/distributors/importers in strengthening those agency-principal relationships, and resolving commission, territorial or termination disputes when they arise.

In California, there is a relatively little-known statute that governs certain contractual requirements and responsibilities in a principal-sales representative relationship, called the Independent Wholesale Sales Representatives Contractual Relations Act (the “Sales Rep Act”) (California Civil Code § 1738.10).  The Sales Rep Act can be a powerful tool for sales reps, particularly because it offers the possibility of treble damages and attorney fees awards when the representative prevails.  For example, CK&E was counsel for a sales rep who was cheated out of his earned commissions by a principal who denied that it had ever agreed to pay those commissions.  After a jury trial, the sales rep received a jury award of $2.1 million that was then trebled to $6.2 million, plus attorney fees, after CK&E showed that the Sales Rep Act was properly applied in the situation at hand.  When the judgment was affirmed on appeal, that case became one of the most important published California court decisions about the correct application of the Sales Rep Act.   (Reilly v. Inquest Technology, 218 Cal. App. 4th 536 (2013)).

But like many powerful tools, the Sales Rep Act can be hazardous to either side when it is misapplied.  For sales representatives, distributors, manufacturers and importers alike, it is critically important to understand the requirements and potential effects of various factors to both the application and exceptions to the Sales Rep Act.  For example, in a recent matter, CK&E attorneys Eric S. Engel and Evan Pitchford represented a Southern California importer-distributor of plumbing parts that was sued by a terminated sales rep who sought treble damages for commissions claimed owed, plus attorney fees, under the Sales Rep Act.  CK&E was able to demonstrate in a pretrial motion that the sales rep had engaged in prohibited sales of certain parts to a purchaser who did not qualify under the Sales Rep Act.  Those sales precluded the sales rep from claiming the benefits of the Sales Rep Act, and limited the sales rep to just ordinary contract damages at most.  After the Court agreed that the claim under the Sales Rep Act was not available for this sales rep, the lawsuit was quickly settled.

These two examples demonstrate that intimate knowledge of how the Sales Rep Act operates is crucial for both sides of disputes between sales representatives and importers, manufacturers and distributors.  If you are an independent sales representative, distributor, or manufacturer that is facing commission, territorial or termination disputes, you would be well served to consult with counsel who is familiar with the very precise requirements of the Independent Wholesale Sales Representatives Contractual Relations Act (California Civil Code § 1738.10).

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Hot Yoga and Cold Law: Employment Retaliation Claims Can Arise Anywhere

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Most people would agree that working in a government office that supervises lawyers is quite different than working in a 104 degree “hot yoga” studio. But recent matters involving these two very different work environments show that employment retaliation claims can be asserted against any employer – whether you’re a yoga master or the master of all lawyers in California.

The California State Bar has the staid mission of regulating the admission of attorneys and investigating assertions of attorney misconduct. Yet in November 2015, the State Bar found itself charged with wrongful employment retaliation after it fired one of its top managers, John Noonen. Noonen asserted that the termination was retaliatory because, just a few weeks earlier, he submitted a 40-page internal complaint against the State Bar’s top attorney for allegedly failing to properly investigate complaints against the president of the State Bar. The State Bar has denied Noonen’s retaliation allegations and has said that Noonen’s position was eliminated as part of a cost-saving effort.

Less than two months later, the same types of claims led to a sizeable jury verdict against a completely different business run by famed yoga guru Bikram Choudhury. Choudhury made his fortune teaching yoga instructors his techniques and allowing graduates to operate yoga studios that feature a specific yoga sequence performed in a 104-degree room. In January 2016, a Los Angeles jury found that Choudhury sexually harassed his former legal advisor and wrongfully fired her for investigating others’ claims of sexual discrimination and assault against him. Choudhury asserted he had good cause to fire his legal advisor because she was not licensed to practice law in California. The jury first ordered Choudhury and his yoga business to pay $924,000 in compensatory damages, and the next day the jury upped the ante with a further award of $6.4 million in punitive damages.

In each of these recent cases, employees alleged that their bosses improperly “retaliated” against them for investigating workplace misconduct. Most employers and employees know that laws exist to protect employees from wrongful discrimination and harassment. The same laws also provide that employers cannot punish or “retaliate” against employees for making complaints about other potentially wrongful employment conduct, such as discrimination or harassment, or for participating in workplace investigations about such potential wrongful employment conduct.

“Retaliation” is prohibited by the same federal laws that prohibit employment discrimination based on race, color, sex, religion, national origin, age, disability and gender. “Retaliation” can take many forms, including termination, demotion, suspension or other employment discipline against the employee for engaging in protected activity, such as reporting perceived employer discrimination or other misconduct. Owing to its broad scope, retaliation is a claim commonly raised by disgruntled or terminated employees. In fact, according to the federal Equal Employment Opportunity Commission (“EEOC”), retaliation is the most common basis of discrimination claims in EEOC cases.

These cases illustrate some of the many circumstances in which employment issues can lead to litigation against a wide variety of employers. Conkle, Kremer & Engel regularly advises employer and individuals on workplace issues and the ramifications of retaliation and harassment claims so that all involved can take steps to resolve conflicts in a meaningful, efficient way. When circumstances do not do not allow a non-litigated solution, CK&E attorneys litigate and arbitrate employment disputes including retaliation claims, whether the claims are asserted individually or as a class action.

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