Monday, March 31st, 2008

EEOC Reports “Surge” in Pregnancy Charges

The U.S. Equal Employment Commission says that its intake of charges in FY 2007 reflected an unexplained 14% increase in charges filed under the Pregnancy Discrimination Act (PDA), which amended the sex discrimination language in Title VII to specify that a company cannot treat a pregnant applicant or employee differently from other persons who have temporary disabilities. The EEOC acknowledges that many of these charges are the result of public confusion over just what the PDA does and does not cover. Many employees file charges because they mistakenly believe that the PDA prevents a company from taking adverse action against them WHEN they are pregnant. Of course, the PDA only prohibits adverse actions taken because the employee is pregnant. In other words, the PDA allows an employer to discipline, discharge, lay off, or transfer a pregnant employee IF such decisions are made and implemented for reasons unrelated to the pregnancy.

For example, an employee whose annual performance review falls seven months into a pregnancy is not protected from a negative review if the evaluation is based on actual job performance – even if the pregnancy may have indirectly contributed to the poor performance. The employer is entitled to evaluate performance for what it is regardless of the cause – so long as the pregnancy is not a motivation for the negative ratings.

The EEOC’s only other explanation for this “surge” is that economic pressures are forcing more women to work longer during their pregnancies, thereby creating more opportunity for job-related conflicts.

No Federal Protection for Family Status

On a related note, the Federal Appeals Court in Denver recently held that Title VII does not protect employees or family members from discrimination based on “familial status.” In this case, the employer had an anti-nepotism policy, and as part of that policy discharged a husband, wife, and daughter. Presumably, the employer could have chosen to discharge only two of the three family members to comply with the anti-nepotism policy. But the company chose to make a “clean sweep” – probably out of a sense that whoever remained would not be a happy camper anyway.

The three employees filed a federal lawsuit alleging gender discrimination based on a theory that their “familial status” – their family relationship – was the reason for their discharge. The Federal court agreed but held that “familial status” is not the same as gender and therefore has no protection under federal law.

While this decision is a correct interpretation of federal anti-discrimination law, employers should be aware that some states and municipalities do have laws that protect “familial status.” In those locations, this case may well have had a different outcome.

Trade Secrets – Customer Lists – Photographic Memory

Robert Martin started working for Al Minor & Associates, Inc. (AMA) in 1998 as a Pension Analyst. AMA is a Columbus, Ohio Company that designs and administers pension plans. Martin was never asked to sign any kind of employment, nonsolicitation, or noncompete agreement. In 2002, while still working for AMA, Martin formed his own company, Martin Consultants, LLC, with the idea of going into business for himself – the same business as AMA. A year later, Martin quit his job and jump started his own company, including taking 15 of AMA’s clients with him. All parties agreed that Martin never took any confidential documents with him when he left AMA. He didn’t need to, in part because he had memorized all information about AMA’s clients, including their names, contact information and other key data.

AMA sued Martin for misappropriating trade secrets – the customer list and related customer information. Martin’s defense was that he only took the information that he carried in his head, that AMA did not have the right to control his memory, that AMA could have protected this information by having him sign a nonsolicitation or noncompete agreement, and that AMA was going overboard in trying to prevent him from operating a competing business. He got a “thumbs down” verdict on all points from both a jury and the reviewing courts.

Ohio, like most states, recognizes and protects “trade secrets,” and in this case Ohio’s definition of “trade secret” included customer information. The Court concluded that it made no difference that Martin had taken the protected information in his head as opposed to on a sheet of paper. Either way, he took confidential business information and used it to compete against his former company.

This case is another illustration of the fact that while it is best to protect confidential information through written agreements, the law itself regulates what a former employee can do with inside data.