Recent Developments from Around the States

Here, the employer leased a truck driver pursuant to a written leasing contract. Subsequently, the employer hired the driver as a full-time employee. The leasing company then sued for liquidated damages of $15,000, plus costs, expenses, and attorney's fees under paragraph 13 of the contract. The employer claimed, in response, that paragraph 13 was unenforceable because it restricted the truck driver's right to free employment. The trial judge disagreed, awarding both liquidated damages and attorney's fees.

The Illinois Supreme Court affirmed, finding that the “anti-raiding” provision was neither a covenant not to compete nor a restrictive covenant between employer and employee; it simply restricted one employer's ability to hire former employees of the other employer. As such, it did not act as a restraint on trade because it protected the leasing company's sole business asset, its drivers, from being hired away by its customers. Furthermore, paragraph 13 was reasonable because it did not restrict employees from working generally with other employers. Thus, the leasing company's “anti-raiding” contract provision did not violate public policy.

NEW JERSEY

Recreational Activity Compelled by Employer Covered By Workers' Compensation

The Supreme Court of New Jersey has ruled that recreational or social activities compelled by an employer constitute work-related activities under the New Jersey Workers' Compensation Act. Lozano v. Frank DeLuca Construction, 2004 WL 434009 (N.J. March 10).

Porfirio Lozano was a general laborer for Frank DeLuca Construction. Lozano did not have a fixed place of employment, but worked wherever his employer assigned him on any given day. Because Lozano did not have a driver's license and did not know how to drive, he relied on the company's owner, Frank DeLuca, for transportation to and from work.

Lozano had completed a job at a home when the homeowner and DeLuca began racing go-carts on the property. DeLuca then instructed Lozano to get in a go-cart. Although Lozano said he could not drive, DeLuca told Lozano to “get in” and that “it was easy.” Lozano understood this to be a command, raced the go-cart and crashed, sustaining severe injuries.

Lozano filed a workers' compensation claim. The Judge of Compensation granted the employer's motion to dismiss, concluding that the accident resulted from a recreational activity outside the scope of employment. Relying on legislative history, the New Jersey Supreme Court concluded that when an employee establishes that his or her employer required participation in an activity of a recreational or social nature, courts should consider the activity as they would any other compensable work-related assignment. Further, when an employee alleges indirect or implicit compulsion, the employee must demonstrate an objectively reasonable basis in fact for believing that the employer had compelled participation in the activity. The court remanded Lozano's case for a new trial in light of its ruling.

NEW YORK

Arbitration Clause Not Superseded By Collective Bargaining Agreement

A New York appellate court has ruled that a broad arbitration clause in an employment contract was not superceded by an arbitration clause in a collective bargaining agreement covering the employee. DiBello v. Salkowitz, 2004 WL 334364 (N.Y.A.D. 1 Dept. Feb. 24).

Russ DiBello was employed as an announcer on a New York City radio station owned and operated by the corporate defendants (Clear Channel). After Clear Channel informed DiBello that his contract would not be renewed, he sued Clear Channel and Joel Salkowitz, the radio station manager. DiBello alleged tortious interference with actual and prospective contractual relations, defamation, and race discrimination in violation of New York state and city human rights laws.

The employment contract between DiBello and Clear Channel provided for final and binding arbitration for disputes or claims relating to the contract, “whether based on contract, tort, discrimination, retaliation or otherwise.” The lower court granted Clear Channel's motion to stay the action and compel arbitration. DiBello appealed. He did not dispute that his claims were within the scope of his contract's arbitration clause, but argued that the clause was superceded by a more limited arbitration provision in an applicable collective bargaining agreement.

The Appellate Division, First Department disagreed, finding that the contract did not provide for total displacement of its arbitration clause by the arbitration provision in the collective bargaining argument. However, the procedures provided by the collective bargaining agreement would govern the arbitration. That was because there was language in the contract specifying that the “dispute resolution process” of the union contract covering plaintiff would displace otherwise applicable American Arbitration Association rules. The court further determined that Salkowitz, as an agent of Clear Channel, was entitled to demand arbitration of the claims against him.

OHIO

Discrimination Because of Parenthood Not Actionable

The Ohio Court of Appeals has held that discrimination based upon an individual's status as a parent is not actionable under Ohio law. Mustard v. Timothy J. O'Reilly Co., 2004 WL 192957 (Ohio Ct. App. Feb. 2).

In this case the employer's owner, Timothy O'Reilly, approached Mustard about considering employment as a sales representative. Although Mustard was actively involved at her daughter's school and also was a Mary Kay Cosmetics consultant, she represented that her Mary Kay work would not interfere with a new job. Thereafter, in a meeting with O'Reilly to discuss her salary and benefits, she requested one week off to attend a Mary Kay convention.

On her first day of work, Mustard also informed O'Reilly that she needed to reschedule some of her training dates due to a conflict with a pizza party at her daughter's school, and she told another employee that she had to attend Mary Kay meetings every Monday. The next day, O'Reilly attempted to call Mustard four times throughout the day and was never able to reach her. When O'Reilly finally spoke to Mustard, she told him that she had to take her daughter to the emergency room for a broken arm and was required to turn her cell phone off while in the hospital. At that point, O'Reilly terminated Mustard's employment and, according to her, stated “we're going to end this before we even get started because we feel you have too many priorities in your life. You're a mom first and we're going to have scheduling conflicts because of it.” O'Reilly denied stating that Mustard was “a mom first,” instead maintaining that he informed her that she was terminated because of scheduling conflicts. Mustard filed suit alleging that she was discriminated against on the basis of her sex and her status as a mother. The trial court granted the employer's motion for summary judgment, dismissing Mustard's claims in their entirety.

The appellate court affirmed, finding that even if O'Reilly told Mustard that she was terminated because she was “a mom first,” discrimination based upon an individual's status as a parent is not actionable under Ohio law. Her sex discrimination claim was also rejected as lacking merit.

Age Discrimination Plaintiff Must Show Replacement By 'Substantially Younger' Employee

The Supreme Court of Ohio has held that in order to prove age discrimination under Ohio law, an employee must demonstrate that he was replaced by, or the discharge permitted the retention of, a person of substantially younger age, although the court declined to define “substantially younger.” Coryell v. Bank One Trust Co. N.A., 803 N.E. 2d 781 (Ohio March 3).

At the age of 49, Coryell was terminated as an employee of Bank One and was replaced by a 42-year-old male. He filed suit against Bank One for wrongful termination, alleging that Bank One replaced him with someone substantially younger. The trial court dismissed the case because Coryell could not prove that he was replaced by someone under the age of 40.

The Ohio Supreme Court rejected the holding of the lower court, concluding, like courts construing the federal Age Discrimination in Employment Act, that an employee suing for age discrimination could proceed under Ohio law if replaced by someone substantially younger, even though the person replacing the employee was older than 40. However, the Ohio Supreme Court declined to define, more precisely, the meaning of “substantially younger,” ruling that this is a concept which defies absolute definition.

ILLINOIS

One-Year Restriction on Employee Raiding Enforceable

The Supreme Court of Illinois has ruled that a 1-year “anti-raiding” provision in an employee leasing contract is not invalid as against public policy. H & M Commercial Driver Leasing, Inc. v. Fox Valley Containers, Inc., No. 96057 (Ill. Feb. 20), 2004 WL 335151. This decision could prove significant not only to companies with leasing arrangements, but also to businesses that provide and hire temporary employees.

Here, the employer leased a truck driver pursuant to a written leasing contract. Subsequently, the employer hired the driver as a full-time employee. The leasing company then sued for liquidated damages of $15,000, plus costs, expenses, and attorney's fees under paragraph 13 of the contract. The employer claimed, in response, that paragraph 13 was unenforceable because it restricted the truck driver's right to free employment. The trial judge disagreed, awarding both liquidated damages and attorney's fees.

The Illinois Supreme Court affirmed, finding that the “anti-raiding” provision was neither a covenant not to compete nor a restrictive covenant between employer and employee; it simply restricted one employer's ability to hire former employees of the other employer. As such, it did not act as a restraint on trade because it protected the leasing company's sole business asset, its drivers, from being hired away by its customers. Furthermore, paragraph 13 was reasonable because it did not restrict employees from working generally with other employers. Thus, the leasing company's “anti-raiding” contract provision did not violate public policy.

NEW JERSEY

Recreational Activity Compelled by Employer Covered By Workers' Compensation

The Supreme Court of New Jersey has ruled that recreational or social activities compelled by an employer constitute work-related activities under the New Jersey Workers' Compensation Act. Lozano v. Frank DeLuca Construction, 2004 WL 434009 (N.J. March 10).

Porfirio Lozano was a general laborer for Frank DeLuca Construction. Lozano did not have a fixed place of employment, but worked wherever his employer assigned him on any given day. Because Lozano did not have a driver's license and did not know how to drive, he relied on the company's owner, Frank DeLuca, for transportation to and from work.

Lozano had completed a job at a home when the homeowner and DeLuca began racing go-carts on the property. DeLuca then instructed Lozano to get in a go-cart. Although Lozano said he could not drive, DeLuca told Lozano to “get in” and that “it was easy.” Lozano understood this to be a command, raced the go-cart and crashed, sustaining severe injuries.

Lozano filed a workers' compensation claim. The Judge of Compensation granted the employer's motion to dismiss, concluding that the accident resulted from a recreational activity outside the scope of employment. Relying on legislative history, the New Jersey Supreme Court concluded that when an employee establishes that his or her employer required participation in an activity of a recreational or social nature, courts should consider the activity as they would any other compensable work-related assignment. Further, when an employee alleges indirect or implicit compulsion, the employee must demonstrate an objectively reasonable basis in fact for believing that the employer had compelled participation in the activity. The court remanded Lozano's case for a new trial in light of its ruling.

NEW YORK

Arbitration Clause Not Superseded By Collective Bargaining Agreement

A New York appellate court has ruled that a broad arbitration clause in an employment contract was not superceded by an arbitration clause in a collective bargaining agreement covering the employee. DiBello v. Salkowitz, 2004 WL 334364 (N.Y.A.D. 1 Dept. Feb. 24).

Russ DiBello was employed as an announcer on a New York City radio station owned and operated by the corporate defendants (Clear Channel). After Clear Channel informed DiBello that his contract would not be renewed, he sued Clear Channel and Joel Salkowitz, the radio station manager. DiBello alleged tortious interference with actual and prospective contractual relations, defamation, and race discrimination in violation of New York state and city human rights laws.

The employment contract between DiBello and Clear Channel provided for final and binding arbitration for disputes or claims relating to the contract, “whether based on contract, tort, discrimination, retaliation or otherwise.” The lower court granted Clear Channel's motion to stay the action and compel arbitration. DiBello appealed. He did not dispute that his claims were within the scope of his contract's arbitration clause, but argued that the clause was superceded by a more limited arbitration provision in an applicable collective bargaining agreement.

The Appellate Division, First Department disagreed, finding that the contract did not provide for total displacement of its arbitration clause by the arbitration provision in the collective bargaining argument. However, the procedures provided by the collective bargaining agreement would govern the arbitration. That was because there was language in the contract specifying that the “dispute resolution process” of the union contract covering plaintiff would displace otherwise applicable American Arbitration Association rules. The court further determined that Salkowitz, as an agent of Clear Channel, was entitled to demand arbitration of the claims against him.

OHIO

Discrimination Because of Parenthood Not Actionable

The Ohio Court of Appeals has held that discrimination based upon an individual's status as a parent is not actionable under Ohio law. Mustard v. Timothy J. O'Reilly Co., 2004 WL 192957 (Ohio Ct. App. Feb. 2).

In this case the employer's owner, Timothy O'Reilly, approached Mustard about considering employment as a sales representative. Although Mustard was actively involved at her daughter's school and also was a Mary Kay Cosmetics consultant, she represented that her Mary Kay work would not interfere with a new job. Thereafter, in a meeting with O'Reilly to discuss her salary and benefits, she requested one week off to attend a Mary Kay convention.

On her first day of work, Mustard also informed O'Reilly that she needed to reschedule some of her training dates due to a conflict with a pizza party at her daughter's school, and she told another employee that she had to attend Mary Kay meetings every Monday. The next day, O'Reilly attempted to call Mustard four times throughout the day and was never able to reach her. When O'Reilly finally spoke to Mustard, she told him that she had to take her daughter to the emergency room for a broken arm and was required to turn her cell phone off while in the hospital. At that point, O'Reilly terminated Mustard's employment and, according to her, stated “we're going to end this before we even get started because we feel you have too many priorities in your life. You're a mom first and we're going to have scheduling conflicts because of it.” O'Reilly denied stating that Mustard was “a mom first,” instead maintaining that he informed her that she was terminated because of scheduling conflicts. Mustard filed suit alleging that she was discriminated against on the basis of her sex and her status as a mother. The trial court granted the employer's motion for summary judgment, dismissing Mustard's claims in their entirety.

The appellate court affirmed, finding that even if O'Reilly told Mustard that she was terminated because she was “a mom first,” discrimination based upon an individual's status as a parent is not actionable under Ohio law. Her sex discrimination claim was also rejected as lacking merit.

Age Discrimination Plaintiff Must Show Replacement By 'Substantially Younger' Employee

The Supreme Court of Ohio has held that in order to prove age discrimination under Ohio law, an employee must demonstrate that he was replaced by, or the discharge permitted the retention of, a person of substantially younger age, although the court declined to define “substantially younger.” Coryell v. Bank One Trust Co. N.A. , 803 N.E. 2d 781 (Ohio March 3).

At the age of 49, Coryell was terminated as an employee of Bank One and was replaced by a 42-year-old male. He filed suit against Bank One for wrongful termination, alleging that Bank One replaced him with someone substantially younger. The trial court dismissed the case because Coryell could not prove that he was replaced by someone under the age of 40.

The Ohio Supreme Court rejected the holding of the lower court, concluding, like courts construing the federal Age Discrimination in Employment Act, that an employee suing for age discrimination could proceed under Ohio law if replaced by someone substantially younger, even though the person replacing the employee was older than 40. However, the Ohio Supreme Court declined to define, more precisely, the meaning of “substantially younger,” ruling that this is a concept which defies absolute definition.