Recent Developments from Around the States

The agreement also provided that Key's salary would be at her current rate, with periodic increases. Although she argued that such language meant that she was entitled at least to her current salary during the term of the contract, the court found this provision indefinite as well.

Finally, the court was unwilling to enforce more definite provisions of the contract, such as the stock transfer commitment, because the contract was intended to be entire, and the defective provisions went to essential elements of the contract: the duration of the contract, and Key's salary. Her claim based on a second contract, signed in 2001, was also rejected as unmeritorious. This case points out the need for clear and well-defined contract provisions in executive agreements.

MINNESOTA

The Supreme Court of Minnesota held that the assault exception to the exclusive remedy provision and the intentional tort exception to the exclusive remedy provision under the Minnesota Workers Compensation Act (WCA) in a case involving a “birthday spanking” given to an employee by his co-workers. Meintsma v. Loram Maintenance of Way, Inc., 2004 WL 1688183 (Minn. July 29).

In this case, a few days after Jeremy Meintsma's birthday, five of his co-workers grabbed him from behind, wrestled him to the concrete floor, and gave him a “birthday spanking” while he was at work, using a two-by-four fashioned into a paddle. Later that evening, Meintsma went to the emergency room where doctors discovered contusions on his back, abrasions to his left arm, muscle spasms in his lower back, and a superficial cut on his left wrist. Ultimately, the co-workers were charged with fifth-degree assault and disorderly conduct, and they eventually pled guilty to disorderly conduct. Some members of the company's management were aware of the birthday spanking practice. Meintsma filed suit against the company and the co-workers individually.

The Supreme Court of Minnesota found that Meintsma's sole remedy against the company was under the WCA, for workers' compensation. As to the claims against the employees who administered the spanking, the Supreme Court of Minnesota found that the evidence was sufficient to require a trial on the question of whether the co-workers themselves had a deliberate intent to inflict injury, which could trigger an exemption to the workers' compensation exclusivity defense.

OHIO

The Ohio Court of Appeals has held that lifting, kneeling, and sitting are major life activities for purposes of defining the term “disability” under the Ohio Civil Rights Act. House v. Kirtland Capital Partners, 2004 WL 1559779 (Ohio Ct. App. July 9).

In this case, Gloria House injured her back in a car accident, but she continued to work full time with some discomfort. A few years later, House elected to undergo spinal-fusion surgery to alleviate the pain in her back. Her doctor advised her that she would need 4 months to recover from the surgery. As it turned out, House needed a few more months to recover and her employer terminated her employment before she was ready to return. House filed suit against her employer under the Ohio Civil Rights Act (OCRA) for failure to reasonably accommodate her disability and wrongful discharge. The trial court granted summary judgment in the employer's favor.

The Ohio Court of Appeals found that lifting, kneeling, and sitting are major life activities for purposes of defining the term “disability” under the OCRA because they are basic, manual tasks that are often an unavoidable necessity of daily life. However, House was unable to provide sufficient evidence that her impairments were a severe or significant restriction to her duties at work, and therefore she did not demonstrate a major life activity that was significantly limited. Accordingly, the Ohio Court of Appeals found that House was not disabled under the OCRA.

SOUTH CAROLINA

The Supreme Court of South Carolina has held that language in a restrictive covenant and non-disclosure agreement did not create an employment-at-will relationship, and that the employee handbook did not alter the employment-at-will status. Horton v. Darby Electric, Co., 2004 WL 1553558 (S.C. July 6).

Here, a few years after Horton began working for Darby Electric, he signed a restrictive covenant and non-disclosure agreement that provided that he would not compete with the company or solicit the company's customers for a period of 2 years “following the termination, for any reason, of his employment with” the company. In addition, as the Vice President of Operations with duties that included hiring and firing employees, Horton read and understood the company's employee handbook, which contained a disciplinary policy with permissive language, conspicuous disclaimers that it was not to be construed as an employment contract, and did not provide for mandatory progressive discipline.

Horton was terminated for a series of infractions that in and of themselves were serious enough to proceed directly to termination. Horton filed suit against Darby Electric for breach of contract and breach of an implied covenant of good faith and fair dealing. The trial court granted summary judgment in favor of the company because it found that the agreement created an employment-at-will relationship, and the employee handbook did not alter Horton's employment-at-will status.

The South Carolina Supreme Court rejected the lower court's holding that the agreement signed by Horton expressly created an employment-at-will relationship, because, read in context, the language did not convey that employment could be terminated for any reason. However, the South Carolina Supreme Court agreed with the lower court that the employee handbook's permissive language, conspicuous disclaimers, and lack of mandatory progressive discipline did not alter Horton's at-will status, and therefore affirmed the trial court's decision.

GEORGIA

The Georgia Court of Appeals recently ruled that an executive employment contract was unenforceable due to lack of specificity in its provisions. Key v. Naylor, Inc., 2004 WL 1535227 (Ga. Ct. App. July 9).

Fay Key worked for a family-owned printing business. John Naylor, the owner of the company, was approaching retirement, and he decided to appoint his son, Steve Naylor, to the position of Chairman of the Board. Key was made company president. At the time of her promotion, Key was told that she would receive 20% of the company's stock. Steve Naylor and Key signed an employment contract for Key in October, 2000. This short contract referred to the transfer of 20% of the company's stock to Key, also provided for “10 years of employment,” and in addition gave Key the right to extend her employment indefinitely at her option. Furthermore, she was given the right to enforce the agreement indefinitely, even if she was no longer employed by the company. Under such circumstances, the Georgia appellate court held that the term or duration of the contract was indefinite.

The agreement also provided that Key's salary would be at her current rate, with periodic increases. Although she argued that such language meant that she was entitled at least to her current salary during the term of the contract, the court found this provision indefinite as well.

Finally, the court was unwilling to enforce more definite provisions of the contract, such as the stock transfer commitment, because the contract was intended to be entire, and the defective provisions went to essential elements of the contract: the duration of the contract, and Key's salary. Her claim based on a second contract, signed in 2001, was also rejected as unmeritorious. This case points out the need for clear and well-defined contract provisions in executive agreements.

MINNESOTA

The Supreme Court of Minnesota held that the assault exception to the exclusive remedy provision and the intentional tort exception to the exclusive remedy provision under the Minnesota Workers Compensation Act (WCA) in a case involving a “birthday spanking” given to an employee by his co-workers. Meintsma v. Loram Maintenance of Way, Inc., 2004 WL 1688183 (Minn. July 29).

In this case, a few days after Jeremy Meintsma's birthday, five of his co-workers grabbed him from behind, wrestled him to the concrete floor, and gave him a “birthday spanking” while he was at work, using a two-by-four fashioned into a paddle. Later that evening, Meintsma went to the emergency room where doctors discovered contusions on his back, abrasions to his left arm, muscle spasms in his lower back, and a superficial cut on his left wrist. Ultimately, the co-workers were charged with fifth-degree assault and disorderly conduct, and they eventually pled guilty to disorderly conduct. Some members of the company's management were aware of the birthday spanking practice. Meintsma filed suit against the company and the co-workers individually.

The Supreme Court of Minnesota found that Meintsma's sole remedy against the company was under the WCA, for workers' compensation. As to the claims against the employees who administered the spanking, the Supreme Court of Minnesota found that the evidence was sufficient to require a trial on the question of whether the co-workers themselves had a deliberate intent to inflict injury, which could trigger an exemption to the workers' compensation exclusivity defense.

OHIO

The Ohio Court of Appeals has held that lifting, kneeling, and sitting are major life activities for purposes of defining the term “disability” under the Ohio Civil Rights Act. House v. Kirtland Capital Partners, 2004 WL 1559779 (Ohio Ct. App. July 9).

In this case, Gloria House injured her back in a car accident, but she continued to work full time with some discomfort. A few years later, House elected to undergo spinal-fusion surgery to alleviate the pain in her back. Her doctor advised her that she would need 4 months to recover from the surgery. As it turned out, House needed a few more months to recover and her employer terminated her employment before she was ready to return. House filed suit against her employer under the Ohio Civil Rights Act (OCRA) for failure to reasonably accommodate her disability and wrongful discharge. The trial court granted summary judgment in the employer's favor.

The Ohio Court of Appeals found that lifting, kneeling, and sitting are major life activities for purposes of defining the term “disability” under the OCRA because they are basic, manual tasks that are often an unavoidable necessity of daily life. However, House was unable to provide sufficient evidence that her impairments were a severe or significant restriction to her duties at work, and therefore she did not demonstrate a major life activity that was significantly limited. Accordingly, the Ohio Court of Appeals found that House was not disabled under the OCRA.

SOUTH CAROLINA

The Supreme Court of South Carolina has held that language in a restrictive covenant and non-disclosure agreement did not create an employment-at-will relationship, and that the employee handbook did not alter the employment-at-will status. Horton v. Darby Electric, Co., 2004 WL 1553558 (S.C. July 6).

Here, a few years after Horton began working for Darby Electric, he signed a restrictive covenant and non-disclosure agreement that provided that he would not compete with the company or solicit the company's customers for a period of 2 years “following the termination, for any reason, of his employment with” the company. In addition, as the Vice President of Operations with duties that included hiring and firing employees, Horton read and understood the company's employee handbook, which contained a disciplinary policy with permissive language, conspicuous disclaimers that it was not to be construed as an employment contract, and did not provide for mandatory progressive discipline.

Horton was terminated for a series of infractions that in and of themselves were serious enough to proceed directly to termination. Horton filed suit against Darby Electric for breach of contract and breach of an implied covenant of good faith and fair dealing. The trial court granted summary judgment in favor of the company because it found that the agreement created an employment-at-will relationship, and the employee handbook did not alter Horton's employment-at-will status.

The South Carolina Supreme Court rejected the lower court's holding that the agreement signed by Horton expressly created an employment-at-will relationship, because, read in context, the language did not convey that employment could be terminated for any reason. However, the South Carolina Supreme Court agreed with the lower court that the employee handbook's permissive language, conspicuous disclaimers, and lack of mandatory progressive discipline did not alter Horton's at-will status, and therefore affirmed the trial court's decision.