The year 2009 was certainly a busy one in Washington.1The Americans With Disabilities Amendment Act, the Lilly Ledbetter Fair Pay Act, E-Verify, and the amendments to the Family Medical Leave Act are just a few of the more significant laws that came to life this past year.
However, even in the face of these significant legislative developments, your Missouri Courts may have made the biggest decade-ending splash. In a major departure from federal law, the Missouri Supreme Court held that supervisors may be held personally liable for violations of the Missouri Human Rights Act. The Missouri Courts of Appeals got into the act as well, issuing one opinion that unquestionably narrows the circumstances under which non-compete agreements will be upheld, and a second opinion that may very well have significantly expanded an employer’s obligation to conduct thorough background checks on newly hired employees. Never an agency to be relegated to a footnote, the Missouri Department of Labor and Industrial Relations also rattled one of its more effective sabers in 2009 — finding more than 126 prevailing wage violations, and assessing more than 1.1 million dollars in back wages against — sometimes unwitting — employers.
SUPERVISORS FACE INDIVIDUAL LIABILITY UNDER MHRA
Hill v. Ford Motor Co., 277 S.W.3d 659 (2009)
Supervisors are not subject to personal liability under federal anti-discrimination statutes. For years, that principle applied in the context of lawsuits arising under the MHRA, as well. However, in Daugherty v. City of Maryland Heights, 231 S.W.3d 814, 816 (Mo. banc 2007), the Supreme Court of Missouri explained that based on the textual differences between Missouri’s anti-discrimination statute and its federal counterpart, Missouri courts were not to apply federal principles where they conflicted with the Missouri statute.2 In Hill, the Court lived up to its earlier command, and held that supervisors can be held personally liable in their individual capacities for actions that violate the Act. The Court observed: “The statute is clear that the MHRA is intended to reach not just the corporate or public employer but any person acting directly in the interest of the employer.” Hill, at 669. A supervisory employee clearly falls into that category. Id.
The Hill decision is likely to result in more discrimination lawsuits being litigated under the MHRA in Missouri state court, because supervisors are generally Missouri citizens whereas many corporate entities are not. This has the legal effect of precluding removal to federal court in most instances. Generally, employers prefer federal court over state court because damages are more restricted and summary judgment is more easily obtainable in the federal forum.
ENFORCEMENT OF NON-COMPETE AGREEMENTS
MORE DIFFICULT IN MISSOURI
Brown v. Rollet Bros. Trucking Co., 291 S.W.3d 766 (Mo. Ct. App.).
Generally, to be enforceable, a covenant not to compete and non-solicitation agreement must be reasonable in scope in terms of geography and duration. In Brown, the Missouri Court of Appeals weakened the theretofore direct relationship between the scope and terms of an agreement and the agreement’s enforceability. Specifically, the Court held that a commodities transportation brokerage firm’s customer list was not a trade secret because the firm’s list could otherwise be compiled from generally available sources. Moreover, the Court held that a dispatcher who worked for the brokerage firm and who used the firm’s customer list to maintain daily contact with between 50 and 100 customers did not have a sufficient “opportunity to influence customers” to justify application of a covenant not to compete against him.
After Brown, Missouri courts will likely more closely scrutinize customer lists by analyzing them in the context of the particular employee who has been accused of misappropriating the list to determine whether the list qualifies as a trade secret. Thus, employers that permit low-level employees, who do not have a track record of transferring clients from company to company, to access customer lists may have a much more difficult time enforcing covenants not to compete and non-solicitation agreements against those employees.
ARE YOUR BACKGROUND CHECKS REASONABLY THOROUGH?
Herndon v. City of Manchester, 284 S.W.3d 682 (Mo. Ct. App. 2009).
So your background check procedure usually results in an applicant’s former employer providing general information such as the applicant’s title and dates of employment — that’s good enough, right? Maybe not. In Herndon v. City of Manchester, Herndon, a female police officer, sued the City of Manchester alleging that she was sexually harassed by one of her male supervisors, Willie Epps. The City moved for summary judgment arguing that it had taken reasonable steps to prevent harassment (by implementing policies prohibiting harassment and mechanisms for reporting alleged violations of those policies), and had promptly corrected the harassment by discharging Epps once it became aware of his actions. Nevertheless, because Herndon produced evidence showing that Epps had been discharged by a former employer more than fifteen years prior based on a citizen complaint of sexual harassment, the question of whether the City took reasonable steps to prevent harassment at the hands of Epps, the Court of Appeals held, was one for the jury.
After Herndon, Missouri employers should be much more proactive when incomplete or unsatisfactory background reports are received from an applicant’s former employer. This is especially true where, as in Herndon, there is any information suggesting that the employee may have left his or her former employer involuntarily following misconduct that might form the basis for a lawsuit if history repeats itself.
MORE GOVERNMENT CONTRACTS LEADS TO
INCREASED PREVAILING WAGE ENFORCEMENT
The Missouri Department of Labor and Industrial Relations (DOLIR) is responsible for enforcing Missouri’s prevailing wage laws. Missouri prevailing wage law mirrors, although not precisely, the Davis Bacon Act, and requires contractors and subcontractors who are awarded state-funded contracts to pay prevailing wage rates that are typically significantly higher than those paid to employees working on private contracts. As the private construction industry continues to sag under the weight of a faltering economy, more and more contractors are expanding their operations into state-funded projects that have historically been dominated by heavily unionized contractors.
Underpaying employees, misclassifying employees, or simply failing to generate the appropriate documentation describing employees’ daily activities can result in contractors being required to pay significant sums to employees as back-pay. Over the course of 2009, the DOLIR assessed more than 1.1 million dollars in back wages — and enforcement efforts show no signs of slowing. Importantly, contractors are not only required to meet prevailing wage requirements as to their own employees, they are also required to police their subcontractors to ensure compliance.
Contractors that are looking to transition into the realm of government contracting, but are unfamiliar with the myriad of unique government contracting requirements, should seek legal counsel to ensure compliance within their own organizations, and to develop a system passing prevailing wage and other government requirements to their subcontractors. Even unintentional or unwitting violations of government contracting requirements can quickly turn an otherwise lucrative business opportunity into a losing proposition.
1 For an overview of a few of the more significant changes to federal employment law in 2009, see SIGNIFICANT EMPLOYMENT LAW CHANGES IN 2009, Mark McQueen, January 12, 2010, available at: http://www.spencerfane.com/Publication/Publication.asp?Key=614&~=. For a more complete discussion of changes to the Americans With Disabilities Act, see PUTTING THE ADA BACK ON TRACK, David Wing, November 1, 2008, available at: http://www.spencerfane.com/Publication/Publication.asp?Key=521&~=.
2 Daugherty v. City of Maryland Heights, 231 S.W.3d 814, 816 (Mo. banc 2007) (holding that, under the MHRA, a protected category need only be a “contributing factor” in an adverse employment decision to support liability).