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Fourth Circuit Holds that Baltimore City Employee Presents Strong Case of Sexual Harassment

Sexual Harassment Decision Reversed: While some of my employment lawyer colleagues may disagree, in my view a definite change has come to the Fourth Circuit in its willingness to overturn federal district court decisions favorable to employers.

Virginia employers, whose cases go to the Fourth Circuit for review, should take note.

Case in point: Okoli v City of Baltimore

On August 8, 2011, the Fourth Circuit found in favor of the employee (Ms. Okoli), vacating the lower court’s grant of summary judgment to the employer (City of Baltimore) and remanding this sexual harassment case on three claims: hostile work environment, quid pro quo harassment, and retaliation. In the case, Ms. Okoli alleges that her boss, John P. Stewart, director of Baltimore’s Commission on Aging and Retirement (“CARE”), sexually harassed her.

The federal district court had dismissed Ms. Okoli’s sexual harassment claims finding, in part, that there were “[j]ust three or four incidents [of physical contact] over a five month period,” no physical threat to Ms. Okoli, and Mr. Stewart had stopped the incidents on his own. The lower court had also concluded that Ms. Okoli had read too much into certain actions, and that Mr. Stewart had decided to fire her before she reported the alleged harassment (thus negating the retaliation claim.)

The Fourth Circuit assessed the facts quite differently. In sharp contrast to the lower court’s analysis, the Fourth Circuit held that Ms. Okoli “presents a strong claim for hostile work environment” because she had suffered 12 incidents of sexually harassing misconduct in four months that spanned “fondling, kissing, propositioning, describing sexual activities, and asking intimate questions.” As the court noted, “some of the incidents may have been severe enough to be actionable in and of themselves.” The Fourth Circuit’s analysis of the employee’s quid pro quo and retaliation claims also provide useful insights for employment attorneys who bring or defend such claims.

While a few cases does not a trend make, this case and other recent decisions from the Fourth Circuit are encouraging to employees who allege serious incidents of sexual harassment in the workplace.

Okoli v City of Baltimore — Appeal from the U.S. District Court for the District of Maryland, at Baltimore. William M. Nickerson, Senior District Judge; 1:06-cv-03025-WMN; Argued: March 22, 2011; Decided: August 8, 2011; Before KING, GREGORY, and WYNN, Circuit Judges.

Religious Discrimination Exemption Bars Employee’s Title VII Claims against Catholic Facility Based on Religious Attire

Religious Discrimination: Adopting a broad interpretation of the word “employment” in Title VII’s exemption for religious organizations, the Fourth Circuit nullified the employee’s workplace harassment, retaliation, and discriminatory termination claims. In the case, Lori Kennedy, a geriatric nurse, sued her former employer, St. Catherine, alleging employment discrimination stemming from Ms. Kennedy’s religious attire. As a member of the Church of the Brethren, Ms. Kennedy wore “modest garb” including long dresses or skirts and a hair covering. St. Catherine, a Catholic facility, told Ms. Kennedy that her attire was inappropriate for the facility. Ms. Kennedy was fired after she refused to change her attire.

Title VII includes various exemptions, including one for religious organizations as follows:

This subchapter [of Title VII] shall not apply to . . .a religious corporation, association, educational institution, or society with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities.

The EEOC Compliance Manual had stated that, for purposes of this exemption, “employment” should be narrowly construed to mean only “employment decisions,” such as hiring and firing. Relying on the EEOC’s interpretation, the district court had concluded that St. Catherine’s decision to terminate Ms. Kennedy was an exempt “employment decision” that was outside of Title VII’s reach, but that the workplace harassment and retaliation claims were not “employment decisions” and therefore could be the basis for Title VII claims.

The Fourth Circuit disagreed, and held that limiting the religious organization exemption to “employment decisions,” as opposed to all aspects of the employment relationship, was “simply incompatible” with the statute. As a consequence, Ms. Kennedy’s harassment and retaliation claims — like her discriminatory firing claim — could not survive.

According to the dissent, “in one fell swoop,” through this opinion, the Fourth Circuit has “shielded religious organizations from every Title VII claim alleging either religious harassment or retaliation for opposing such harassment.”

Lori Kennedy v. St Joseph’s Ministries, Inc., d/b/a St. Joseph’s Ministries, No. 10-1792, Appeal from the United States District Court for the District of Maryland, at Baltimore, Paul W. Grimm, Magistrate Judge. Decided: September 14, 2011 before KING, SHEDD, and WYNN, Circuit Judges. Reversed and remanded by published opinion. Judge Shedd wrote the majority opinion, in which Judge Wynn joined. Judge King wrote a dissenting opinion.

Virginia Employment Law: Wage Garnishments (VA Code § 34-29)

As a courtesy to employers and employment lawyers, The Employment Law Chronicle provides links to the text of key Federal, Virginia, and District of Columbia labor and employment laws published on government sites.

In addition to setting restrictions on the amount of employee pay that can be garnished, the Virginia Wage Garnishment Law makes it illegal to fire an employee for being subjected to garnishment for a single debt.

Virginia Non-Compete Agreements: Home Paramount v. Shaffer

“Employers, Draft Your Non-Compete Provisions in Employment Agreements Carefully.” That is the main takeaway from a recent Virginia Supreme Court decision.

In Home Paramount Pest Control v. Shaffer, the Court held that the former employer’s non-compete restriction in its employment agreement was overbroad and unenforceable because it effectively restricted former employees from performing any activity whatsoever for any competitor of the former employer’s. Invalidating a provision that the Court acknowledged was “identical” to a covenant not to compete that the Court had upheld more than 20 years ago, the Court said the law of non-compete agreements in Virginia has “evolved.”

In light of this case, employment lawyers and employers may need to shake off the dust and clean up old non-compete agreements. Here are the general rules for non-competes in Virginia:

To be valid, a non-compete agreement must be narrowly drawn to protect the employer’s legitimate business interest, not be unduly burdensome on the employee’s ability to earn a living, and not be against public policy.

To determine whether a non-compete agreement meets the above factors, Virginia courts consider three elements: function, geographic scope, and duration. In other words, the function, geographic scope, and duration of a non-compete restriction must be narrowly tailored in that it reaches only the employer’s “legitimate” business interests, does not unduly burden the employee’s ability to work, and does not violate public policy.

In this recent case, as is often true, the focus was on the “function” element. Courts assess the function element of covenants not to compete by determining whether the activities restricted are the same type of activities actually engaged in by the former employer. In general (although this is an oversimplification because the elements must be considered together), employers may restrict employees from engaging in activities with future employers that actually or potentially compete with the former employer. On the other hand, non-compete agreements that restrict employees from working for an employer’s competitor in activities that do not compete with the former employer are generally unenforceable.

The problem in this case was that the provision prohibited former employees from performing any function for a competitor of the former employer’s. The restriction at issue was as follows:

The Employee will not engage directly or indirectly or concern himself/herself in any manner whatsoever in the carrying on or conducting the business of exterminating, pest control, termite control and/or fumigation services as an owner, agent, servant, representative, or employee, and/or as a member of a partnership and/or as an officer, director or stockholder of any corporation, or in any manner whatsoever, in any city, cities, county or counties in the state(s) in which the Employee works and/or in which the Employee was assigned during the two (2) years next preceding the termination of the Employment Agreement and for a period of two (2) years from and after the date upon which he/she shall cease for any reason whatsoever to be an employee of [Home Paramount].

According to the Court, the highlighted language effectively restricted employees from working for any business in the pest control industry in any capacity and barred employees from engaging, even indirectly, with a competitor of the former employer’s. Accordingly, the restriction was overbroad as to the functions restricted.

In addition to overturning prior case law on non-compete agreements in Virginia, the case is worth reading as it provides several illustrations and examples of enforceable and unenforceable non-compete agreements based on recent Virginia case law.

HOME PARAMOUNT PEST CONTROL COMPANIES, INC. v. JUSTIN SHAFFER, ET AL., No. 101837, November 4, 2011, OPINION BY JUSTICE WILLIAM C. MIMS