In Champion, the Michigan Supreme Court ruled that under the MCRA an employer could be held liable for the intentional torts of its supervisor for instances of sexual harassment. The Champion Court held that employers were liable “where the supervisor accomplishes [a] rape through the exercise of his supervisory power over the victim.” In the Champion case, a supervisor used his influence and authority over a lower employee to rape her. The Champion court ruled that the forseeability of the action was not relevant to the employer’s liability.

The Hamed Court overruled the Champion decision, which arose under similar circumstances. The Court’s ruling focused on the fact that employers could not be held liable for the intentional torts of its employees (including supervisors) that were not foreseeable to the employer.

The Michigan Supreme Court stated:

The general rule that an employer is not liable for acts of its employee outside the scope of its business, however, does not preclude vicarious liability in every instance.  This Court has consistently recognized that an employer can be held liable for its employee’s conduct if “the employer ‘knew or should have known of [the] employee’s propensities and criminal record’” before that employee committed an intentional tort.  This inquiry involves an analysis of whether an employer had (1) actual or constructive knowledge of prior similar conduct and (2) actual or constructive knowledge of the employee’s propensity to act in accordance with that conduct.

Although, employers are no longer liable for the unforeseeable torts of their employees under the MCRA, employers must still exercise care in hiring employees. The Court noted that employers might still be liable for the intentional torts of its employees (as well as for negligent hiring or negligent supervision) if the torts were foreseeable.

The court’s ruling turned on the fact that the woman’s employer had warned her that emails sent via her work email account were not confidential. In other words, the employer had the right to look at all email traffic. Under the evidence rules in most jurisdictions, the presence of a third party during attorney client communications will destroy privilege. The court treated the fact that any email might be viewed by the employer as analogous to a third party being present.

In order to ensure that attorney client privilege is maintained, clients need to be careful as to how they transmit information. If clients communicate privileged information via email, make sure that the client is the only one with access to the email account. Even the ability for a spouse or child to use the account may destroy the privilege.

This article was written by Mark S. Demorest, Managing Member of Demorest Law Firm.

Michigan courts continue to enforce non-compete agreements. In a recent case decided by the Michigan Court of Appeals, Brown Dairy Equipment, Inc. v. Lesoski, the court upheld a non-compete agreement between a dairy farming supply business and one of its former sales representatives. The sales representative left the employer to work for one if its competitors. The court noted that goodwill between a business and its customers was important and that non-compete agreements allow employers to protect the value of goodwill by precluding former employees from working for a competitor in a limited market area for a limited time.

If your business is one where employees have the opportunity to take valuable and confidential information with them, you should consider using a non-compete agreement.

To download the Michigan Court of Appeals decision click here.

This article was written by Michael Hayes, a Law Clerk at Demorest Law Firm.

This is informally referred to as a “ban the box” law.  “Ban the box” gets its name from employment applications requiring an applicant to check a box indicating whether they have been convicted of a crime.   Grassroots groups and organizations have sought to enact these laws nationwide. Several

states and over twenty cities in the United States have already enacted these laws including Kalamazoo, Battle Creek, Boston, Chicago, and most recently Detroit.  These laws typically apply only to applicants for public jobs.

Proponents of “ban the box” argue that convicted criminals are unfairly punished and incapable of being re-integrated into society due to their past conduct. However, as this movement advances, private employers should watch out, as three states, (Massachusetts, Hawaii and New Mexico) have already enacted ban the box laws that apply to all employers, not just public employers.

Employers are concerned about these “ban the box” laws. First, obtaining information about an applicant’s criminal history helps to screen out applicants that may not be suitable for a particular job, such as a convicted embezzler working with cash, or a convicted sex offender working with children.  Second, an employer may have a duty to check the backgrounds of job applicants.  A “ban the box” law would prevent an employer from doing so.

So far, Michigan has not adopted a “ban the box” law for private employers.  We will keep you posted.

This article was written by Matthew Ehrlich, Legal Clerk at Demorest Law Firm.

In fearing that a broad ruling “might have implications for future cases that cannot be predicted,” the Court did not issue a “broad holding concerning employees’ privacy expectations vis-à-vis employer-provided technological equipment.” Rather, the Court’s ruling was narrow as it refused to decide whether the officer had an expectation of privacy. Rather, they assumed that there was an expectation of privacy in order to determine that the search was reasonable.

Despite the fact that Quon involved a government search on a government employee (with the resulting Constitutional issues), and the Supreme Court did not address the question of whether an employee has a reasonable expectation of privacy, employers can still take guidance from the case. Private employers should be aware that the Court noted that the search of the officer’s phone would have been “reasonable and normal in the private-employer context” because there was a legitimate reason for the search and “the search was not excessively intrusive.”

Given the rapid advances in technology and the proliferation of social media, employers should consider what extent they have the right to check on their employees’ communications. Companies should develop specific policies on employees’ use of computers, smart phones, and other devices owned by the employer, or in connection with work.

This article was written by Michael K. Hayes, Legal Clerk at Demorest Law Firm.

The only exception to this rule allows an employee to recover damages from the employer if the employee can prove that the employer committed an intentional tort. In order to prevail, the employee must prove the employer acted deliberately, and with intent to cause an injury. Intent to injure will be imputed to the employer if the employer (1) had actual knowledge that an injury was certain to occur and  (2) disregards that knowledge.

In a recent Michigan Court of Appeals decision (Click Here to See a Copy of the Court’s Decision), the court ruled that liability for an intentional tort may exist where “the employer subjects an employee to a continuously operative dangerous condition that the employer knows will cause an injury, that it knows employees are taking insufficient precautions to protect themselves, and that the employer takes no action to remedy the situation.” This case presented a unique situation where multiple injuries occurred, management knew of the injuries, solutions to preventing injuries were discussed, and no changes were made. This created a “certainty of harm” because the employees had no effective means of protecting themselves from injury.

The Court of Appeals, in noting that the employers could have prevented the injuries by adopting some remedial safety equipment, seemed to adopt a negligence standard. Had the employer taken certain safety precautions it would not be open to liability. Only time will tell whether this case  is the first step toward judicial erosion of the prior strict interpretation of the exclusive remedy provision.

This article was written by Michael K. Hayes, Legal Clerk at Demorest Law Firm.

In order to avoid situations similar to the one above, employers should do one of the following: (1) Allow the employee to work through the resignation date; (2) Continue to pay the employee through the resignation date, but tell them that they do not need to actively work during this period; or (3) Add provisions to employment contracts or the employee handbook stating that after receiving an employee’s notice of resignation with a future effective date, the employer may  accept that resignation effective immediately.

This article was written by Mark S. Demorest, Managing Member of Demorest Law Firm.

However, the term “gross misconduct” is not specifically defined in COBRA or in regulations under COBRA. Therefore, employers should be very cautious about withholding COBRA benefits when an employee is terminated for misconduct.  Whether a terminated employee has engaged in “gross misconduct” is a determination for the Courts and will depend on the specific facts and circumstances of the situation.  Employers should be aware that there can be serious consequences for failing to comply with COBRA if an employee’s misconduct is not deemed “gross misconduct”.

There are certain offenses that clearly constitute gross misconduct, and have been deemed so by Courts.  Generally, it can be assumed that being fired for most ordinary reasons, such as excessive absences or generally poor performance, does not amount to “gross misconduct.”

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm.

The most important provisions in a severance agreement are those regarding payment, non-competition, and the release of claims. In a severance agreement, the employee typically agrees to accept payment in exchange for agreeing to release employer from claims he or she may have against employer. It is also very typical for a severance agreement, like many employment agreements, to include a non-compete provision. An agreement not to compete should be reviewed for reasonableness, which will vary depending on the specifics of the situation.

It is recommended that employers offer the terminated employee a reasonable period of time to consider signing a severance agreement with a release. A release is unenforceable unless the employee voluntarily executes it, i.e., the execution is not the result of duress or coercion.

Employers should make sure to have legal counsel draft or review their severance agreement to ensure that the employer is adequately protected. Employees should consult legal counsel before signing a severance agreement to ensure that the agreement terms are fair and reasonable.

This article was written by Natalie C. Najarian, Associate at Demorest Law Firm.

A recent Michigan Court of Appeals ruling in the case Reicher v SET Enters, Inc (click here to view) decided that a settlement agreement between the representative and principal after the representative was terminated and had filed a lawsuit against the principal can negate the non-waiver rule.  In other words, when Reicher decided to settle his claims against the principal he signed away his rights to protection under the SCRA.  When the principal breached the settlement agreement, the statutory penalties under the SCRA did not apply.  Reicher was limited to the damages for breach of contract.

The non-waiver provision will still apply to a contract or agreement establishing or modifying the business relationship between the principal and the sales representative, but does not apply to post-termination agreements.