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Terminating Employee to Avoid Hefty Commission Amounts to a $1 Million Mistake

Posted on: February 20th, 2020 by admin

Francoise Parker marketed energy services for EnerNOC, Inc., for which she was paid a base salary and commissions. The Massachusetts Supreme Judicial Court has held that EnerNOC’s decision to withhold more nearly $350,000 in commissions because Ms. Parker was no longer employed by the Company subjected the Company to treble damages. In short, EnerNOC could not evade the Massachusetts Wage Act by terminating Ms. Parker to avoid paying her commissions.

In 2016, Ms. Parker negotiated a contract for EnerNOC that was the largest in the company’s history, worth more than $20 million.

Under EnerNOC’s commission policy, Ms. Parker was entitled to a commission to be paid on the first year value of the contract. Additionally, under EnerNOC’s “true-up” policy, an additional commission payment would be made based on the full value of the contract, if neither side opted out of the contract at the one-year mark. EnerNOC’s written policy made commissions contingent on an employee’s employment, regardless of the reason for an employee’s separation.

After EnerNOC secured its lucrative contract, Ms. Parker complained to management because the company failed to pay her full commission on the one-year guaranteed portion of the contract. EnerNOC then terminated her employment.

Because she was no longer its employee, EnerNOC also declined to pay Ms. Parker the “true up” portion of her commission a year later, even though neither side opted out of the contract and it was locked in for four additional years.  That “true up” commission payment was worth nearly $350,000.

At trial, the Jury found that the company failed to pay $25,000 in commissions that were owed to Ms. Parker as of her termination date, as well as the $350,000 in “true up” commissions that she would have received if EnerNOC had not unlawfully fired her.  Under the Massachusetts Wage Act, prevailing plaintiffs are entitled to collect treble (three times) the amount of any unpaid wages.  The trial judge awarded Ms. Parker three times the pre-termination commissions, but he did not award multiple damages on the “true up” commissions because they were not actually “due and payable” when she was terminated.

According to the Supreme Judicial Court, that decision was wrong.  The SJC held that commissions are “wages” under the Wage Act and should be trebled, even if they become due after the employee’s termination, when the employer’s decision to fire the employee is itself a violation of the Wage Act.  In Ms. Parker’s case, the Jury had found that EnerNOC fired her as retaliation for her complaint about unfair pay and to avoid having to pay her the “true up” commission.

The SJC also ruled that continued employment can be a valid contingency to be eligible for commissions but that “such a contingency cannot be relied upon by an employer to create circumstances under which the contingency goes unfulfilled in order to deny a commission that otherwise would be due and payable to an employee.”  Since EnerNOC’s motivation for firing Ms. Parker was to keep her from collecting this commission, it could not hide behind a requirement that individuals must be active employees in order to receive commissions.

In Ms. Parker’s case, the SJC ruled that she was entitled to three times the amount of the “true up” commission – over $1 million.  This decision clarifies the scope of employers’ potential liability for retaliating against employees who complain about their pay, since future commissions that would become due and payable but for the retaliation are subject to automatic trebling.

Court Upholds Dismissal of Discrimination Claim Due to Employee’s Failure to Disclose Health Conditions

Posted on: February 11th, 2020 by admin

 

While it is important for employers to diligently engage in an interactive process with its employees, a recent case demonstrates the importance of the obligation of employees in certain situations to disclose medical diagnoses relevant to their ability to perform the essential functions of their job. In a December 23, 2019 decision, Flaherty v. Entergy Nuclear Operations, Inc., 946 F.3d 41 (1st Cir. 2019), the First Circuit upheld a summary judgment decision for an employer because the employee, a nuclear power plant security guard, repeatedly failed to disclose medical diagnoses. It was determined that because of these failures to disclose his diagnoses he was neither reliable nor trustworthy, qualities that were required by regulation for authorization to hold the safety sensitive position.

The employee worked at a nuclear power plant in Massachusetts which required certain clearance authorization because of the safety sensitive areas in the nuclear plant  including the nuclear reactors. This federally regulated certification process was rather extensive requiring “assessments of the applicant’s personal history, employment history, credit history, character and reputation, and criminal history, along with psychological and behavioral tests.”

The employee suffered from several disabilities, including but not limited to symptoms relating to Chronic Fatigue Syndrome (“CFS”) and Post Traumatic Stress Disorder (“PTSD”), which he reported to Veteran’s Affairs following tours in Iraq prior to 2004. However, the employee failed to report any of these disabilities on multiple medical questionnaires during the employer’s certification process and throughout his employment.  He also failed to report CFS on an application for a short term medical leave in 2014.

In early 2015, the employee refused to work a mandatory overtime shift stating that he would be too fatigued to work. Following his refusal to work this mandatory shift, he was suspended. In response, the employee filed an ethics complaint with the Company relating to his suspension stating that he was disabled and suspended despite this fact. During that process, he then provided the Company with his VA medical records which detailed his disabilities, including his CFS. After further evaluation, the employer found that because the employee withheld information relating to these medical diagnoses,  he was not trustworthy or reliable as required by regulations for the certification process to access the safety sensitive areas at nuclear power plants and the employee was terminated.

The First Circuit confirmed the District Court’s decision that the employee failed to show that he was qualified individual capable of performing the essential functions of the position; because the employee failed to disclose his CFS made him untrustworthy and unreliable, the employer was entitled to revoke his clearance authorization which the employee needed to perform the essential functions of the position.

Important for employers to note however, is that this finding does not allow employers to suggest that any time an employee withholds medical diagnoses, they are not qualified to hold a position; in the case of Flaherty, there were federal regulations which required certain standards relating to character and reputation in order to retain safety clearance.

 

 

 

Belfort Serves as Panelist at the MCLE’s 22nd Annual Law Conference

Posted on: December 23rd, 2019 by admin

On December 6, 2019, Bennett & Belfort, P.C. partner, David E. Belfort served as a panel presenter on the topic of “Jury Verdicts: the Big, the Bad and the Ugly; How to Get Them and How to Avoid Them” at the 22nd Annual MCLE Employment Law Conference.  Attorney Belfort, along with three other distinguished panelists, engaged in a dialogue highlighting strategies for achieving and defending against large damage awards.  The panel addressed the pre-trial matters such as how to approach motions in limine, preparing for final pretrial conferences and engaging in jury selection and voir dire.  Mr. Belfort spoke on the effective presentation of evidence at trial, his use of technology in the courtroom and the effective use of trial experts (economic, medical and human resources).

OK Boomer

Posted on: December 23rd, 2019 by admin

Bennett & Belfort, P.C. partner, David E. Belfort, was invited to comment for Massachusetts Lawyers Weekly (12/19/19) on whether the “OK Boomer” retort will find its way into age discrimination lawsuits.  His comments follow:

 

 

Bennett & Belfort Attorney Presents at Suffolk Law Symposium

Posted on: December 6th, 2019 by admin

On November 21, 2019 Bennett & Belfort P.C. attorney Craig D. Levey served as a panelist at Suffolk Law School’s Fall Symposium entitled Automation In The Legal Profession: But At What Costs? The panel was hosted by the Journal of High Technology Law, and focused on the intersection between human attorneys and automation in the legal field.

Mr. Levey discussed how advanced technology and automation plays a pivotal role in his litigation practice, including advancements in the state and federal courts, tools to assist with discovery, and how attorneys can benefit from enhanced legal software.

Mr. Levey was joined on the panel by Ashley Keenan, Esq. of Robinson & Cole, Bryan Natale, Esq. of Burns & Levinson, Francesco Deluca, Esq. of Ogletree Deakins, and Chris Combs, co-founder and COO of LinkSquares. The panel was moderated by Suffolk Law student, Jeremy Siegel.

Congratulations to Mr. Levey for his participation in this successful event.

Six B&B Attorneys Recognized as “Super Lawyers”

Posted on: October 25th, 2019 by admin

 

Bennett & Belfort is proud to announce that Thomas Reuters / “Super Lawyers” has listed Bennett & Belfort P.C. Partners David Belfort,  Todd Bennett and Michael Mason as 2019 New England Super Lawyers; and Partner Eric LeBlanc and Senior Associates Michaela  May and Craig Levey as Rising Stars.

 

Attorney Belfort was selected as a “Top 100” attorney and in the area of Employment Litigation: Plaintiff, and Attorney Bennett in the area of Business Litigation.  Attorney Mason was selected as a Super Lawyer in Employment and Labor.  Attorneys LeBlanc and Levey were selected as “Rising Stars” (Super Lawyers under 40 or within the first 10 years of practice) in the area of Business Litigation. Attorney May was selected as a “Rising Star” in the area of Employment and Labor.

 

“Super Lawyers” evaluates attorneys who have attained a high-degree of peer recognition and professional achievement. The selection process includes independent research, peer nominations and peer evaluations. Up to 5 percent of the lawyers in a state are named to Super Lawyers, and no more than 2.5 percent are named to Rising Stars.

Bennett & Belfort P.C. concentrates its practice in business and commercial litigation and employment law and litigation.

 

Bennett & Belfort Attorneys Win Jury Trial on Overtime Claims

Posted on: October 11th, 2019 by admin

 

On October 4, a Suffolk County jury awarded three restaurant workers $114,498 in unpaid overtime compensation. The jury’s verdict followed a seven-day trial in which B&B attorneys, Michaela May and Craig Levey, represented the Thai kitchen workers.

Each of the Plaintiffs routinely worked six or seven days per week, usually for much more than 40 hours per week, for the Defendant, the Rice Barn restaurant in Needham. Rice Barn failed to pay them the “time and a half” required by the Fair Labor Standards Act (“FLSA”). Rice Barn’s problematic record keeping practices required each plaintiff and some of their former co-workers to reconstruct their hours worked and wages paid through memory. Ultimately, the jury found the plaintiffs and their co-workers credible and awarded each of the three plaintiffs between $27,000 and $46,000 in overtime pay.

Previously, a judge of the Superior Court found that Rice Barn’s failure to timely pay overtime compensation was also a violation of the Massachusetts Wage Act and that, therefore, the Plaintiffs would be entitled to treble damages under that law. Attorneys May and Levey anticipate requesting statutory trebling of the jury’s verdict and an award of attorneys’ fees and costs shortly.

The case is Devaney et al v. Zucchini Gold, LLC, et al (C.A. No. 15-2839).

Bennett and Belfort, P.C. Partner, Todd Bennett, quoted in Massachusetts Lawyers Weekly

Posted on: October 4th, 2019 by admin

Partner Todd Bennett was quoted in a September 30, 2019 Massachusetts Lawyer’s Weekly article about a recent case involving physicians’ attorney-client privilege and peer-review privilege.

 

The underlying case was brought against Massachusetts General Hospital by a physician who alleged that he was fired in retaliation for whistleblower activity after he raised concerns about the hospital’s practice of scheduling surgeons for more than one operation at time.  In the course of the litigation, a dispute arose as to whether the Plaintiff should be granted access to the report of an attorney hired by MGH to conduct an independent investigation of the hospital’s practice of booking overlapping surgeries.  The hospital refused to provide the report to the Plaintiff’s attorney upon request, citing both peer-review privilege and attorney client privilege. In response, the physician’s attorney filed a motion asking the court to compel MGH to produce the report. Ultimately, the court ruled in the physician’s favor.

 

The investigation in question was conducted years before the physician filed suit, based in part upon his whistleblowing activity and the Boston Globe’s reporting on the issue.  MGH hired an attorney to conduct an independent investigation of the hospital’s surgery scheduling practices, and to recommend any necessary changes in policy and procedure. In a subsequent Boston Globe opinion piece, MGH stated that the investigator’s report had concluded the hospital’s practices were lawful and proper. MGH further defended its scheduling practices by giving the report to a public relations firm to share with the Globe.

 

Lawyers Weekly contacted Attorney Bennett for comment on this case because of his experience in litigating employment matters.   As Attorney Bennett noted in the article, the hospital’s legal argument—that it could not provide the Plaintiff physician with the report produced by its investigating attorney due to attorney-client privilege—was problematic.  “If the company is relying on portions of the report as a defense, it puts the contents of the report at issue and it almost certainly is going to be discoverable,” Attorney Bennett explained.  Superior Court Judge Rosemary Connolly’s determination in the MGH case illustrates this point:  In ruling that the investigator’s report must be turned over to the physician, Judge Connolly stated that the report was not privileged because although the report was written by an attorney, it was not written for the purpose of providing legal advice to MGH; and additionally, that even if the report were written for the purpose of providing legal advice to MGH, the attorney-client privilege was waived because the hospital, rather than keeping the report confidential, had given it to a public relations firm for purposes of responding to the Boston Globe article.

 

MGH’s unsuccessful defense in this discovery dispute, as Attorney Bennett told Lawyers Weekly, demonstrates an all-too-common tendency of companies to engage independent investigators without properly considering all of the potential consequences.  The Lawyers Weekly article, which contains a link to the full court opinion, can be read at https://masslawyersweekly.com/2019/09/26/investigators-report-discoverable-in-retaliation-case-vs-mgh/.

FMLA Protects Employee Leave for School Meetings

Posted on: August 19th, 2019 by admin

In a recent opinion letter, the Department of Labor clarified that the FMLA can require employers to allow leave for employees to attend school special education meetings.  The Department issued the August 8, 2019, opinion letter in response to an inquiry from the parents of two children with FMLA-qualifying serious health conditions.

One of the parents received medical certification supporting her need for intermittent leave and had received approval from her employer to attend medical appointments.  However, her employer did not approve her leave to attend school meetings that were regularly held to discuss the children’s’ Individualized Education Programs (IEPs) and review the children’s educational and medical needs, well-being, and progress.

The FMLA provides for up to 12 weeks of leave to eligible employees to, among other things, “care for the spouse, or a son, daughter, or parent, of the employee, if such spouse, son, daughter, or parent has a serious health condition.”  See 29 U.S.C. § 2612 (a)(1)(C).

The Department determined that these IEP meetings were indeed a necessary part of caring for a family member with a serious health condition.  Specifically, the Department noted that the employee attends these meetings to help participants make medical decisions concerning their children’s medically-prescribed speech, physical, and occupational therapy; to discuss their children’s wellbeing and progress with the providers of such services; and to ensure that the school environment is suitable to their medical, social, and academic needs.

The Department’s determination recognizes the reality that working parents of children with serious health conditions need leave from work not only for doctor’s appointments, but also to communicate and manage their children’s care at school, daycare, and with other providers.  Going forward, these parents should be sure to follow their employer’s FMLA leave request procedures in order to take leave for any time off that relates to their child’s care.

Final Paid Family and Medical Leave Regulations Issued

Posted on: July 8th, 2019 by admin

 

Effective July 1, 2019, final regulations for the Massachusetts Paid Family and Medical Leave Law (PFML) are now available for review by employees and employers.

The final regulations come on the tail of a three-month delay of the start of employers paying into the state leave program.  The new family and medical leave law goes into effect in stages, with employees beginning to see benefits beginning in 2021:

(Graphic Source: https://www.mass.gov/info-details/timeline-of-paid-family-and-medical-leave-contributions-and-benefits).  Employers have until September 30, 2019 to complete mandatory, documented disclosures  to covered employees and other individuals of their rights under the law.

For more on the expansion of employee family and medical leave rights in Massachusetts, read Bennett & Belfort’s blog entry  on the topic, and feel free to contact Bennett & Belfort P.C.