Termination

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On September 8, the U.S. Securities and Exchange Commission (SEC) announced that it settled charges against Monolith Resources LLC, a privately held technology and energy company headquartered in Nebraska. The SEC’s enforcement action alleged that Monolith had been using restrictive employee separation agreements that violated the SEC Whistleblower Protection Rule 21F-17. Without admitting or denying the SEC’s findings, Monolith agreed to revise its separation agreements and pay a $225,000 penalty, among other remedial actions.

Do companies that use workplace surveillance tools to make hiring and firing decisions risk violating the Fair Credit Reporting Act (FCRA)? According to the Consumer Financial Protection Bureau (CFPB or Bureau) in a recent comment, the answer to that question is yes. The Bureau’s official comment comes in response to a request for information issued by the White House’s Office of Science and Technology Policy on the impact of automated tools used by employers to monitor and evaluate workers. The CFPB’s position that the FCRA applies to automated worker surveillance tools is consistent with the Bureau’s March 2023 request for information on data brokers, discussed here, to determine whether the FCRA applies to modern data surveillance practices.

Q. May an employer discipline or discharge an employee for appearing in a TikTok video?

A. If the employee is part of a union, inappropriate conduct in a TikTok video may not be sufficient grounds for a just cause termination. In 2019, a Pennsylvania school district terminated a third-grade teacher after the district discovered the teacher had appeared with her minor daughter in an online TikTok video. However, following arbitration and two appeals, the teacher was reinstated to her former position and received all lost earnings, seniority, and benefits.

What steps should an employer take to terminate an employee properly? What is the best way to communicate the termination decision? In Episode 6 of the Hiring to Firing Podcast, Troutman Pepper Partner Tracey Diamond and Associate Brian Ellixson sit down with Barry Thrutchley, vice president of human resources at Puratos Corporation, to discuss the movie Up In The Air and best practices in conducting terminations. Tune in to hear a lively discussion about the “right” way to deliver bad news.

* Faith Simms is a 2021 summer associate at Troutman Pepper. She is not admitted to practice law.

Q: Can an employer be found liable for terminating an employee for misconduct after an investigation initiated by a biased supervisor?

A: In a recent decision issued by the Seventh Circuit, Vesey v. Envoy Air, Inc., the court held that the employer was not liable under the cat’s paw theory even though the investigation leading to the employee’s termination was initiated by a biased manager. The cat’s paw theory of liability applies to circumstances where a biased individual, who lacks decision-making power, influences the decision-maker into taking adverse employment action against the employee.

Q: Can my company refuse to hire or terminate an individual because the individual is a medical marijuana user?

A: Not necessarily.  While we have not seen any laws to date explicitly requiring employers to accommodate employees’ use of marijuana for medicinal purposes while at work, in some states at least, employers may not terminate employees for their use of medical marijuana outside of the workplace, even if it means that the employee tests positive in a drug screen.

Q.  Our Company just terminated an employee for a social media post that was in violation of our social media policy. Will she be entitled to unemployment compensation benefits?

A.  Possibly.

While unemployment compensation laws vary from state-to-state, former employees generally are entitled to benefits unless the employer can prove that the employee’s employment ended due to a disqualifying reason, such as willful misconduct or voluntary discharge.

Q.  Can I discharge an employee if I believe that he or she is misusing FMLA?

A.  According to a recent Third Circuit opinion, an employer’s honest belief that its employee misused FMLA leave is sufficient to defeat an FMLA retaliation claim, even if the employer was mistaken.

In Capps v. Mondelez Global, LLC, 847 F.3d 144 (3rd Cir. 2017), the company granted the employee intermittent FMLA leave for flare-ups as a result of hip replacement surgery.  On February 14, 2013, Capps took intermittent leave. That evening, he went to a pub and became severely intoxicated. On his way home, Capps was arrested for driving while intoxicated and spent the night in jail. He was scheduled to work the next afternoon, but called out again. Approximately six months later, Capps pled guilty to the DWI charge and served 72 hours in jail immediately following the guilty plea hearing.

Q:  My Company wants to institute a drug testing policy that would automatically disqualify an applicant for employment if they test positive for illegal drugs, including medically-prescribed marijuana. Is this legal?

A.  The law regarding the responsibility of employers to accommodate medical marijuana use continues to evolve as more states pass laws allowing for marijuana use for medical and recreational reasons. In Pennsylvania, for example, the law is silent as to whether an employer can rely upon a positive drug test as a reason to reject the applicant for employment. However, the statute lists specific areas in which employers may prohibit employees from working while under the influence of marijuana – operating or controlling government-controlled chemicals or high-voltage electricity, performing duties at heights or in confined spaces; and performing tasks that threaten the life of the employee or his/her coworkers.  By implication, outside these specified areas, employers may be required to accommodate marijuana use, so long as it does not occur at work.

Q.  A former employee has posted a negative review about our company on a social media website. Is there anything we can do about it?

A.  While social media is a powerful tool for promoting your company’s brand, negative reviews can be equally powerful in affecting the company’s reputation. When the negative review is by an employee or former employee, the review is particularly galling.