Winning! Alabama Supreme Court Rules In Favor of My Client.

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The Alabama Supreme Court recently ruled in favor of the Cleburne County Commission in a dispute with its former County Engineer.

It feels good to win! And, if you operate an employment law blog and win, you should be able to talk about the case.  So, that’s what I’m doing here.  My client, the Cleburne County Commission, recently won a decision from the Alabama Supreme Court in a dispute with its former County Engineer.  See Robbins v. Cleburne County Commission, No. 1180106, 2020 WL 502541 (Ala. Jan. 31, 2020).

Shannon Robbins was the Cleburne County Engineer.  He signed an employment contract with the Cleburne County Commission for the five-year period of February 1, 2011 to January 31, 2016.  The contract also contained an option provision by which Mr. Robbins could extend the contract to a sixth-year if he provided at least 60 days notice of his desire to extend.  On October 13, 2015, Mr. Robbins attempted to exercise that sixth-year option.  But, the County Commission claimed that the option was not valid and terminated his employment effective January 31, 2016.

Mr. Robbins sued the Commission for breach of contract and I was retained to represent the Commission.  In the trial court, I moved to dismiss the complaint because Alabama’s general law for County Engineers provides that counties can only contract with engineers for five-year terms, and Mr. Robbins’ option created an invalid six-year contract.  See Ala. Code § 11-6-1.  Mr.  Robbins countered that the Alabama Legislature passed a special statute for the Cleburne County Engineer under which the engineer must be employed “at the pleasure” of the Commission.  See Ala. Code § 45-15-130.01.  He argued that the County’s “pleasure” was to employ him for six years.

I was able to convince the trial court that the phrase “at the pleasure” actually meant that Mr. Robbins must be an “at will” employee.  As a result, any written contract for a specific term violated the statutory mandate that Mr. Robbins be employed “at will.”  After the trial court granted my motion to dismiss, Mr. Robbins appealed to the Alabama Supreme Court.

The Alabama Supreme Court ordered the parties to appear for oral argument in Montgomery on December 4, 2019.  During that argument, some of the Justices appeared concerned that Cleburne County’s local statute might be an invalid, unconstitutional variance from Alabama’s general statute on County Engineers.  I argued that, regardless of the constitutionality of the local act, my client should win.  If the local act was unconstitutional, then Alabama’s general five-year limit on engineer contracts controlled and Mr. Robbins’ lawsuit for a sixth-year was impermissible.  If the local act was valid, then the phrase “at the pleasure” required “at will” employment — invalidating the contract and the breach of contract lawsuit.

In its decision, the Supreme Court effectively adopted that argument.  Instead of ruling on the constitutionality of the local act, the Court found that the Cleburne County Commission was entitled to prevail under either statute.

The Robbins case is also important for two reasons.  First, Alabama’s appellate courts had not previously ruled that an option-year for a contract would be considered an extra year for purposes of statutes limiting the length of government contracts.  There were several opinions from the Alabama Attorney General supporting that proposition.  But, Robbins clearly holds that an option year is an impermissible extension.  Second, the Court clearly found that the phrase “at the pleasure” mandates “at will” employment.  I relied upon an older case from the Alabama Court of Appeals and more-recent cases from other states to support that proposition.  The Robbins case is the first decision from the Alabama Supreme Court on the issue.

Now that I’ve celebrated, it’s time to get back to representing other clients.

Employment Contracts and “Cause” Provisions

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Employers can terminate employment contracts, even if those contracts do not have a termination “for cause” provision

An employer can terminate an employment contract — even if the contract does not have a termination “for cause” provision.  That’s the lesson to be learned from the Alabama Supreme Court’s recent decision in Shoals Extrusion, LLC v. Beal, No. 1170673, 2019 WL 1748138 (Ala. Apr. 19, 2019).

Shoals Extrusion, LLC entered into an employment contract with Lonnie Beal to serve as its plant manager.   The agreement provided that Beal would work “40 plus” hours per week on the “days and the time” set by Shoals Extrusion.  If Shoals Extrusion terminated Beal’s employment during that term, he was promised a severance package of one-year’s pay and benefits.  While most employment contracts have provisions that permit termination of an employee “for cause,” Shoals Extrusion’s agreement did not.

By July 2015, there were disputes regarding Beal’s work schedule.  Shoals Extrusion’s plant initially worked a schedule beginning at 7:00 a.m., but changed its start time to 6:00 a.m.  Nevertheless, Beal refused to change his schedule and continued to arrive for work at 7:00 a.m.  Additionally, Shoals Extrusion’s owners asked Beal to work more than 40 hours per week, but he refused unless they gave him an ownership interest.  The owners also discovered that Beal was telling individuals in the industry that Shoals Extrusion was having financial problems.

Shoals Extrusion decided to terminate Beal’s employment.  On November 23, 2015, the owners met with Beal and asked him to sign a “severance and general release agreement.”  Under that agreement, Beal would receive one-month of pay and release all further rights or claims related to Shoals Extrusion.  Beal declined to sign the agreement.  Shoals Extrusion terminated his employment and refused to make the severance payment promised in his employment contract.

Beal sued Shoals Extrusion for breach of contract — arguing that he was entitled to one year’s pay and benefits.   Soon after filing suit, Beal asked the trial court to grant summary judgment in his favor — essentially finding that Beal should win as a matter of law and without a trial.  The trial court granted that motion and Shoals Extrusion appealed.

The Alabama Supreme Court reversed and found that summary judgment was improper.  In doing so, the Court was forced to distinguish an earlier case, Southern Medical Health Sys., Inc. v. Vaughn, 669 So.2d 98 (Ala. 1995).  In Vaughn, the Supreme Court ruled that an employer could not terminate a contract “for cause” if there was no provision of the agreement permitting “for cause” terminations.  Logically, Beal argued that he could not be fired for a “cause” (refusing to work at 6:00 or work more hours) if his employment contract did not have a “for cause” provision as required by Vaughn.

Nevertheless, the Court rejected that argument and adopted Shoals Extrusion’s argument.  Shoals Extrusion argued that it did not terminate Beal “for cause.”  Instead, it claimed that Beal breached his employment agreement first, and his breach excused Shoals Extrusion from any further performance — including payment of severance.  The Supreme Court found that “[w]hether Beal breached the employment agreement and whether that breach was material to the contract are ultimately questions for the fact-finder that cannot be resolved at the summary judgment stage.”  In short, the Court found that Beal’s case had to be decided at trial.

Shoals Extrusion is a good case for Alabama employers, because it gives them an argument for terminating an employment agreement — even in the absence of a “for cause” termination provision.

 

Warning: “Offer Letters” Are Employment Contracts!

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Employers should exercise caution when providing new employees with offer letters

Many of my clients use “offer letters” to hire new employees.  Those letters generally inform a new employee about the job they are being offered and the salary they will be paid.  And, those letters ask the employee to sign that they accept the job.  Frequently, my clients are surprised when I tell them that their “offer letter” is a binding employment contract.  “It’s only a letter! We weren’t signing a contract!  There’s no details.”  But, one of the earliest lessons that law students learn is that a contract is created by “offer” and “acceptance.”  That’s exactly what an “offer letter” is.

The creation of an employment contract by an offer letter was one the key issues in Physiotherapy Associates, Inc. v. Deloach, No. 1:16-cv-02014-ACA, 0218 WL 4409349 (N.D. Ala. Sep. 17, 2018).  In that case, James Doug DeLoach signed an offer letter that contained extensive non-competition and non-solicitation requirements:  If DeLoach left his employer, he couldn’t compete or solicit employees.  But, the offer letter said that it was “not intended to create a contract of employment.”

Mr. DeLoach left his employment and went to work for a competitor.  When he was sued for breaching an employment contract, he argued that the offer letter meant what it said — it wasn’t an enforceable employment contract.  United States District court Judge Annemarie Carney Axon was not persuaded.  She found that the non-competition and non-solicitation provisions were enforceable.  Ultimately, Judge Axon ruled in Mr. DeLoach’s favor.  She essentially found that the non-competition and non-solicitation provisions were poorly-drafted.  And, Mr. DeLoach did not breach either of those provisions — as drafted.

Thus, the DeLoach case provides at least two lessons for Alabama employers.  First, if you use offer letters, I strongly recommend that you include language in the letter informing the employee that they will be an “at will” employee.  Otherwise, there is some potential to create an employment contract for a specific term.  Second, carefully review the language of your offer letters.  Don’t just assume that “form” language is going to apply to this employee.  If you have provisions that you want to enforce later, a reviewing Judge will hold your strictly to your own language.

An Employee’s Insistence on Enforcing “Rules” Can Be Insubordination.

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Employees who disregard workplace directives in favor of their interpretation of the “rules” may be insubordinate.

I frequently encounter employees who think that workplace rules make them bulletproof.  Usually, these employees have memorized their employer’s handbook and know it better than the Human Resources staff.  They then insist that any workplace action must be taken in compliance with the “rules.”  And, they think that any action which contradicts the “rules” must be invalid.  One employee recently learned the hard way that his insistence upon the “rules” amounted to insubordination, which justified termination of his employment.  Veasy v. Sheriff of Palm Beach County, No. 17-13174, 2018 WL 3868674 (11th Cir. Aug. 14, 2018).

Wilbur Veasy was employed as a corrections officer by the Palm Beach County Sheriff for 25 years.  Over the course of those 25 years, he was written-up for insubordination six times.  He is African-American.  On February 5, 2013, Mr. Veasy was directed to submit to a random urine drug screen.  In accordance with written policy, Mr. Veasy appeared at the Sheriff’s Internal Affairs Office to submit his urine sample.  But, despite the language of the written policy, the Sheriff’s Office had not accepted urine samples at Internal Affairs for more than four (4) years.  Thus, upon arrival, Mr. Veasy was directed to drive his personal car to a third-party contractor’s office to submit a sample.

Mr. Veasy refused.  He insisted that the Sheriff Department’s policy did not require him to drive his personal vehicle to a testing facility.  Mr. Veasy requested an “official vehicle” to drive to the testing facility.  A sergeant denied Mr. Veasy’s request, and ordered that Mr. Veasy drive to the testing facility.  When Mr. Veasy refused, the matter was referred to the Sheriff.    The Sheriff gave Mr. Veasy two options: either drive to the test site in his personal vehicle or be placed on administrative leave.  Mr. Veasy responded that his “2007 red four door Tacoma is not going,” and the  Sheriff placed him on administrative leave.  Mr. Veasy was ultimately terminated for refusing to comply with a direct order and for refusing to submit to a random drug screen.

Mr. Veasy sued for race discrimination.  The Eleventh Circuit assumed that he could prove a basic (prima facie) case of discrimination.  But, Mr. Veasy could not rebut the Sheriff’s legitimate nondiscriminatory reason for termination:  insubordination.  Mr. Veasy tried to argue that he had not actually violated a work rule.  After all, the Sheriff’s written policy said to arrive at Internal Affairs ready to submit a sample, and he did just that.  The Eleventh Circuit was not persuaded.  The issue was not whether Mr. Veasy violated the written rule, but whether he was insubordinate when he refused two direct orders to travel to the third-party contractor’s office.  The Eleventh Circuit found he was insubordinate, and affirmed dismissal of his discrimination claim.

Overzealous employers might be tempted to read Veazy to permit them to terminate an employee for insubordination any time the employee refuses a direct order.  To quote Lee Corso:  “Not so fast, my friend.”  There are numerous factors that need to be considered before any employee is terminated.  Probably, the most important factor is treatment of other similar employees who refuse direct orders.  So, if an employer only terminates insubordinate employees in a protected class, then the termination might be impermissible.  Veazy is more of a cautionary tale for employees to be careful about their insistence on work rules.

 

 

3 Alabama Laws That Provide Protection For Whistleblowers

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Man with Red Whistle in Office
Man with Red Whistle in Office

Many employees like to complain about their work environment.  In large part, Alabama law provides no protections to employees who complain about work conditions, because Alabama is an employment-at-will state.  This means that, in the absence of an employment contract, employees can generally be fired for a good reason, a bad reason or no reason at all.

Nevertheless, Alabama provides at least three statutes which limit the ability of employers to terminate employees who make reports about work conditions:

  1. Alabama Code Section 25-5-11.1 prevents employers from terminating employees who file written notices of safety violations.
  2. Alabama Code Section 25-8-57 protects employees who oppose or report violations of Alabama’s Child Labor Laws.
  3. Alabama Code Section 36-26A-3 prohibits adverse actions against a limited set of governmental employees who report wrongdoing by their supervisors.

While Alabama law provides very little protection for employees, there are numerous federal laws that do protect employees.  Therefore, you should consult your attorney before disciplining an employee who complains about their work environment.

Alabama Supreme Court Allows “At Will” Employee to Sue Based Upon Promises Made During Interview Process.

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Fraud

The Alabama Supreme Court recently upheld an award of $600,000 in compensatory damages to an “at will” employee who sued his employer for fraud. See Farmers Insurance Exchange v. Morris, No. 1121091, 2016 WL 661671 (Ala. Feb. 12, 2016). In Morris, the employee was working as an independent insurance agent at his father’s insurance agency. He wanted to continue working for his father, but also join Farmers Insurance Company as an agent. He repeatedly asked Farmers representatives if he could work for both his father and Farmers. He was told that such a relationship was permissible. Although there was conflicting evidence, the jury found that the employee was ultimately terminated by Farmers because of a conflict of interest policy which actually prohibited the employee from working for both Farmers and his father.

The employee argued that Farmers fraudulently induced him into giving up business with his father’s agency — business which Farmers retained after termination. A crucial element of fraud is detrimental reliance — the recipient of a promise takes detrimental action in reliance on the promise. In this case, the employee claimed that he detrimentally relied upon Farmers’ promise that there was no conflict of interest.

Farmers argued that the employee was an “at will” employee of Farmers, who could be terminated from employment at any time. As a result, he could not rely upon his belief that he would continue to work at Farmers and receive payment from Farmers in the future. The Alabama Supreme Court rejected that argument: “When an employee leaves one job for another based on a representation by the new employer regarding the new job that is not true at the time it is made, the new employer cannot hide behind the fact that Alabama law enforces or reads into the new employment contract an ‘at will’ clause to avoid the consequences of its fraud.”

The key lesson for employers is to attempt to learn all of the promises made to potential employees in the course of interviews. This can be a difficult task, but the key is documentation. In the course of interviews, executives need to make comprehensive notes of the questions asked by applicants and the answers given by the executive. With that documentation, employers can better defend potential claims for fraud based upon the interview process.