Archive for the ‘Rogue Employees’ Category

I’ve been thinking about giving notable examples of rogue employees from the popular press. So why not start with this one. reported today that a stripper at the Glass Slipper in Boston may have caused some problems for her employer by not following a city ordinance that prevents physical contact between dancers and customers. The article is here:

Apparently, a $300 tip was enough of an inducement to ignore the city ordinance and, presumably, the club’s own rules. The employer could face fines or a suspension of its license. The takeaway here is that your employees are your agents. When they commit wrongdoings while performing their job duties, your company could be exposed (no pun intended) to government sanctions or civil liability. While you can never completely control your employees, make sure that they know the rules and laws of your industry and make sure that they are following them. If not, consider whether employing the rogue employee is worth the risk.

This week I have had a rash of clients dealing with ex-employees behaving badly. Employees who feel that they have been unfairly fired may want to cause harm to your company. And they know how to hit you where it hurts. A favorite devious tactic is to harm your business relationship with your clients or customers by badmouthing you, or by undermining your credibility. They do other devious things too. Once it gets to that point, or you see it about to get to that point, your options are merely brute force and damage control, which are certainly not mutually exclusive. Below, I’ll discuss how to handle these options. In a later post, I’ll discuss how to avoid getting to the point where you are left with these unenviable options.

The Brute Force Option

Clients often come to me after an employment relationship has ended badly and the ex-employee has gone rogue to harm the company. In my world, lawyers can write letters and file lawsuits, but there is not much else that they can do to stop the misbehavior of a rogue ex-employee. In appropriate circumstances, law enforcement can be involved.

I generally opt for the stern letter first. Some of my colleagues call these “nastygrams” because they are usually pretty threatening; some call them “cease and desist” letters. I call them “stop the nonsense” letters. A well-written stop the nonsense letter can actually be very effective. If the rogue ex-employee is told the specific legal exposure that he is creating for himself, many will realize that they are being self-destructive more than they are actually hurting the company. This letter has to be written very carefully (for a variety of reasons) to both show the employee the exposure he is creating for himself, as well as show the employee the way to avoid further exposure.

The brute force option of last resort is a lawsuit against the rogue ex-employee. In rare cases, these are necessary, but no one really wins these lawsuits, other than the lawyers collecting fees (I like collecting fees too, but only if the client has a fair chance to get a good result). Even if the employer obtains a total victory, it is very unlikely that the employer will collect significant damages. These cases can be bitter, hard-fought and expensive. No one will be happy in the end unless the employer has such significant resources that vindication is priceless. I usually try to talk clients out of these suits, but I will and have pursued them if they have merit. The fruitlessness of suits can also be true for many types of suits against rogue ex-employees, including embezzlers and trade secret thieves, but it is not always the case. I have some nice judgments against ex-employees, but a judgment is just a very expensive piece of paper that gives you some rights to collect from the assets of the ex-employee, if any.

Damage Control

You should know best how to perform damage control and protect your valuable relationships with your clients. Cut off the rogue ex-employee,s access to your e-mails, cell phones, computers, etc., etc. If possible, cut off all chains of communications that the ex-employee can have with your client (the stop the nonsense letters can direct the employee to not trespass onto your property or your clients’ property and to not contact your clients). If appropriate, inform the client in advance that you have a rogue ex-employee who may try to defame you. Apologize in advance and assure the client that you are dealing with it. The client will appreciate and understand this, and may even be an ally.

If you have a rogue ex-employee who you need help dealing with, call me at 617.338.7000.

By Adam P. Whitney

Say what? When I advise employers on termination issues, I am most comfortable approving a termination when the employee has committed serious misconduct, such as stealing from the company. However, even though Massachusetts is an at-will state, and employers usually are on safe grounds to fire an employee who has stolen from the company, there are exceptions.

Take the recent case brought by the EEOC against Walgreens. Walgreens fired a cashier who opened and ate a $1.39 bag of potato chips because she was suffering from low blood sugar, on account of her diabetes. The case was brought under the Americans with Disabilities Act. Walgreens apparently considered the employee’s actions to be stealing from the company. It is not reported whether there was an investigation prior to the termination. Some reports suggest that the employee planned to or did pay for the chips after the fact.

I won’t comment on who should win this claim without having more facts. What Walgreens should have done was to conduct an investigation, including especially questioning the employee. Given that she was reportedly an 18-year employee with no disciplinary problems, maybe Walgreens should have given her the benefit of the doubt. If she did plan to pay, then allowing her to grab the chips and eating them (and pay for them later) would likely be considered a reasonable accommodation.

In a written statement, the EEOC wrote that “[a]ccommodating [a] disability does not have to be expensive, but it may require an employer to be flexible and open-minded.” That is good advice, when you have an employee who may be considered disabled (which is now very broadly defined), you should always have reasonable accommodations in the back of your mind.

Another situation where you could be held liable for firing an employee for stealing is the case of disparate treatment. If, for example, you do not fire white employees who are caught stealing, but do fire a black employee who has committed the same offense, you could be held liable for racial discrimination. This was the theory that a plaintiff used in Matthews v. Ocean Spray Cranberries, Inc., 426 Mass. 122 (1997).

Although the employee lost (after what must have been an expensive legal battle all the way to the highest court in Massachusetts) on factual grounds, the legal theory was sound. Employers must be careful to be consistent with their policies, especially in matters of discipline. Of course, this advice is contradictory to the lesson in the Walgreen’s case. As you will read elsewhere in my blog, sometimes disabled employees have to be treated differently. This fits in nicely with my theme – sometimes you’re damned if you do; damned if you don’t.

The takeaway here is that, maybe, you can never be sure that a termination will not lead to an expensive lawsuit. If you cannot fire an employee after you have determined that they were stealing with the company, when can you fire them? I’m not trying to be alarmist. The vast majority of employees who have allegedly stolen from the company can be safely fired. But, as you can see, that’s not always the case. If you do have any questions on whether you can terminate, and how to do it, call me at 617.338.7000.

By Adam P. Whitney, Esq.

Here’s a very interesting read from a fellow blogger, Attorney Jon Hyman, who has an excellent blog on employment law in Ohio:

As you can read from the post and the attached complaint, the employee alleges that her supervisor asked her sign a note agreeing that he could sexually harass her.

It should go without saying that an employee cannot be forced to waive her rights against sexual harassment. In limited circumstances, participation in sexual banter can be a defense to a sexual harassment claim, but it’s really a defense of last resort, because it is an admission of a sexually charged atmosphere. Moreover, even if an employee seems to participate in sexual banter or jokes or whatnot, the employee may feel that there is no choice other than to play along. Or, the employee may be terminated and suddenly find the banter offensive and hostile.

The takeaway is obvious. Don’t tolerate any kind of sexual banter in the workplace, unless you want to try your luck explaining to a government agency, judge or jury why it was okay to do so.

If you have any questions about sexual harassment, call me at 617.338.7000.

By Adam P. Whitney

Rogue employees are like pornography, they are hard to define, but you know them when you see them. (I’m paraphrasing U.S. Supreme Court Justice Potter Stewart, who described his threshold test for pornography in Jacobellis v. Ohio)

There are a lot of different types of Rogue Employees and not one defining characteristic, but the recurring theme is that they are selfish people and they do not care about the company at all. The company exists to give them a paycheck, and whatever else they need. They are not interested in your company’s success. Rogue employees are neither predictable, nor obedient.

I will write a lot about Rogue Employees, who can be so damaging to a business in such a number of ways. They steal, lie, cheat and otherwise cause problems for you. They are scoundrels who resent their employer and the company owners. See my blog post about firing Rogue Employees once you identify them. But can you avoid hiring Rogue Employees in the first place? Maybe. It’s worth the effort to try. One or two Rouges can literally destroy a small company and do significant harm to larger companies. So, it’s worth trying to keep them off of your payroll.

Obviously, do as much background checking as is economically reasonable, within the bounds of the law. Really check references, especially work references. Don’t settle for the name, rank and serial number approach from the former employer’s Human Resources. Try to speak to an actual supervisor of the candidate and ask about the employee’s work performance and attitude. Ask the candidate to sign a waiver allowing the former employer to give a candid assessment. With so many good people looking for jobs in this economy, you should fully vet the candidates to make sure you’re hiring one of the good ones. Strongly consider older candidates who have a long history of being loyal to an employer (although this sounds discriminatory, being young is generally not a protected class in Massachusetts). A loyal employee is the opposite of a Rouge Employee, and is worth her weight in gold.

Also, try to ask the right questions. Ask the candidate to tell you what he thinks his former supervisor would say. You may get a surprising answer. You may see that the candidate is someone who has a lot of excuses and blames others for failures. That could be the type who turns into the dreaded Rogue Employee. Ask the candidate where they fit into the success of their previous employer, and how they see themselves contributing to your firm. Ask them what things their previous employer did right, and did wrong, and see if you get a constructive answer. Listen to what your instincts are telling you and use common sense. Of course, you may need to be able to articulate a non-discriminatory reason for not hiring someone.

And of course, you should do some checking on the internet, including Google and social networks. You have to be careful not to exclude an employee based on a protected class (race, religion, disability, etc., etc.), but there is no prohibition against learning that someone is a scoundrel and refusing to hire them, as long as you are not basing your decision on an illegal, discriminatory reason. This can be tricky, so if you have any questions on whether you can refuse to hire an employee, call me at 617.338.7000.

By Adam P. Whitney

If you hire a new employee from a competitor, you should make damn sure that the employee did not bring any trade secrets or proprietary information from the former employer. Otherwise, you could face significant exposure to your company, especially if others at your company participated in use of the trade secrets (the term “trade secrets” can be broad to include any proprietary business information, including customer lists and customer information).

This is the lesson of the attached case report, People’s Choice Mortgage, Inc. v. Premium Capital Funding d/b/a Topdot Mortgage. In the interest of full disclosure, I was the trial attorney for People’s Choice Mortgage (“PCM”), the prevailing party in the case.

The following is a summary of the case report, which is a public record: PCM employed Mr. Bodden, who turned out to be a dreaded Rogue Employee. Mr. Bodden then went to work for Topdot while still employed at PCM, and kept working for PCM for an additional five weeks. Bodden had access to PCM’s customer information. Because his commission structure was better at Topdot, Bodden used the PCM documents at Topdot to solicit and close loans. The Court concluded that Topdot had constructive knowledge that Bodden was using PCM documents. The case report makes for an interesting read.

The awards themselves against Topdot and Boddon were not large. PCM prevailed against Bodden in the amount of $39,005 ($64,589.20 after interest). PCM prevailed against Topdot for $12,279, which was doubled to $24,558 under Chapter 93A, which became $31,773 with interest. The bigger award was the attorneys’ fees and costs award against Topdot of $88,170.57.

That comes to a total of $184,532 against Topdot and Bodden for their use of PCM’s trade secrets. Not to mention the costs that they incurred on their own attorneys and other legal costs, which could bring the total exposure to a quarter million dollars.

If you have any questions regarding how to protect your trade secrets, what to do if a former employee is using your trade secrets, or how to make sure a new hire is not exposing your company, call me, Adam P. Whitney, at 617.338.7000.

Findings of Fact, Rulings of Law, and Order for Judgment

Firing employees is hard. It’s usually the last thing any employer wants to do. Corporations are people too (ask the Supreme Court), and they don’t want to put someone out of work, especially in a tough economy, and especially an employee who has a family. I’ve seen time and again employers thinking that they are doing a good deed by keeping an employee on when they know they should terminate the employee. In addition to the title of this blog, I have another cliché truism in employment law: no good deed goes unpunished. The employee for whom you are doing a favor turns around to bite you in the ass.

Some of these employees may even mean well. They think that they are doing a fine job, but really are not. If you fire them after two years of poor, but not declining performance, the employee will wonder why you suddenly fired them and look for a discriminatory motive (human nature being what it is, no one wants to think that they are a poor performer). Employers make this situation even worse when they try to ease the pain of the employee and tell a “white lie” that the company is eliminating the position or something of that nature. As innocent as that may be, a plaintiff’s attorney will turn that around on you and call it a pretext for discrimination.

Potential lawsuits aside, there is one type of employee who must be fired because he can cause great injury to your company. This is the Rogue Employee, who is disgruntled for some perceived injustice and/or plans to steal your clients and otherwise compete with you. A clever Rogue Employee who is hell bent on hurting her employer can do a great deal of damage. Rogue Employees can do any of the following: destroy computer files; bad mouth you to clients; destroy documents; report you to authorities; steal from the company; cause the company to incur expenses or liability; etc., etc. I cannot completely define a Rogue Employee, but (like the famous quote on pornography) you know them when you see them. Actually, that’s not true, because the most destructive Rogue Employee is the one you don’t identify as such.

Especially dangerous are Rogue Employees in positions of trust or authority. The more power they have, the more damage they can do. Some war stories and examples make this clear, which will be a recurring topic in my blog. I’ve had several cases where Rogue Employees embezzled from the company, stole proprietary business information, stole clients, exposed the company to liability, and exposed the company owners to personal financial liability. I’ve even seen Rogue Employees who are actively working for a competitor at the same time they were receiving a paycheck from my client – and funneling business away from my client, causing a double injury.

Employees who have the authority to write checks have the potential to do great mischief. Employee embezzlement is much more common than people think. The ABA Journal recently reported that a Chicago law firm office manager embezzled $884,000 over a seven year period. If it can happen to a law firm, do you think it can’t happen to your business? The office manager was a trusted employee; the firm didn’t know she was a Rogue Employee.

Another example is from Massachusetts and is set forth in the reported decision of Bank of America, N.A. v. Prestige Imports, Inc., 75 Mass. App. Ct. 741 (2009). The case report describes a “sophisticated and complex scheme” whereby an employee stole hundreds of thousands from his employer, a Weymouth, Massachusetts auto dealership, Prestige Imports, Inc. The employee manipulated deposits that Prestige intended to make into accounts at the employer’s bank. This caused loans to Prestige to default, which also impacted the owner who had personally guaranteed the loan. Even after warning signs, he employer did not fire the Rogue Employee. The case report reads as follows:

“[The Bank] called [the company owner] to express concern about a $90,000 Prestige check made payable to [the employee]. Suspicions aroused, [the owner] asked his accounting firm for advice. An accountant investigated the matter and told [the owner] that someone had made unusual adjustments to Prestige’s records. He also advised [the owner] not to allow [the employee] to continue his daily banking transactions and suggested that [the employee] might be stealing money. Despite this advice, [the owner] did not fire [the employee], change his duties, or remove him as a signatory on an account Prestige had opened at another bank that November and utilized for used car transactions.”

A copy of the case report is attached.

It’s hard to believe in hindsight that Prestige would not only keep the employee, but keep him as a signatory on a bank account. But this extreme example shows that employers do not want to believe that trusted employees could so turn against them and cause them such harm. If you have any concern that one of your employees may be a dreaded Rogue Employee, call me, Adam P. Whitney, at 617.338.7000 and I can guide you through what to do about it.