Excessive Fee Litigation by Mutual Funds Face Serious Implications with the Passing of the Financial CHOICE Act by the House

The passing of the Financial CHOICE Act (H.R. 10) on June 8, 2017, along House party lines aims to replace and repeal several clauses of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The Financial CHOICE Act is a big reform for financial regulation which will contain possible amendments to section 36(b) of the 1940 Act that will raise the burden of proof and heighten the standards of pleading for plaintiffs in situations of litigation fee that are excessive. It was passed 233-186 along the party divide.

Investment advisers face a fiduciary duty imposed by section 36(b) instead of the compensation they receive for the advisory services they provide to funds which give the shareholders of the funds a private action right to enforce the duty against all the affiliates and their advisers who receive the compensations from the funds. By a preponderance of the available evidence, the burden of proof will be on the plaintiffs who will be required to show that the fee they pay for advice is excessive. In other words, they will need to give evidence that the services the defendant rendered and the fee charged are so disproportionate that they do not bear any relationship, and that the negotiations could not take place at an arm’s length.

Therefore, the Financial CHOICE Act will impose a requirement that under Section 36(b) any complaint brought should state all the peculiar facts that establish a breach of fiduciary duty, and to prove that if any such alleged facts are based on existing beliefs and information, the complainant shall use all means to state the peculiarities on which the facts and opinions are based or on which the opinion are formed. Apart from the raised or stricter standards of pleading that the complainants will have to face, the plaintiffs will also be confronted by heightened burden of proof imposed by the Act from a state of legal “preponderance of the evidence” to a legally acceptable state of “convincing and unequivocal evidence.”

The new rules will not make the playing field any simpler for all the parties involved, and in the event of a process of litigation, it is clear that the cases will be long-drawn and complicated. Under the Financial Choice Act, the shareholder of a fund will have the burden to prove that there was a breach of fiduciary duty by convincing and clear evidence.

 

Trump’s Justice Appointed, Debate Over Travel Ban Rages On

The travel ban, or immigration pause as the lawyers are calling it, has been held up in court once again. As this is being weighed, Donald Trump visited the Supreme Court this last week to attend the appointment of his newly-appointed justice, Neil Gorsuch.

Donald and Melania Trump attended, but did not speak at, the event honoring the appointment of Gorsuch to the nation’s highest court. Justice John Roberts offered Trump favorable words in his opening comments.

Gorsuch has been the subject of controversy for some time, since the only reason he was able to be appointed was that the Republican-led Senate refused to consider Obama’s pick for justice, Merrick Garland, for most of last year.

As the 5-4 conservative majority is now restored, things may be looking up for Trump’s travel ban which is slated to be weighed by the justices on its constitutionality. The court is also looking at a request to allow the ban to go into effect preemptively until litigation can be thoroughly carried out. It’s possible that Gorsuch may be the linchpin in these proceedings in favor of the Trump administration.

Federal judges in Hawaii and Maryland have blocked the travel ban, calling it unconstitutional and clearly a religious ban, despite the rhetoric of the Trump administration. The appeals process has now sent that up the pipeline to the Supreme Court and its newly-appointed justice.

While justices are supposed to be apolitical and judge solely on the legality of a matter, the fact of the matter is the political and judicial worlds are far more entangled than many may think. A justice newly appointed by Trump may also be more likely to assist in pushing through a Trump agenda, but there’s no way of knowing for sure until litigation is completed.

The Trump administration currently has a lot of legal battles to fight. Trump is also under investigation by a special committee for obstruction of justice in his recent firing of James Comey.

Jeremy Goldstein Explains How Knockout Options Help Employers

In recent years, numerous corporations have decided to stop providing employees with stock options. Some firms did so to save money, but the reasons are usually more complex. Three major problems frequently persuade companies to curtail these benefits:

 

  1. The stock value may drop significantly and make it impossible for employees to exercise their options. Nonetheless, businesses still need to report the associated expenses, and stockholders face the risk of option overhang.

 

  1. Many employees have become wary of this compensation method. They know that economic downturns often render options worthless. These benefits may seem to resemble casino tokens more than cash.

 

  1. Options result in considerable accounting burdens. The relevant costs may eclipse the financial advantages of these derivatives. Staff members don’t always consider this benefit as valuable as the higher salaries that an employer could pay if it was eliminated.

 

Advantages

 

Nevertheless, this type of compensation can still be preferable to additional wages, equities or better insurance coverage. Why? It’s relatively simple for staff members to understand stock options. They provide something of equivalent value to all employees.

 

Furthermore, options only boost personal earnings if a corporation’s share value rises. This encourages people to prioritize the company’s success. The staff may work harder to satisfy existing customers, attract desirable clients or develop innovative services.

 

Certain Internal Revenue Service rules make it considerably more difficult to supply employees with equities. This is especially true when companies develop compensation packages for top executives. Businesses may face greater tax burdens if they provide shares rather than options.

 

Solution

 

If a firm wants to continue awarding options to employees, it can gain the above-mentioned benefits and avoid excessive costs by adopting the right strategy. It must take steps to minimize overhang as well as initial and ongoing expenses.

 

The best solution is to embrace a type of barrier option known as a “knockout.” These stock options have the same time limits and vesting requirements as their conventional counterparts. However, employees lose them if the share value falls under a specific amount.

 

A staff member might receive an option that has a five-year term and allows her to buy stock at the price of $150 per unit. If it’s a knockout option, it would probably expire when the company’s share value drops to less than $75.

 

It wouldn’t make sense to eliminate these benefits merely because the price plunges for a few hours or days. Employers can avoid this problem by only canceling them when the share value remains low for at least one week.

 

If a firm’s stock is comparatively volatile, the knockout mechanism will probably reduce initial accounting costs. This holds true because each option remains valid for a shorter period of time.

 

When corporations supply knockout option benefits, non-employee investors don’t face overhang threats from options that no one can actually exercise. This means that existing stockholders have fewer worries about shrinking ownership shares.

 

Knockout clauses often result in lower executive compensation figures on yearly disclosure documents. This causes a company’s annual proxy to reflect earnings more accurately. It also looks better to shareholders.

 

This solution gives employees a strong incentive to prevent a firm’s stock value from dropping below the forfeiture threshold. Staff members know that they can earn more when the share price soars, but they’ll completely lose this benefit if it plummets.

 

Considerations

 

Knockout options don’t solve every problem, but they banish many of the biggest obstacles associated with stock-based compensation. Nonetheless, it’s crucial for company officials to communicate with auditors about the ramifications of supplying these options to employees.

 

Businesses may benefit from waiting more than six months to provide new options after the existing derivatives expire. Otherwise, the replacements might have a negative impact on the quarterly financial statement; accountants must treat the costs as repricing expenses.

 

Jeremy Goldstein

 

When corporations need legal advice regarding employee benefits, they often turn to attorney Jeremy Goldstein. He has over 15 years of experience as a business lawyer. Goldstein independently established a law firm in New York after working as a partner at a similar organization.

 

He has played important roles in major transactions that involved top companies like Verizon, Chevron, AT&T, Duke Energy, Bank One and Merck. Goldstein serves on the boards of a prestigious law journal and a nonprofit known as Fountain House.

Learn more:

House Financial Services Committee Seek to Roll Back Dodd-Frank

The Financial Services Committee in the Republican-controlled House of Representatives laid the groundwork for a full-scale roll back of Obama’s Dodd-Frank. The House made its move on June 1st when it approved a bill to repeal significant parts of Dodd-Frank that put restrictions on Wall Street’s freedom of movement.

Originally, the Dodd-Frank Wall Street Reform and Consumer Protection Act put major regulatory controls of Wall Street’s financial maneuvers in the hands of government regulatory oversight. Dodd-Frank’s replacement bill, known as the CHOICE Act, was put forward by Texas Representative and House Chairman of the Financial Services Committee, Jeb Hensarling, on June 1st.

The vote was close at 34 approving to 26 disapproving the measure to repeal and replace Obama’s Wall Street regulations. Everyone on the Financial Services Committee voted on the bill and, unsurprising among a divided Congress, not one democrat voted with the Republican majority to support the regulatory overhaul.

Debates raged into the night for three days and republicans unrelentingly blocked amendments from House Financial Services Committee members from affixing amendments to the CHOICE Act. The CHOICE Act is undeniably a Republican creation, and republicans were loathe to allow democrats to insert amendments that would have safeguarded key components of Obama’s Dodd-Frank. The vote on June 1st went entirely down party lines.

Republicans have argued that Dodd-Frank has choked growth since its inception. Although the claim is difficult to prove, republicans also asset that Dodd-Frank has hamstrung the banks’ ability to extended credit and limiting choices across the board. Hence, the name: the CHOICE Act. Republicans are hoping to rectify the problems they see riddling the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The CHOICE Act would sidestep the problem of overleveraged banks by allowing banks that had enough liquidity and cash on hand to avoid the most onerous regulations enshrined in Dodd-Frank. Dodd-Frnak also demanded stress tests for the banks to be undertaken quite frequently whereas the CHOICE Act limits stress tests to every two years. Supporters of the CHOICE Act are delighted; critics of the CHOICE Act feel the economy could move more quickly and the systemic risk expand quicker than a stress test every two years could detect.

Democrats are worried that repealing most of Dodd-Frank’s biting regulations at once could deregulate the financial markets too quickly and have unforeseen negative effects on the economy. Republicans counter that the CHOICE Act will create growth.

States and Counties Across U.S. Sue Drug Companies Over Opioids

In an interesting turn of events a number of states and cities blighted by the recent opioid epidemic sweeping the country have started filing lawsuits against select pharmaceutical companies. Individual counties in states hardest hit by the opioid epidemic have also decided to file lawsuits against pharmaceutical companies like Purdue Pharma LP.

Legal experts claim that these lawsuits might have an uphill battle in the courts since all of the drugs in question are regulated by the Food and Drug Administration. This makes it much tougher for a state to allege that the addictive potential of these drug companies was downplayed or pushed aside by the pharmaceutical companies behind the opioid medication.

The most recent state to join the spate of lawsuits against pharmaceutical giants like Teva Pharmaceutical Industries Ltd. and Johnson and Johnson’s is Ohio.

Ohio in particular and other states more broadly are arguing that states have been losing revenue by filing unnecessary prescriptions. States are also seeking compensation for the costs associated with these medications as well as state-funded addiction treatment centers that received funds associated with the rising opioid epidemic.

Surprisingly, this legal battle between the states and five large pharmaceutical companies has a recent legal precedent. In 1998 over 45 states received more than $200 billion in compensation when the courts ruled that major tobacco companies downplayed the addictive potential of cigarettes in their packaging and advertisements.

The same sort of allegations are being made today by states, cities, and counties across the United States that feel their residents and state budget’s have been adversely affected by the claims that pharmaceutical companies have been making. Many states, including Mississippi, feel that patients weren’t informed of all the risks before filling their prescriptions.

Unfortunately, for plaintiffs like the state of Mississippi these lawsuits might be exceedingly difficult to win in court. The reason is twofold. First, plaintiff’s attorneys are rationally worried about the fact that one or all five of these pharmaceutical companies could be protected by the fact that these opioid medications had FDA approval before making it to market.

The second reason that pharmaceutical companies like Johnson and Johnson’s stand on fairly solid legal ground is that the warning labels on these medications clearly state the addictive potential of the drugs in question. A judge in Orange County California, furthermore, stopped a case due to fears that pending lawsuits would stymie long-term opioid treatment.

More Law Schools Accepting GRE

Law schools from around the country are starting to accept Graduate Record Exam (GRE) scores in lieu of traditional Law School Admissions Test (LSAT) scores. The reason is that many admissions committees feel that the LSAT requires a large time and financial investment to prepare for. The GRE is also less specialized but perhaps just as predictive of first-year success in law school.

The University of Arizona and, more recently, Harvard University have gotten on board with the plan to transition to the GRE for admissions purposes. Northwestern University in Illinois might be the next big-name law school to do so. Individual law schools as well as the American Bar Association’s Section of Legal Education and Admissions are taking a hard look at correlational studied before coming broader decisions that could affect the admissions criterion for all ABA-approved law schools in the United States.

Many legal experts concede that it may be a few short years before more law schools start accepting the GRE. It could be only a decade before every law school in the United States does so. Right now Northwestern is conducted a landmark study in partnership with the Educational Testing Service (ETS) in order to determine whether the GRE is as good a predictor of first-year GPA as the LSAT. If so, more law schools may consider taking on the GRE for admissions purposes.

Nearly three months ago Harvard said that it would transition over to the GRE. In statements, Harvard representatives and admissions personnel said that broadening diversity and eliminating barriers for low-income and underprivileged applicants were serious considerations swaying their decision in favor of allowing the GRE to influence application success.

Harvard undertook its own study with the ABA’s Section of Legal Applications and Admissions to find out whether the GRE or traditional LSAT proved a better predictor of grades in students’ first years. The study found that the GRE and LSAT were equally valid instruments for sussing out who makes the cut after the first year at law school. This is great news for students looking for more diverse entrance exams as well as the Educational Testing Service.

The hope is that by allowing the GRE to be used as an entrance exam more students of all backgrounds will apply to law school and remedy the problem of lower law school admissions across the board. Dozens more law schools may accept GRE scores.

How to Know if You’re Being Discriminated Against

Discrimination in business is a complex subject, but at its core, it revolves around whether or not you are being treated fairly and equally by an employer. Most types of discrimination fall into one or more of the following categories – if you believe you’re being discriminated against and it doesn’t match any of these, you may need to consult an attorney for more information.

Race and Ethnicity

Race and Ethnicity are an unfortunately common source of discrimination in the workplace, despite the fact that Title VII of the Civil Rights Act specifically prohibits using race or color in regards to many hiring decisions. It also rejects the use of stereotypes for potential employees, but this doesn’t always stop companies from displaying a bias.

Example: Generic Business Company is a national corporation with offices in twelve states. Twenty-seven percent of its workforce is African-American, and another ten percent is Hispanic, but executive and managerial positions are staffed exclusively by Caucasians. Darryl Johnson is an African-American who has been with the company for seventeen years, and has performed as well (or better than) many people who have been promoted to managers… and repeatedly been denied a promotion despite the fact that his performance demonstrates he deserves it. He is probably being discriminated against.

Gender and Sexual Orientation

Often referred to merely as ‘sex’ in documents, there are times when one’s gender or sexual orientation have an adverse impact on their ability to succeed within the company. This type of discrimination is typically – but not always – financial.

Example: Betty Brown is a manager at Generic Business Company, where she makes an annual salary of $60,580. This is an average salary for female managers in the company, but male managers have an average salary of $75,931, even if they perform worse (and have been employed for a shorter amount of time) than Betty. This is a probable case of gender discrimination, and Betty would be entirely within her rights to inquire about the discrepancy.

Age

Some companies don’t like the costs associated with having older workers, but federal guidelines are clear that age is not an acceptable reason for denying promotions, hiring, or benefits.

Example: Robert Jeffson is a 54-year-old male who has been with Generic Business Company for 30 years. Over that time, he has performed well and steadily been rewarded with raises. However, an economic downturn has cut into the business’ cash reserves, and it decided to fire him because of his ‘inappropriate age for the position he holds’. Robert has a discrimination case on his hands.

Disability

This is the most complex area of discrimination. Companies cannot discriminate against employees who suffer in a way outlined by the Americans with Disabilities Act. However, neither are companies required to lower their quality standards or go to “undue hardship” to provide for that employee.

Example: Carl cannot use his legs, and requires a wheelchair to move around the office. Generic Business Company hired him, but refused to provide him with an elevator key, slowing his movement between floors… then fired him for “consistently failing to move between areas in a timely manner”. GBC’s failure to provide a reasonable accommodation for his disability, then blaming him for problems caused by this, is a clear case of discrimination based on a disability.

Note: In all cases, there are times when exceptions are made to the rules. For example, many companies require bathrooms to be cleaned exclusively by individuals of the same gender as those using it. Refusing to hire a woman to clean the men’s bathroom – or the other way around – is not necessarily discrimination.

Are You Eligible for Workers Comp in California?

You get injured while working. Should you report it or go to your own doctor instead? In California, every employer must carry workers comp insurance. And any injury sustained on the job is covered by that insurance.

What makes you eligible for workers’ compensation?

There are three general requirements for determining whether you are eligible for workers’ compensation.

  • Your employer must be required by law to carry workers’ compensation insurance.
  • You must be an employee of that employer.
  • You must have an injury or illness that is work-related.

Let’s take them one at a time.

Employer required to provide coverage

In the state of California, any company or business that has one employee or more must carry workers’ compensation insurance, or provide proof they are self-insured. There are very few exceptions to this law, so virtually everyone is covered.

Employee of company

To be eligible for workers’ comp, you must be an employee of the company.

Independent contractors are usually not eligible in case of an injury. Volunteers are also usually not covered, though California does allow non-profit organizations to opt in to provide coverage for volunteers.

There are gray areas in the law, however. Some employers try to categorize people as independent contractors, when, by legal definition, they are actually employees. In those cases, the injured employee may be eligible for coverage under their employer’s policy (if it exists).

Work-related injury or illness

The injury or illness must be work-related. In most cases, this is easy to determine. You injured your shoulder while carrying a heavy box at work. You tripped and fell down the stairs at work. You developed carpal tunnel syndrome due to heavy use of the computer keyboard. Those are all easy to see as work-related injuries.

Some injuries or illnesses may not be so easy to figure out if they are work-related or not. Here are a few examples:

  • If you are out of the building, grabbing a sandwich for yourself at a nearby deli and sustain an injury, then you are likely not covered. However, if you are there picking up a lunch order for your employer, you may be covered.
  • You are attending an employee baseball game off hours. You get hit by a ball and sustain an injury. The injury is likely covered by workers’ comp. After the game ends, if you trip getting into your car and sustain an injury, you may or may not be covered.
  • If you are on a business trip and sustain an injury, it is likely covered. If you routinely drive a company car back and forth to work, and sustain an injury during your commute, you are likely covered. If you are driving your own car and sustain an injury during your commute, it is likely not covered.

If you have a work-related injury, you may need to seek legal counsel to make sure you get the proper medical care, disability benefits, and compensation you are eligible for.

California Minimum Wage

The federal government establishes a minimum wage requiring employers to pay their workers a minimum of $7.25 an hour. Politicians are currently debating whether or not to raise that to a more reasonable amount.

Each state can establish its own minimum wage requirement as long as it at least meets the federal requirement. States can require employers to pay a higher minimum wage, but they cannot go below the minimum established by federal law.

California has an established minimum wage of $9 an hour. On January 1, 2016, that will increase to $10. The minimum wage requirement applies to both employers and employees. Employers cannot pay less than the minimum wage and employees are prohibited from agreeing to work for less than that amount. The law only applies to employees and not to those who work as independent contractors. There are some exceptions to the minimum wage requirement and nuances specific to California employers and employees.

Exceptions to the minimum wage requirement

There are some categories of workers to whom employers are not required to pay the minimum wage. They include:

  • Outside sales people or employees for whom generating outside sales is their main job.
  • The employer’s parents, children or spouse.
  • Babysitters under the age of 18.
  • Sheepherders. There is a minimum monthly wage instead of an hourly wage for sheepherders since they work unusual hours and generally live on the farm where they are working.
  • On the job learners may be paid 85 percent of the minimum wage during their first 160 hours of employment while they are learning. This is only if the worker has no previous experience in doing the specific job and is genuinely learning how to do the work.
  • Physically or disabled workers who are employed by nonprofit organizations who have obtained a special license from the Labor Department authorizing them to pay less than the minimum wage.

Specific rules applicable to the way employers calculate minimum wage

California law has some specific rules employers must follow to be sure the minimum wage law is not circumvented. Employees also need to be aware of the laws so they know what they can and cannot expect.

  • Holidays: California employers are not required to provide paid holidays to any employee. If they do so, it is according to their specific policy or to a collective bargaining agreement. Therefore, employees who work on a day considered a holiday are only entitled to be paid at the legally established hourly minimum wage and nothing more.
  • Tips: These belong to the employee who receives the tip. The employer must still pay the minimum hourly wage and what the employee receives as a tip is the employee’s to keep. It cannot be deducted from the minimum wage the employer is required to pay. If the tip is added on to a credit card charge and not left in cash, the employer may not deduct even one cent from the amount for credit card processing.
  • Benefits of meals and lodging: An employer and employee may agree in writing that meals and lodging may be provided to the employee to make up part of the minimum wage requirement. There are legal limits on how much of these expenses can be used to make up the minimum wage.

Whether you are an employer wanting to be sure you are complying with the minimum wage requirement, or an employee concerned about the accuracy of your pay, a California business and employment attorney can help you with your questions.

Poor Performance and Unemployment?

If you have fired an employee for the reason of poor performance, they may still be eligible to receive unemployment. Depending upon the state that you live in, most states consider workers who are terminated because of performance issue to still be eligible in many instances, provided they meet other work requirements.

What Does Poor Performance Mean?

Poor performance can be considered a catch-all term for several different reasons why an employee has been separated from their job. It is often defined as the employee’s inability to meet the standards set for their particular position provided that this inability was not deliberate.

Examples of why you would fire an employee because of poor performance may include that he or she:

  • Is a poor fit for the position in which they were hired
  • Does not have the proper skills or training for the position in which they were hired
  • Has been unable to perform to the standards for the position as expected by the employer
  • Made honest mistakes that cannot be considered willful misconduct

However, if you can prove that the employee has intentionally acted in any of these circumstances, it is possible that their unemployment benefits may be completely denied or delayed for a period of time.

For example, if the employee has intentionally shown misconduct or has acted recklessly against the best interests of your business, it is important not to label their dismissal as due to poor performance. This could be that they have previously performed their job as required, but have now stopped doing so intentionally. Keep in mind this does not include instances where the employee’s skills have declined because of infirmity or other declines.

Reasons Why an Employee May be Ruled Ineligible for Unemployment Benefits

It is important to protect your rights as an employer and help keep your costs for unemployment in check. The most important way is to understand the circumstances in which you would fire an employee under the guise of poor performance versus misconduct. For example, if after repeated warnings your employee has not corrected their behavior or performance to adhere to company policy; this may be grounds for being terminated for reasons of misconduct.

Instances of misconduct may include:

  • Excessive tardiness or unexcused absences
  • Insubordination or causing dissension among other employees
  • Dishonesty or stealing
  • Sexual harassment
  • Violating safety rules
  • Intoxication or failing a drug or alcohol test

The severity of the willful misconduct of the employee will be taken into consideration when determining if and when they will be eligible to collect unemployment benefits.

An Employers Responsibility When it Comes to Sexual Harassment

As an employer, you understand that fear of judgment and backlash can make opening up about sexual harassment tough for an employee. When a victim finally decides to speak up, you must be ready and willing to get to the bottom of the situation immediately.

Keep in mind that as the boss, you’re indirectly responsible for the on-the-job actions of your employees. If you choose to kick allegations of sexual harassment under the rug, it could lead to resentment, reduced productivity and high turnover rates among your employees.

Even worse, if you don’t take action, you could end up with a business-crippling lawsuit on your hands. The entire situation could turn into a chain reaction. Once one employee decides to sue, past victims might come out of the woodwork and fan the flames. Although 6 out of 10 lawsuits, according to information by the Equal Employment Opportunity Commission (EEOC), never see the light of day, why would you want to take that chance?

Interview the parties

Speak to the victim, and then to the accused to get both sides of the story. Get the names of anyone who may have witnessed the incident. There should be two people in management present during both interviews so there is an extra witness just in case the issue spills over to court.

Have the victim sign a statement confirming his or her version of what happened. Document the date and time you spoke with the accuser and the alleged perpetrator. To keep down trouble and confusion, request that the victim avoid speaking to anyone on the job about what happened.

Investigate the matter

Gather all of the information and conduct an investigation via an in-house manager or a lawyer. It’s best to assign at least two people to the investigation to make sure it’s fair and unbiased. Also, document every step of the investigation process, as well as the basis for the outcome.

Take appropriate disciplinary action

If your investigation reveals that the accused did in fact sexually harass a coworker, take disciplinary action. The nature of the action will depend on what happened. If the infraction is small, a written warning may suffice. If the harassment is ongoing and severe, you may have to send the person packing to prevent a lawsuit.

Having a written, anti-harassment policy in place shows you took measures to prevent employee harassment and can protect you legally. Give everyone in the workplace a copy of the manual and have them sign a form indicating they received it. To ensure you cover all the bases, have the handbook drafted by an employment attorney. In addition, go over the handbook annually and update it as needed.

Can I Sue My Employer for Workplace Stress?

Each year thousands of lawsuits are brought against employers by their employees across the country. There are a plethora of laws currently on the books that aim at protecting employees from their employers, and give employees grounds for suit if the laws are violated. While many of these lawsuits never make the news, they happen each and everyday. For example, in 2013 Walmart was the defendant in 5,000 employee lawsuits, alone. That is about 17 lawsuits a day. The company currently employs about 1.3 million workers.

So Can I Sue My Employer?

Employees can sue their employers for many reasons. While most people are aware they can sue over negligence, injury and sexual harassment, many people wonder “can I sue my employer for stress?” There isn’t exactly a simply answer to the question, the answer is actually yes, because, technically you can bring a suit against an employer for an injury that occurs during the working hours, but winning such lawsuits is another story all together.

Workplace Laws

Under federal and state laws employees are protected from undue stress, harassment and unsafe working environments. That means an employer must provide all employees with a workplace that is physically and emotionally safe. They must meet basic workplace standards, and must have a policy pertaining to harassment and other negative workplace cultures that could cause undue emotional stress for their employees. Additionally, workplace laws require that employers ensure harassment, both sexual and otherwise, is dealt with appropriately and swiftly. That is not to say that all employers follow the laws to the letter, but the laws due exist to protect employees.

Additionally, the Fair Employment and Housing Act protects individuals from harassment and unfair treatment based on their age (over the age of 40), race, religious beliefs, military and veteran status, martial status, gender, and sexual orientation. The FEHA makes it illegal for an employee to be singled out and treated inappropriately because of any of the above listed protected attributes. .

While there is no law that specifically states that an employer can not cause emotional distress, emotional stress would generally be considered an injury if it can be proven to be directly due to the workplace environment, or if an employee can prove they have been harassed or singled out as a member of a protected groups.

Lawsuit Requirements

In most lawsuits alleging the infliction of emotional stress, the plaintiff has attempted to prove the employer intentionally attempted to inflict emotional stress upon the victim. In all of such cases courts will require that the stress and resulting injury from the stress be severe. For example, an individual claiming emotional stress from their job would need to prove they have required medical intervention because of the stress or that a medical condition is directly attributed to the stress they suffered at the hands of the employer.

Workplace Laws

Most courts will require the plaintiff to prove that the actions of their employer was intentional or reckless, that the conduct was extreme and outrageous, severe emotional distress was caused by an ongoing situation, and that the employer failed to fix the issue after a formal complain was filed within the company.

So, in short, yes, an employee can file suit against an employer for stress the have endured on the job, but winning can be an uphill battle. In most cases, emotional distress is an outcome of another violation of either FEHA or workplaces laws, not the sole reason an employment lawsuit is brought about.

Can I Be Fired for What I Post on Facebook?

Facebook has quickly grown into more than just a social media website, in many ways it has become a way of life and a lifeline of sorts. With over a billion users, the site has seen its fair share of inappropriate comments, pictures and status updates. As more and more of our lives move online, many people are beginning to wonder if the line between the online world and our real lives have blurred. The simple answer is yes. According to a recent report about 33% of divorce proceedings include the word “Facebook” in them, and over 50% of companies admit to checking out the social media feeds of prospective hires before they extend a job offer. The buck doesn’t stop there, either. Many companies monitor Facebook feeds and they can and do utilize the material they see online to discipline or even fire current employees.

People Who Have Been Fired For Facebook Comments

Employees can terminate “at will” employees for a variety of reasons, and that includes what they post on Facebook. More than a few people have been asked to leave a company after disparaging remarks about the company or clients on Facebook. In fact, Virgin Airlines took disciplinary actions against 13 employees after they took part in a Facebook post that insulted passengers and suggested the airline had less-than-stellar safety standards.

An employee at a pizza joint was fired after posting about “cheap” customers who stayed passed closing and left a bad tip. Four employees were fired from a non-profit after a Facebook thread called out a fellow co-worker and criticized the clientele they served.

A teacher came under fire from her boss and was asked to resign after racy pictures of her appeared no her Facebook feed. The teacher, however, is appealing the decision and suing the school she worked for, claiming the pictures and her private Facebook page do not interfere with her ability to do her job.

Post on Facebook

Is Firing Over Facebook Legal?

Many people assume that they are protected under the first amendment when they take to Facebook, but that is not the case. The first amendment protects the freedom of speech against government interference. So, you can say you think the government is doing a poor job at budgeting taxpayers money wherever and whenever you feel the urge, however, the private sector is a different story. Companies are completely within their rights to fire an employee they feel is poorly representing the company.

In the case of the non-profit incident calling out a co-worker, whether face-to-face or online is considered harassment. Whenever an online forum is used for the purpose of harassing another individual a person can be fired because of workplace harassment and safety regulations.

These are not the only reasons people are fired because of what they post on Facebook. Every private company has the right to fire an employee, any employee, they feel is reflecting poorly on the company, as it could be considered potentially disparaging to the company. Just like you could get fired for showing up late on a regular basis, or being rude to customers in the retail sector, you can be fired for making remarks with a similar tone on Facebook, or any other social media site for that matter.

While many “Facebook firings” are perfectly legal, there have been a slew of individuals who have fought their terminations. Several cases have gone before judges, many of those fired claiming that their private pages do not interfere with their job performances.