Please ensure Javascript is enabled for purposes of website accessibility

Independent Investigations and Decision-making Can Help Employers Avoid Liability

In one of Aesop’s fables, a monkey dupes a cat into pulling roasted chestnuts from a hot fire, promising the cat a share of the bounty. The flattered cat complies — burns its paw in the process — only to watch the monkey devour the whole snack.

This imagery has become engrained in the employment-law concept of “cat’s paw” liability, a theory by which employers can be held responsible for the discriminatory animus of biased supervisors. A recent appellate court case involving United Airlines’ handling of a terminated employee is a fresh reminder to employers on how to avoid liability under this theory.

READ —How to Manage Underperforming Employees

Most laws that prohibit employment discrimination (including harassment and retaliation) don’t create individual liability for supervisors. Aggrieved employees can sue their employers, not their supervisors.

When a supervisor wrongfully discriminates against an employee — e.g., fires the employee because of race, sex, or some other protected characteristic — that discriminatory act is imputed to the employer. That’s because supervisors usually function as agents of their employers.

But what if the biased supervisor isn’t the ultimate decision-maker? What if the biased supervisor, for reasons that are discriminatory, lies to get an employee disciplined or fired?

That’s where the cat’s paw theory comes in. If the ill-motivated supervisor manipulates or tricks the final decision-maker — as the monkey did with the cat — then the employer can get burned. If, on the other hand, the final decision-maker acts independently, reaching their own conclusion without relying on the dishonest supervisor’s input, this can break the “causal chain” from the supervisor’s animus, and the employer can avoid liability.

That’s what saved United Airlines from a lawsuit filed by Jeannie Parker, a former call center worker for the airline. Parker claimed United wrongfully fired her in retaliation for taking leave under the Family and Medical Leave Act (FMLA). But the court held that even if Parker’s supervisor had a retaliatory motive for recommending her termination, United was off the hook because a higher-level manager conducted an independent investigation after it received that recommendation.

Specifically, the manager reviewed call recordings that showed Parker had placed customers on long holds while she chatted with coworkers about her personal problems and considered Parker’s alternative characterization of the calls.

According to the court, this independent investigation was enough to insulate United — the company went even further by letting Parker appeal her termination, which she did (without success).

The court noted, though, that merely giving employees an “opportunity to respond” is not enough to avoid liability. What matters is that the employer’s investigation is independent and does not uncritically rely on a biased supervisor’s recommendation or version of the facts.

Of course, the first and best line of defense for any employer is to have quality, trained supervisors who treat employees fairly and professionally. But when unforeseen gaps occur in that foundation, having a mechanism for truly independent investigations and decision-making can help prevent singed paws.

 

John MelconJohn Melcon is an attorney with Sherman & Howard in Colorado Springs. He specializes in labor and employment issues, including employment litigation, labor relations and workplace counseling.

What Is Trade Secret Misappropriation: Is Your Business at Risk?

KFC’s secret blend of 11 herbs and spices, Burger King’s secret sauce, and Google’s algorithm are all examples of trade secrets. They are things that competitors do not know and, accordingly, provide a competitive advantage.

While it’s easy to name these famous examples, not all trade secrets are so high-profile. Most businesses have trade secrets they take steps to protect, such as the client lists they have built up, sometimes over years and years, and on which they depend on to stay profitable.

So, what happens when these trade secrets are misappropriated? And how can business leaders tell if a business is at risk?

READ — Changes To Non-Compete Rules Also Mean Paying More Attention To Your Trade Secrets

The Law on Trade Secret Misappropriation

Trade secrets generally gain their protection by being “secret” because of how a business manages the information, often through contracts and policies. When violating these contracts and policies leads to litigation, the dispute is usually a state court matter.

However, trade secret misappropriation can sometimes become an issue that is more appropriately resolved in federal courts. This commonly happens when multiple states are involved, like when a business engages in interstate commerce. In this case, 18 U.S.C. § 1839(5) can apply.

Of course, the law is particular and uses specific words that have been extensively discussed in many court cases. Generally, trade secret misappropriation happens when someone improperly acquires a trade secret, improperly discloses or uses it without permission. Misappropriation can occur even if the trade secret was obtained through a mistake or accident, as long as the person who acquired the information knew or should have known that it was not intended to be disclosed by the business.

READ — How to Safeguard Your Business Trade Secrets

Businesses at Risk of Trade Secret Misappropriation

Some businesses are more at risk of trade secret misappropriation than others. Startups are especially susceptible because of their quick growth rate. Often, a startup is created with just a few employees. Because of this, it’s run with fewer formal policies than an established business.

However, by the time formal policies are introduced, one of these employees may have taken action to misappropriate valuable trade secrets.

Reducing the Risk of Trade Secret Misappropriation

There are many ways to reduce a business’s risk of trade secret misappropriation, including developing policies that protect valuable secrets. For example, access can be limited to specific business leaders and protected by passwords. In addition, the secrets can be stored only on secure servers instead of in less secure places, such as laptop computers that can be lost, stolen, or hacked.

Employees and contractors, too, can be required to sign non-compete or non-solicitation agreements that deter them from trade secret misappropriation. If employees or contractors violate these agreements, resolution can sometimes be obtained more cost-effectively by resolving the breach of contract through alternative dispute resolution methods.

The best way to protect a business from trade secret misappropriation is to take these steps and protect the information before it ever leaks. Again, an experienced attorney can guide the company through this process, offering valuable counsel.

For more information about trade secret misappropriation in Colorado, contact Hackstaff Snow Atkinson & Griess, LLC, at 303-534-4317 or visit our website.

 

Aaron Atkinson, Doug Griess, and John Snow of Hackstaff Snow Atkinson & Griess, LLC, are top Denver business attorneys and litigators with expertise spanning various industries. Specializing in business law, litigation, intellectual property, tax law, and dispute resolution, the firm offers an in-depth understanding and knowledge of general real estate and litigation rules and regulations and are a trusted resource for business owners throughout Colorado.