Smooth Transitions Law Blog
Addressing the legal issues arising from the departure of employees & business breakups

April 2012

Firing Based on Weight
April 27, 2012

                        

A few weeks ago we discussed a Texas employer hiring new employees based upon their Body Mass Index.  The dangers of considering weight in employment decisions were recently exemplified in a press release from the EEOC. 

In that release, it was announced that a treatment facility for chemically dependent women and children was paying $125,000 to settle a disability discrimination suit filed in September 2010 by the EEOC.  The suit alleged that the employer violated the ADA because it fired a former employee because of her disability, severe obesity, even though she was able to perform the essential functions of her job.  Unfortunately, the employee died prior to the suit being filed.  The EEOC’s take on the settlement:

All people with a disability who are qualified for their position are protected from unlawful discrimination,” said EEOC General Counsel David Lopez.  “Severe obesity is no exception.  It is important for employers to realize that stereotypes, myths, and biases about that condition should not be the basis of employment decisions.

Courts have previously concluded that severe obesity may qualify as a disability regardless of whether it is caused by a physiological disorder.  Hiring or firing policies based on weight may be actionable.  Employers need to tread lightly if they are going to consider weight in a hiring/firing decision.(H/T disability law.blogspot.com)                      

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Hiring and Firing

Financial Advisors Still on the Move
April 23, 2012

 A recent article  from Financial Planning suggests that financial advisors continue to be on the move in 2012.  But the trend is not departures to the traditional wirehouses – instead, they are going independent:

Twelve percent of financial advisors change firms annually, according to [Chip] Roame, but two-thirds of those advisors are still “landing” at another wirehouse. Roame said he expects more advisors to shift to the independent channel. “I think the big elephants have moved,” he said. “The more interesting thing is who might follow.”

Roame expects the traditional wirehouses will try to meet these type of producers half-way by creating an alternative:

Roame said he expected one of the wirehouses would have already responded was by creating a “halfway house” as an alternative for advisors that were considering independence. This “halfway house,” which he predicts will happen at some point this year, would enable advisors some of the benefits of independence and ownership while remaining under the wirehouse umbrella.

FAs considering making a move should be aware that moving to a non-protocol  firm could bring a potential lawsuit from their previous employer.  No matter the move, FAs should always consider:

  1. Are they employed at a protocol firm?
  2. Would they be moving to a protocol firm?
  3. If they are not moving between protocol firms, what is the likelihood that they will be sued over any restrictive covenants (non-compete – non-solicits) that exist in their contracts?
  4. Is the financial upside of new employment going to outweigh the paying potential financial losses of moving to a new firm?
  5. Is the new employer in a position to help the FA successfully move their business – are they up for the fight?
  6. What does the new employer’s employment agreement look like?  Are there more restrictive covenants?  Are they more burdensome? 

These are but a few areas to consider.  As with any employment move, the employee must make a smart decision based on the pros and the cons.  The grass is always greener on the other side of the fence.

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Financial Advisors

Synthes Continues to Sue
April 10, 2012

                                  

At the beginning of the year, we predicted that health care related litigation would continue to rise through 2012 as that industry continues to grow, in large part because of our aging population.  Mentioned in the post were some lawsuits filed by Synthes,  a European-based medical device manufacturer.  Synthes has historically enforced its non-compete and non-solicitation agreements against former sales persons around the United States.  The medical device industry is big business and in many cases, based on strong relationships with doctors.

Synthes continues to enforce those agreements.  In a recent case, Synthes filed suit against a former salesperson in the Denver, Colorado area, who left Synthes and went off to start his own competing medical device venture.  Synthes sued and the employee counterclaimed.  The counterclaim is interesting.  Whether it has any merit, is another question.  Basically, he asserts that Synthes tactics violate antitrust laws.

Whether you love or hate Synthes, you have to respect their tenacity and the seriousness with which they approach their post-employment covenants.  As we have discussed here previously, employers with these type of agreements should uniformly enforce them, and not make exceptions or ignore violations of them.  This both supports the actual claim in court and also acts as a deterrent when an employee is considered breaching a post-employment covenant.  Bottom line, if you’re going to draft these agreements, enforce them and take them seriously.  Post-employment covenants make sense in certain situations depending upon your venue and law. 

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Non-Compete Agreements

Is your BMI too high to work for this Texas Hospital?
April 6, 2012

                        

Bruce Carton of law.com tracked down a great story about a Victoria, Texas hospital (in between San Antonio and Houston) that has implemented a hiring policy that requires potential employees to have a Body Mass Index of less than 35.  According to the Texas Tribune, the policy shapes up like this:

  1. Existing employees who become obese over the course of their employment are not terminated;
  2. The hospital offers to help job candidates get their body mass index down;
  3. The policy is based upon the concept that an employee’s physique "should fit with a representational image or specific mental projects of the job of a health care professional."

Suzanne Lucas provides her take on the policy and points out that  BMI is not a good indicator of obesity.  Of course, we can always debate over what constitutes obesity, the bottom line is that this country has a weight problem.  

Now the legality of the policy is another issue.  Being overweight is not a protected class, but a policy like this that has a disparate impact on a particular group could be.

"Health qualifications" for potential jobs are here to stay.  Earlier in the year, a Texas hospital implemented a no smoking hiring policy.  It would appear that health care business have a pretty good argument that nondiscriminatory policies which promote health, such as a no smoking or obesity policy make sense.  

The bottom line is that more and more employers are going to implement these type of policies.  Whether or not President Obama’s health care legislation is upheld by the Supreme Court, the cost of health care continues to rise for private employers.  This is going to force private employers to consider health-related issues as they related to their health premiums, and will flow through into the hiring process.  Employers will have to be very careful in terms of what policies they ultimately implement to ensure they are not discriminatory.

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HR Issues



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