It’s the Most Wonderful Time of the Year – for Social Host Alcohol Liability

So what could the holiday season possibly have to do with North Carolina employment law?  Unfortunately, quite a lot.  Potential employer liability issues abound with year-end parties, where employees are encouraged to participate in festivities free of the usual work place rules, constraints, and inhibitions.  Add to the relaxed environment a free flow of alcohol, and the risk of liability arising from various employee indiscretions increases exponentially.  Much has been written, for example, about the potential for sexual harassment claims to arise from such circumstances.

Another issue that employers and individuals frequently overlook is the potential for social host liability for alcohol related motor vehicle accidents.  Like many jurisdictions, North Carolina law allows persons injured by drunk drivers to sue host providers of alcohol in certain situations.  Under North Carolina’s dram shop statute, for example, a person or entity who furnishes alcohol to a minor can be sued by victims of motor vehicle accidents later caused by the underage or intoxicated driver.  North Carolina statute also prohibits the sale or giving of alcohol to a noticeably intoxicated person.  North Carolina case law also recognizes negligence based theories under which persons can be assessed with tort liability for injuries causes by a drunk driver.

With these principles in mind, consider the typical holiday party.  Often held at a management member’s home, a standard staple is a bar, where courtesy alcoholic beverages are served.  Employees are frequently invited to bring guests, which opens the possibility for underage dates, siblings, student interns, and other guests.  What would normally be considered inappropriate activity is frequently accepted.  Indeed, many people view boisterous activity as directly related to the success of the party.  Conduct that would otherwise be deemed unprofessional and unacceptable is typically expected and, to some extent, welcomed as employees are encouraged to “blow off steam” and build camaraderie.  All too often, guests are served alcohol beyond the point of inebriation and permitted to drive home.

What are some good strategies for minimizing the risk in this area?  Consider the following:

• Hire a professional bartender, one who is trained to notice signs of intoxication.
• In addition to beverages, serve food, which slows the absorption of alcohol and, hopefully, reduces the amount of alcohol consumed.
• Offer soft drinks as well as alcohol.  With surprising frequency, holiday parties overlook soft drinks and/or make them less available to attendees.  Offer a variety of soft drinks so that guests do not feel pressured into drinking alcohol.
• Have one or more designated drivers available.  Instruct these persons to monitor the crowd for potential problems and to take the initiative in offering rides to suspect individuals.
• Before the party, make it known that employees are expected to behave responsibly during the party.

These same principles apply to private parties hosted by individuals.   

Finally, if you have questions about social host liability, or if you are confronting legal issues as a result of an alcohol related accident, be sure to consult attorneys experienced in this important aspect of North Carolina law.

United States Supreme Court Ponders Definition of “Supervisor” in Harassment Case

On November 26, 2012, the U.S. Supreme Court heard argument in the employment law case of Vance v. Ball State University.  One issue in the case is whether the harasser is a “supervisor” such that the employer can be held vicariously liable for her actions under Title VII of the Civil Rights Act of 1964, the federal law that allows employees to sue for work place harassment.   

Many lower courts have defined “supervisor” narrowly as someone with the power to "hire, fire, demote, promote, transfer, or discipline" employees.  Other courts and the Equal Employment Opportunity Commission (EEOC) have adopted a broader definition, finding that someone who directs other employees’ daily work activities is a supervisor.  The distinction is important in employment discrimination matters.  If a supervisor is harassing an employee, the employer can be held liable.  On the other hand, if a mere co-worker harasses another co-worker, the employer is liable only if it knew or reasonably should have known about the harassment and did nothing to stop it.

The Vance case arises from a “hostile work environment” among the catering staff at Ball State University.  Maetta Vance, an African American female, alleged that she was subjected to racial hostility from her white co-worker, Saundra Davis.  Ms. Davis had some control over Ms. Vance’s daily work schedule, but Ms. Davis had no authority to fire her.  After years of alleged antagonism, Ms. Vance filed a lawsuit against the university.

In Vance, the U.S. Court of Appeals for the 7^th Circuit upheld a lower court’s decision to throw out Ms. Vance’s lawsuit.  In doing so, the 7^th Circuit endorsed the narrow definition and affirmed the trial court’s decision that since Ms. Davis could not fire Ms. Vance, she was not a “supervisor” and the university could not be held vicariously liable for her actions.  

According to several news sources, the Court hinted during oral arguments that Vance ultimately may not be the best case for resolving the question of who is a supervisor because of the disputed facts of the case.  However, if and/or when the Court does ultimately decide the issue, its holding is likely to have a significant impact on North Carolina employment law, as the Court’s decision could greatly expand or restrict the ability of employees to bring harassment complaints against co-workers that do not meet the narrow definition of “supervisor.”  

If you are confronting issues of work place harassment, it is important to speak with experienced North Carolina employment lawyers, as employment discrimination law raises many complex legal questions shaped by an evolving body of case law.  Please feel free to contact me directly at (336) 333-6375 to discuss this Supreme Court activity or North Carolina employment law matters.  For more information about my Greensboro law firm of Sharpless & Stavola, please visit our website at www.sharpless-stavola.com. 

North Carolina Court of Appeals allows Employment Law Action to proceed against State University despite Sovereign Immunity argument

The North Carolina Court of Appeals recently allowed an employment law action to proceed against a North Carolina university.  The case, Martinez v. The University of North Carolina, recognizes the right of individuals to sue the State in cases arising from breach of employment contract.

The plaintiff was a former provost of Winston-Salem State University who was asked by the school’s chancellor to resign his provost position and accept a full-time faculty position.   The plaintiff agreed to the request, and the parties entered a written contract to confirm the terms of the transition.  Under the contract, the plaintiff would continue to receive a full administrative salary of $180,000.00 until June 30, 2009.  He would then “retreat” to the Faculty of the School of Education where he would receive a salary commensurate with salaries of other senior faculty members.

As the transition date approached, WSSU notified the plaintiff that his annual faculty salary would be $85,000.00.  The plaintiff, feeling that this salary was not commensurate with salaries of similarly situated faculty members, initiated a grievance.  A faculty grievance committee determined that the salary was appropriate.  The plaintiff then appealed, in turn, to the new provost and to the chancellor of WSSU, both of whom affirmed the decision.

The plaintiff then filed suit for breach of contract.  WSSU moved to dismiss the suit on grounds that sovereign immunity prevented the suit.  The trial court granted the motion and dismissed the case.   In a decision issued last week, the North Carolina Court of Appeals reversed this ruling, allowing the case to proceed.  The ruling is a significant precedent inasmuch as it permits plaintiffs to circumvent a powerful governmental defense in North Carolina employment law cases based on breach of contract.

Sovereign immunity is a doctrine that generally prevents the State of North Carolina from being sued unless it has consented to the suit.  In considering the trial court’s dismissal on this basis, the Court of Appeals applied an exception to the doctrine.  The exception holds that when the State, through authorized officers and agencies, enters into a valid contract, it implicitly consents to being sued for damages in the event of a breach.  In such circumstances, the state occupies the same position as any other litigant. 

Because WSSU, as an agency of the State, entered into an employment contract with the plaintiff, the Court of Appeals determined that it waived sovereign immunity in the plaintiff’s action for breach of that contract.  Sovereign immunity is often a difficult defense to overcome in suits brought against the government.  The Martinez precedent provides a significant limitation to this defense in North Carolina employment law matters.

Federal Court dismisses Age Discrimination suit brought by North Carolina employment applicant

A recent North Carolina employment law decision confirms the importance of timely filed EEOC charges and adequately framed pleadings in employment discrimination actions.  The case, Hansen v. Siemens Energy, 2012 Westlaw 5388920 (W.D.N.C. 2012), reaffirms important procedural defenses that can arise in response to defectively grounded or presented claims of employment discrimination.

The plaintiff, Elmer Hansen, unsuccessfully applied for a welder maintenance position with Siemens Energy on two separate occasions.  He first applied on September 16, 2010 by electronically uploading his resume to the company’s career website.  After completing an online assessment, Mr. Hansen received a required Career Readiness Certificate, but he did not thereafter receive an invitation to participate in the next phase of training. 

Roughly one year later, Mr. Hansen learned from a CharlotteObserver newspaper article that Siemens still had need for skilled workers.  Mr. Hansen then re-applied for the same welder-maintenance position in January of 2012.  After again receiving no invitation to interview, Mr. Hansen filed a charge of discrimination with the EEOC in March of 2012.  

Mr. Hansen later filed a federal lawsuit against Siemens in which he alleged that the company failed to hire him, on both occasions, because of age discrimination.  Siemens filed a motion to dismiss the complaint, which the Court recently granted.

In its ruling, the Court first dismissed the employment discrimination claim arising from the 2010 application because the plaintiff failed to file a timely EEOC charge of discrimination with respect to that application.  Under the applicable AgeDiscrimination in Employment Act, a person alleging age discrimination must file a charge of discrimination with the EEOC within 180 days of the discriminatory act.  Because the plaintiff’s charge of discrimination was not filed until March of 2012, the Court made short work of dismissing the age discrimination claim as to the 2010 application.

The Court then dismissed the remaining age discrimination claim on grounds that the plaintiff failed to state a claim for relief adequately with respect to the 2012 application.  Here, the Court noted the plaintiff’s obligation to plead facts sufficient to render the claim of age discrimination plausible, as opposed to merely conceivable.  The Court cited to the United States Supreme Court’s Twombly line of cases for this principle.

The Court then determined that the plaintiff’s complaint, even as to the 2012 employment application, was fatally defective in several particulars.  For example, the Court noted that the complaint contained no allegation as to whether the plaintiff’s application was, in fact, rejected, or whether the position sought remained open or was filled by a similarly qualified younger person.  In fact, the complaint failed to present any allegations with respect to what other applicants were considered and/or chosen, or how an inference of discrimination could otherwise be supported.  The Court found the plaintiff’s mere conclusory statement that he believed discrimination had occurred insufficient to state a valid cause of action.

Notably, the plaintiff in this case represented himself in what is known as a pro se capacity.  Early in its decision, the Court noted that pro se complaints are to be construed liberally so as “to ensure that valid claims do not fail for lack of legal specificity.”  The Court further explained that courts must look beyond the face of the complaint to allegations made in any materials filed by the pro se plaintiff in order to ensure that “form does not trump substance.”  At the same time, the Court emphasized that, under the Twombly line of authority, even a pro se plaintiff is obligated to plead facts sufficient to “budge claims across the line from conceivable to plausible.” 

After weighing these somewhat competing considerations, the Court had no apparent reservation about dismissing the case.  The ruling therefore underscores the importance of capable counsel for all parties in employment litigation.

Changes to North Carolina’s Unemployment Insurance Laws are Good News for Terminated Workers

A frequently litigated North Carolina employment issue is the question of whether a terminated employee should be disqualified from unemployment compensation benefits due to misconduct.  North Carolina employment law recently saw statutory changes in this important area that arguably increase the burden that an employer must carry in order to deny a terminated employee unemployment compensation benefits on this ground.

Under North Carolina law, a terminated employee is disqualified from receiving unemployment compensation if the employee was terminated due to misconduct connected with the employee's work. Employee misconduct, sufficient to disqualify an employee from benefits, was previously defined as intentional misconduct that shows a disregard of the employee's job responsibilities or carelessness so extreme as to manifest an equal level of disregard by the employee.  This important disqualifying definition was found in North Carolina General Statute 96-14(2).

In its 2011 session, the North Carolina General Assembly enacted amendments to this statute through Senate Bill 828.  In so doing, the General Assembly rewrote the statute’s definition of the phrase, “misconduct connected with the work.”  Under the amended definition, which became effective November 1, 2012, the pivotal phrase now means:

conduct evincing a willful or wanton disregard of the employer's interest as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of an employee or has explained orally or in writing to an employee or conduct evincing carelessness or negligence of such degree or recurrence as to manifest an intentional and substantial disregard of the employer's interests or of the employee's duties and obligations to the employer.

While this newly implemented definition, on an initial reading, may not appear to significantly change its predecessor, the new language goes to some additional length to underscore the level of employee culpability needed to preclude benefits.  The amended definition, for example, speaks of “willful or wanton disregard,” as opposed to a mere disregard of employer interest or standards.  Similarly, the new definition now refers to “intentional and substantial disregard” in defining the previously unspecified degree of employee carelessness or negligence that can support disqualification. 

The General Assembly went on to amend a portion of the same statute, which previously listed a number of non-exclusive examples of employee misconduct that constitute a sufficient level of misconduct.  The amended statute now states that the examples listed constitute prima facie evidence of misconduct, which may be rebutted by the employee.  Previously, the statute made no provision for employee rebuttal.

Finally, the General Assembly added to the list of potential disqualifying grounds the following:

Refusing to perform reasonably assigned work tasks or failing to adequately perform employment duties as evidenced by no fewer than three written reprimands in the 12 months immediately preceding the employee's termination.

The first portion of this newly added basis for disqualification is nothing new, as insubordination has long been considered a sufficient ground for denying benefits.  The additional language, however, appears significant because of the level of employee fault that must be proven in order to disqualify an employee from benefits due to inadequate work performance.  Under the added language, failure to perform work duties adequately is grounds for denial if evidenced by at least three written reprimands during the 12 months before termination.

Taken as a whole, the above changes to North Carolina General Statute 96-14(2) appear to raise the bar for employers wishing to deny unemployment compensation benefits to terminated employees.  The amendments to the statute evidence that a heightened level of employee fault will be required and that, in the case of inadequate work performance, multiple written warnings will be required in order to substantiate the employer’s claim of poor performance.

National Labor Relations Board Finds At-Will Clauses in Two Employee Handbooks Lawful

On October 31, 2012, the National Labor Relations Board (NLRB) Acting General Counsel released two advice memos that analyze at-will employment clauses in two employee handbooks. 

Charges filed with the NLRB alleged that the handbooks (one distributed by Rocha Transportation in California, the other by Mimi’s Café in Arizona) were too broad in their definitions of at-will employment and could reasonably lead employees to believe that they could not engage in activity protected by the National Labor Relations Act, such as forming or joining a union. 

Rocha Transportation’s employee handbook contained the following clause:  “Employment with Rocha Transportation is employment at-will.  Employment at-will may be terminated with or without cause and with or without notice at any time by the employee or the Company.  Nothing in this Handbook or in any document or statement shall limit the right to terminate employment at-will.  No manager, supervisor, or employee of Rocha Transportation has any authority to enter into an agreement for employment for any specified period of time or to make an agreement for employment other than at-will.  Only the president of the company has the authority to make any such agreement and then only in writing.” 

The NLRB concluded that because this clause provides that the relationship can be changed, employees would not reasonably assume that their National Labor Relations Act rights are prohibited.  The Rocha Transportation advice memorandum can be accessed by clicking here. 

The Mimi’s Café employee handbook contained the following clause:  “The relationship between you and Mimi’s Café is referred to as ‘employment at will.’  This means that your employment can be terminated at any time for any reason, with or without cause, with or without notice, by you or the Company.  No representative of the Company has authority to enter into any agreement contrary to the foregoing ‘employment at will’ relationship…” 

The advice memo issued by the NLRB concludes that this clause is not unlawfully broad because it does not require employees to agree that the employee relationship cannot be changed in any way, but merely states that the employer’s representatives are not authorized to change it.  The Mimi’s Cafe advice memorandum can be accessed by clicking here.

These two advice memoranda distinguish the language in the Rocha Transportation and Mimi’s Cafe handbooks from another at-will clause that earlier this year was found by an NLRB Administrative Law Judge to be unlawfully broad.  See American Red Cross Arizona Blood Services Region, Case 28-CA-23443.  The American Red Cross at-will clause at issue in that case read as follows:  “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.” 

In addressing this language, the Administrative Law Judge noted that “it is somewhat questionable as to whether that language expressly restricts Section 7 activity.  After all, the phrase in question does not mention union or protected concerted activity, or even the raising of complaints involving employees’ wages, hours and working conditions.  However, in my view there is no doubt that ‘employees would reasonably construe the language to prohibit Section 7 activity.’”  Id.  (internal citations omitted). 

These decisions illustrate the NLRB’s scrutiny of typical boilerplate at-will employment clauses and the NLRB’s efforts to protect rank-and-file employees’ rights to unionize or otherwise organize.  They also highlight the fact that the law in this area remains somewhat uncertain.  Indeed, the Associate General Counsel who authored the Rocha Transportation advice memo concluded by stating, “[b]ecause the law in this area remains unsettled, the Regions should submit to the Division of Advice all cases involving employer handbook provisions that restrict the future modification of an employee’s at-will status.”


Please feel free to contact me directly at (336) 333-6375 to discuss this case or other North Carolina employment law matters.  For more information about my Greensboro law firm of Sharpless & Stavola, please visit our website at www.sharpless-stavola.com.