Wyatt Employment Law Report

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Employers Beware! You Can Now Be Sued for What you Say in Unemployment Proceedings

By Mitzi Wyrick

Based on a recent court ruling, what you say in unemployment proceedings can now lead to a lawsuit.  In Hickey v. General Electric Company, 2017-SC-000135-CL, the Kentucky Supreme Court held in a unanimous opinion that employers may be sued for making false statements during unemployment proceedings.  This ruling means that employers may have to face a claim for punitive damages if they are found to have made a false statement during an unemployment proceeding.Employee-Termination

The dispute arose over whether Logan Hickey voluntarily quit his employment or was fired.  Hickey was hired to work the first shift on the production line at General Electric Company (“GE”) in May 2015.  At the time he applied, Hickey stated that he was capable of and available for work on any shift.  In August 2015, Hickey was reassigned to a second-shift position.  After working several days, Hickey claimed Continue reading

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Kentucky Supreme Court Reasserts Constitutional Power, Opens Door to Class Actions

By Thomas E. Travis

With the Kentucky Supreme Court’s recent ruling in McCann v. The Sullivan University System, Inc., employers should take heed to potential class action exposure in cases related to alleged violations of Kentucky’s wage and hour statute. However, the Court, in its text-centric opinion, appears to have issued a broader warning shot as to how to interpret Kentucky statutory causes of action in light of the Kentucky Rules of Civil Procedure.

The underlying dispute arose when Sullivan University hired McCann as an admissions officer in 2006 at its campus in Fort Knox, later transferring her to its Spencerian College campus in Louisville in 2007. After a prolonged tilt in federal court, McCann filed a state court motion under Kentucky Rule of Civil Procedure 23 to certify a class action on behalf of admissions officers for back overtime pay. KRS 337.385—Kentucky’s wage and hour statute—neither Continue reading

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Senate Bill 18: Will the General Assembly Finally Clarify the Reach of the Peer Review Privilege?

By Rachel K. Mulloy

A bill passed in the Kentucky Senate (by a vote of 22-12) and currently awaiting House action in the Judiciary Committee proposes to amend the portion of KRS 311.377 pertaining to the confidentiality of certain medical records.  If passed, Senate Bill 18, sponsored by Senator Ralph Alvarado of Senate District 28, will prevent records of an entity, group, or individual performing a professional review function from being admissible in any civil action or administrative proceeding, including, specifically, medical malpractice actions.

Under the proposed amendment, KRS 311.377(2) reads as follows:

At all times in performing a designated professional review function, the proceedings, records, opinions, conclusions, and recommendations of any committee, board, commission, medical staff, professional standards review organization, or other entity, as referred to in subsection (1) of this section shall be Continue reading

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Kentucky Supreme Court Invalidates Louisville’s Minimum Wage Ordinance, Decision Impacts Lexington’s Ordinance As Well

By Sharon L. Gold

wage increaseToday the Kentucky Supreme Court issued a much awaited opinion in the minimum wage battle between Louisville and business groups, siding with the business groups and invalidating the ordinance.  In Kentucky Restaurant Association et. al v. Louisville/Jefferson County Metro Gov’t, 2015 –SC-000371-TG (October 20, 2016), the Kentucky Supreme Court invalidated Louisville’s minimum wage ordinance that raised the minimum wage above the state minimum.  Louisville’s ordinance raised the minimum wage gradually to $9.00 over the next several years.  Lexington passed a similar ordinance in November of 2015 that raised the minimum wage gradually to $10.10 over the next three years.  At the time of the decision, Lexington’s minimum wage had increased to $8.20 and Louisville’s was $8.25.

In February of 2015, the Kentucky Restaurant Association, Kentucky Retail Federation and Packaging Unlimited, LLC filed a lawsuit in Jefferson Circuit Court arguing that local governments do not have the authority to raise the minimum wage.  While several states have raised the minimum wage, Kentucky’s is the same as the federal minimum of $7.25 per hour.

The Jefferson Circuit disagreed with the business groups and held that local governments had the authority to pass a minimum wage ordinance.  The business groups Continue reading

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Lexington-Fayette Urban County Council Votes 9-6 to Increase the Minimum Wage to $10.10 over the Next Three Years

By Sharon L. Gold

coin stackAt last night’s packed council meeting, the Lexington-Fayette Urban County Council voted 9-6 to increase the minimum wage in the city to $10.10 over the next three years. The ordinance provides that the minimum wage shall increase to $8.20 an hour on July 1, 2016, $9.15 an hour on July 1, 2017, and $10.10 an hour on July 1, 2018. Mayor Gray indicated to the media that he will sign the ordinance.

Neighboring Louisville passed an ordinance increasing the minimum wage to $9 over the next three years. A group of businesses challenged the Louisville ordinance and that case is currently pending before the Kentucky Supreme Court. The Court will ultimately have to decide whether cities have the authority to increase the minimum wage.

This issue is being hotly contested all across the country, with proponents of a minimum wage increase arguing that families cannot live on the current minimum wage of $7.25 per hour. Opponents of the wage increase argue, on the other hand, that raising the minimum wage will hurt lower income families because it will result in lost jobs and increased cost in everything from groceries to gas. Others argue that job training and education are more proper avenues to raise working families’ incomes.



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Kentucky Supreme Court Rules in Lawsuit Filed by Morbidly Obese Employee of Wagner’s Pharmacy

By Amanda Warford Edge

Employee-TerminationOn May 14, 2015, the Kentucky Supreme Court issued a ruling in Wagner’s Pharmacy, Inc. v. Melissa K. Pennington. Pennington had filed the lawsuit back in 2007, alleging that her employer, Wagner’s Pharmacy, discriminated against her by terminating her employment due to her morbid obesity. At the time of filing the lawsuit, Pennington weighed 425 pounds. She is just 5’4” tall.

Wagner’s cited Pennington’s poor personal appearance and declining sales as the reasons behind Pennington’s termination – not Pennington’s weight. Prior to her termination, Pennington had operated a food and drink concession truck owned by Wagner’s at Churchill Downs. She had been employed by Wagner’s for approximately ten years.

In support of her discrimination lawsuit, Pennington relied on the expert testimony of Dr. Gaar, a board-certified surgeon who had performed nearly 2,000 gastric bypass surgeries. Dr. Gaar testified in detail as to the causes of morbid obesity, stating that Continue reading

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Kentucky Supreme Court Issues Potential Game-Changing Decision for Employers with Non-Competes

By Mitzi D. Wyrick

In Creech, Inc. v. Brown, et al, 2012-SC-000651 (Ky. 2014) rendered June 19, 2014, the Kentucky Supreme Court altered the landscape for employers who have covenants not to compete signed by their employees. The employer, Creech, Inc. (“Creech”), provided hay and straw to farms. In 2006, after Donald Brown (“Brown”) had worked for Creech for sixteen years, he was presented with a “conflict of interest” agreement (“Agreement”). The Agreement contained confidentiality provisions with respect to proprietary information as well as a prohibition on employment with any company that directly or indirectly competed with Creech for three years after Brown left his employment. At the time he signed the Agreement, Brown worked as a salesperson. He received no additional compensation for signing the Agreement. Shortly after signing the Agreement, Brown was transferred to the position of dispatcher with no change in salary, but decreased responsibilities and little to no customer contact. In November 2008, Brown resigned to take a job with Standlee, a producer and seller of hay and straw. Ultimately, Creech filed suit against Brown and Standlee alleging breach of contract, intentional interference with contract, aiding and abetting breach of contract, intentional interference with prospective business relations, fraud, and breach of confidentiality.

The trial court issued an injunction allowing Creech to remain employed with Standlee but preventing him from selling or purchasing hay for Standlee in Kentucky and preventing him from disclosing information obtained during his employment with Creech. The trial court modified the Agreement to include a geographical restriction to the Commonwealth of Kentucky. The court found that continued employment was adequate consideration for the non-compete. The Court of Appeals was concerned with the breadth of agreement. The court found that additional discovery was warranted and held, as a matter of law, that continued employment was sufficient consideration to support the Agreement.

On appeal, the Kentucky Supreme Court reversed and held that the Agreement was not enforceable because it was not supported by adequate consideration. Specifically, the Supreme Court held that Brown was offered nothing in exchange for signing the Agreement. Brown remained an at-will employee without an employment contract, with no raise or promotion, no change in the terms of the employment relationship, no specialized training or expertise, and no limitation on Creech’s ability to discharge him after he signed the Agreement.

The Supreme Court distinguished two of the leading cases on non-competes in Kentucky, which had led many employers to believe that continued employment was adequate consideration for a non-compete. In Higdon Food Service, Inc. v. Walker, 641 S.W.2d 750 (Ky. 1982), after the plaintiff worked for four years without an employment contract, he was presented with an employment contract in a new position that contained limitations on the employer’s ability to discharge him in exchange for signing the non-compete. Because the employment contract altered the terms of the employment relationship, it was the same as “new employment.” Similarly, the Supreme Court found Central Adjustment Bureau, Inc. v. Ingram Associates, Inc., 622 S.W.2d 681 (Ky. 1981), to be inapplicable. There, the employees involved signed agreements shortly after they began working and they continued to be employed for a number of years before leaving. While employed they received raises and promotions as well as specialized training and knowledge to which they would not otherwise have had access. And unlike Creech, Central threatened employees with the loss of their jobs if they did not sign the agreements.

Lessons for Employers: Employers should examine any non-compete agreements they have entered into with their employees. After Creech, it appears that continued employment, by itself, may not support enforcement of a non-compete. If employees signed the non-compete after they became employed, employers should make certain that the agreements are supported by adequate consideration, such as access to proprietary information, specialized training or knowledge, raises or promotions, or restrictions on the ability to terminate employment. If employees received none of these things, a non-compete may not be enforceable.   In addition, employers should explicitly make signing a non-compete or confidentiality agreement a condition of continued employment. That, by itself, may not be enough to enforce the agreement, but it is a factor that was lacking in Creech. The Court also noted that the Agreement at issue was contained in the employee handbook. Confidentiality and non-compete agreements should not be included in employee handbooks. Employee handbooks should contain disclaimers stating that they are not contracts or guarantees of employment and that they may be revised at any time in the employer’s discretion. If a confidentiality or non-compete agreement is included in an employee handbook that contains such a disclaimer, a court will likely find that it is unenforceable.

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