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The terminated employee—Don’t do it!

August 26, 2015

By Anthony Kaylin, courtesy of SBAM Approved Partner ASE

The employee is gone, but won’t leave well enough alone. You are tempted to fight back. But you cannot make that same mistake, because anti-retaliation protections can extend to terminated employees. Most employers resist the temptation to take further adverse action against the terminated employee, but there are those who cannot. And when they take action, liability may attach.

In the case of Oram v. SoulCycle LLC, et al., 979 F. Supp. 2d 498 (S.D.N.Y. 2013), Oram was a former indoor cycling (or “spin”) instructor at SoulCycle.  Not only did Oram teach classes at various location for SoulCycle, but Oram had to perform a variety of other tasks including, but not limited to, “training, preparing for classes, developing routines, compiling playlists, communicating with customers, attending meetings, leading special event classes and engaging in marketing.” These tasks required an additional 15 to 25 hours per week of his time which he was not compensated for. Oram was paid “strictly on a per- class basis,” although the rate he was paid far exceeded the minimum wage.   He also claimed that he incurred business expenses that he wasn’t reimbursed for.

Three weeks after he left SoulCycle’s employment, Oram initiated a wage-and-hour lawsuit against the company. SoulCycle was not happy.  Oram and his lawyer, Wigdor, who was a paying members of SoulCyle, were “explicitly told that they were not permitted on SoulCycle’s premises.”

Predictably, Oram amended his complaint again.  He included claims of retaliation, contending that as a former employee, he was protected by anti-retaliation provisions. SoulCycle’s ban on attendance qualified as an adverse action because it “might have dissuaded a reasonable worker from making or supporting similar charges.”

The company filed a motion to dismiss Oram’s claim for failure to state a cause of action.

The trial court granted the motion with respect to the wage and hour claims, finding that everything Oram claimed that he wasn’t being paid for was specifically identified in the contract under which he was being paid. Oram’s contract with Soulcylce stated that his compensation was for “all services rendered by employee in connection with employee’s employment” and described such services as including, but not limited to, teaching no less than 11 classes per week, attending regular staff meetings, attending continuing education sessions, compiling playlists and contributing to the Company’s music library, offering content for the Company’s website, and setting up new riders for the class.

However, the trial court allowed the retaliation claim to continue. The court pointed out that courts have routinely considered that retaliation encompasses a broad range of acts, including those not traditionally implicated in an employer-employee relationship. For example, an employer’s filing of counterclaims constituted sufficient adverse employment action because counterclaims asserted against an ex-employee could harm his reputation in his industry and negatively affect his prospective employment or business opportunities. Or contesting an ex-employee’s unemployment benefits after filing a complaint with State Division of Human Rights constituted retaliation.  The trial court then stated that barring Oram and Wigdor from its premises rises to the level of retaliation.

What this case exemplifies is that business is business, employer-employee relationships go bad all the time, and the employer should never take them personally. When an employee leaves or is terminated, advise your manager(s) to let the situation go. If it requires additional attention, you—not the involved manager(s)—should manage it. 

A typical situation in Michigan is what to do when providing job references on former employees. Michigan gives employers limited protection if they provide truthful references. But providing poor recommendations (or refusing to furnish the same), blacklisting, making threats to future employers, opposing applications for unemployment benefits, or filing false criminal charges will lead to liability on the part of the company.  

There are times when the actions are not retaliatory such as contesting unemployment for misconduct when misconduct is documented, asserting rights under confidentiality agreements, or trying to enforce non-competes, among other actions. 

But managing these situations is clearly HR’s job. Front-line managers need to be trained on their proper role and held to playing it correctly. The case above may end up needlessly costing SoulCycle dearly because their management did not resist the temptation to let well enough alone.

Remember that business is business, and you cannot take things personally.

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