Indiana Business Lawyer Blog

The Indiana Supreme Court recently provided important guidance for employers looking to hold employees accountable for breaching non-solicitation clauses in employment agreements by providing for liquidated damages. In its December 18, 2019, majority opinion in American Consulting, Inc. d/b/a American Structurepoint, Inc. v. Hannum Wagle & Cline Engineering, Inc. d/b/a HWC Engineering, Inc. et al. (“ASI”),[1] the Court found that the liquidated damages provisions in employees’ employment agreements were facially unreasonable and unenforceable and were not correlated to the employer’s actual loss.[2]

In ASI, the relevant contract provisions for one former employee provided as follows:

• For two years after employment, the employee will not sell, provide, try to sell or provide or assist any person or entity in the sale or provision of any competing products or services to the employer’s customers with whom the employee had any business contact on behalf of the employer during the two years prior to his separation from employment. A breach of this provision that results in the termination, withdrawal or reduction of a client’s business with the employer will result in liquidated damages equal to 45% of all fees and other amounts that the employer billed to the customer during the 12 months prior to the breach.

Employers often express concern about obese employees in physically demanding jobs or jobs that involve driving a motor vehicle. Obesity causes increased risk of numerous conditions that can cause sudden incapacitation, such as heart attack or stroke.[1]  It is also linked with sleep apnea, which can cause exhaustion.[2]  As a result, employers often fear that an employee’s obesity creates a safety risk for the employee, fellow employees, and, in some cases, the public. However, employers are skittish about benching these employees for fear of potential liability under the Americans with Disabilities Act (“ADA”).

Employers in Indiana can take some comfort in that the Seventh Circuit Court of Appeals issued several opinions in 2019 that have narrowed the scope of employees who are protected under the Americans with Disabilities Act (“ADA”) due to obesity. While this is encouraging for employers, the current state of the law challenges common sense and makes an employer’s evaluation more—not less—complex.

First, the Seventh Circuit held that obesity alone is not a physical impairment under the ADA unless there is evidence that obesity is caused by an underlying physiological disorder or condition.[3]  While Richardson is positive for employers because it forecloses carte blanch ADA protection for every obese person, it adds complexity for employers who must now consider whether an employee’s obesity is caused by an underlying physiological disorder or condition before making employment decisions. Furthermore, what specific policy goal does the Richardson rule promote? If obesity is not an “impairment” that qualifies under the ADA, why should obesity be protected when it is the manifestation of an underlying physiological disorder? Surely the employer is not making its decision to remove an obese employee from a safety sensitive job on the basis of the employee’s thyroid disorder that caused or contributed to the obesity. Unfortunately, that policy question is one for congress—not the Seventh Circuit—and congress isn’t solving many problems these days.

The Seventh Circuit recently reaffirmed the standard required to hold an employer liable for retaliation under Title VII. In Mollet v. City of Greenfield, the court held that “Title VII claims require proof that the desire to retaliate was the but-for cause of the challenged employment action.”[1] This ruling establishes the requirement for an employee to bring a successful retaliation claim and helps protect an employer if it can demonstrate it terminated the employee for a lawful reason.

In August 2016, James Mollet filed a Title VII claim against the City of Greenfield, Wisconsin. Mollet’s complaint alleged that he was constructively discharged from the city’s fire department as retaliation for reporting a racist incident in the firehouse. The incident occurred in February 2012, and Mollet’s report led to the fire department management disciplining four individuals. However, in the year following the incident, Mollet’s superiors became increasingly critical of his performance. Facing demotion or reassignment, Mollet resigned and found new employment in March 2013.

Title VII of the Civil Rights Act of 1964 prevents retaliation against employees for complaining about discrimination in the workplace.[2] A successful claim under Title VII requires an employee to show: “(1) he engaged in a statutorily protected activity, (2) his employer took a materially adverse action against him, and (3) there is a causal link between the protected activity and the adverse action.”[3]

For the first time, the 7th Circuit has directly addressed the question of whether obesity is a “physical impairment” that qualifies as a disability under the ADA. Consistent with the Second, Sixth, and Eighth circuit courts’ holdings, the 7th Circuit held in Richardson v. Chicago Transit Authority that “obesity is an ADA impairment only if it is the result of an underlying physiological disorder or condition.”[1] Although this ruling clarifies that not every obese person is being protected under the ADA, it does leave the waters muddy for employers who must consider whether an employee’s obesity is caused by an underlying physiological disorder or condition before making employment decisions.

Mark Richardson worked as a full-time bus driver for Chicago Transit Authority (“CTA”) from August 1999 until February 2012. In February 2010, Richardson was absent from work due to the flu. Upon his return, CTA’s third-party medical provider documented that Richardson suffered from a variety of conditions, in addition to weighing more than the CTA bus seat limit of 400 pounds.[2] In April, CTA transferred Richardson to its Temporary Medical Disability-Area 605 (“605”), an area described as a budgetary assignment for employees found medically unfit for their job classification due to illness or injury. Although Richardson was given two years in 605 to prove his ability to operate the busses and to comply with the seat’s weight accommodation, he failed to do both. CTA offered to extend his time in 605 if Richardson submitted medical documentation. When he did not, CTA terminated his employment.

Richardson filed a lawsuit against CTA, alleging that it violated the Americans with Disabilities Act (“ADA”) by firing him for being too obese to operate a bus. The district court granted summary judgment for CTA, agreeing with its argument that Richardson had failed to show his obesity qualified as a protected physical impairment under the ADA. Richardson appealed the decision to the United States Court of Appeals for the Seventh Circuit.[3]