Labor Law

Bryan P. Cavanaugh, Esquire

Resigning to access funds from a 401(k) account does not constitute resignation for good cause. Timothy Schweitzer v. Sinak Plumbing and Division of Employment Security, No. 96337 (Mo. App., E.D., November 8, 2011), Romines, J.

Schweitzer worked as a plumber for Sinak for twenty-five years. One day, he told the office manager he was resigning because he needed to access funds from his 401(k). Schweitzer filed for unemployment benefits two days later and cited several alleged incidents of harassment from Sinak’s owner. The deputy awarded him benefits on the basis that Schweitzer quit for good cause. The appeals tribunal affirmed. The commission reversed and concluded Schweitzer did not quit for good cause.

Held: Affirmed.
The commission had found that Schweitzer resigned because he wanted to access funds from his 401(k), and not because of harassment from Sinak’s owner. The court was bound to accept this fact. Given that, the issue is whether Schweitzer’s resignation for that reason constituted good cause, which is a question of law. “Good cause” typically involves some type of harassment, inappropriate comments, or other objectionable behavior on the part of the employer. “Resigning for the purpose of accessing funds from a 401K account is not reasonable for the purposes of good cause because it is a personal motivation over which the employer has no control.”  Therefore, Schweitzer’s resignation was not for good cause, and he was not entitled to unemployment benefits.

Equitable tolling may apply to deadlines for applying for benefits under the federal Trade Act. Staci Adams v. Division of Employment Security, No. 95820 (Mo. App. E.D., November 22, 2011), Cohen, J.

Adams was laid off from her job working at a Chrysler plant. She sought benefits under the federal Trade Act of 1974, 19 U.S.C. §§ 2271, et seq. Eligibility for Trade Act benefits requires a group of workers, their union, or their employer to file a petition with the United States Department of Labor stating that the loss of their employment is due to either competition from imports or a shift in production to another country. The commission denied her application for benefits under the Trade Act because she filed her application after the deadline to do so. Adams appealed, arguing the commission erred in failing to apply equitable tolling to the deadlines under the Trade Act.

Held: Reversed and remanded for a new hearing.
A litigant seeking equitable tolling must establish (1) he has been pursuing his rights diligently, and (2) some extraordinary circumstances stood in his way. Here, the court found both of those elements were met. The court also identified a recent U.S. Department of Labor guidance letter that specifically allowed for the possibility of equitable tolling in circumstances such as Adams’. Therefore, the court remanded the case to the commission for further findings of fact and conclusions of law on the issue of the propriety of the application of equitable tolling to Adams’ failure to request a training waiver by the statutory deadline.

Restrictive covenant with a two-year restriction and a 50-mile radius held not per se unreasonable. Whelan Security Company v. Charles Kennebrew, Sr. and W. Landon Morgan, No. 96394 (Mo. App. E.D., November 29, 2011), Ahrens, J.

Kennebrew and Morgan were employees of Whelan. Kennebrew’s employment agreement contained non-competition and non-solicitation of employees and customers restrictions. The temporal restriction was for two years after employment, and the non-compete geographical restriction was a 50-mile radius of any location where Kennebrew had provided services or arranged for Whelan to do so. Kennebrew worked as Director of Quality Assurance, and was responsible for various areas of operations and client development. Kennebrew resigned in August 2009.

Morgan, whose employment agreement with Whelan contained similar restrictive covenants as Kennebrew’s, oversaw the Tennessee operations and was responsible for operations and sales. He resigned in December 2008.

Whelan filed a petition for injunctive and monetary relief, alleging unlawful solicitation and competition by Kennebrew and Morgan. Both sides moved for summary judgment, and the trial court granted a judgment in Kennebrew’s and Morgan’s favor. It ruled: “the employment agreements at issue in this case, as written, are overbroad, not reasonable as to time and space and are therefore not valid.”   Whelan appealed.

Held: Reversed.
The court of appeals found the restrictive covenants reasonable as written. The temporal restriction of two years is reasonable under Missouri law. The non-solicitation of customers restriction is reasonable even without a geographic restriction. As for the non-solicitation of employees restriction, Morgan’s one-year restriction is presumptively reasonable under § 431.202 RSMo. Kennebrew’s two-year restriction is not presumptively unreasonable. The court remanded this issue to the trial court to consider the reasonableness of the two-year restriction on the solicitation of customers, and reminded the trial court it could “blue pencil” that two-year restriction if it found it too long.

As for the non-compete restriction for two years and within a 50-mile radius of every location where the defendant had worked, the court of appeals concluded neither the temporal nor geographic scope was per se unreasonable.

Therefore, nothing in the non-compete and non-solicitation agreements was per se unreasonable and unenforceable as a matter of law. The appropriate inquiry for the trial court is whether the temporal and spatial restrictions on non-competition are reasonable under the particular circumstances of the case and serve the employer’s legitimate interests.

The court of appeals remanded the case for a determination of whether the restrictive covenants were reasonable under the circumstances and, if so, for a determination of damages. The court of appeals refused to apply any equitable tolling to extend the length of the temporal restrictions.