Tag Archives: Idaho Supreme Court

October 9, 2013

Idaho Supreme Court Changes Tack and Applies McDonnell Douglas Burden Shifting Analysis at Summary Judgment Stage

Since 2008, employers defending employment claims in Idaho have faced a higher burden of proof, thanks to the Curlee v. Kootenai County Fire & Rescue decision of the Idaho Supreme Court. In that case, the Court decided that the well-known McDonnell Douglas burden shifting analysis used in employment cases did not apply at the summary judgment stage, making it more difficult for employers to get a favorable outcome without going to trial. Recently, however, the Idaho Supreme Court changed its position, deciding that the McDonnell Douglas burden shifting analysis did apply at the summary judgment stage, resolving a five-year debacle in which Idaho employers faced different burdens of proof depending on whether employment claims were litigated in state or federal court. See Hatheway v. Bd. of Regents of the Univ. of Idaho, No. 39507 (Idaho Sept. 6, 2013).

Federal Framework Applied to Age Discrimination Claim Under the Idaho Human Rights Act (IHRA)

The McDonnell Douglas burden shifting analysis has been widely used to resolve a variety of federal employment law claims since 1973. The analysis allows a plaintiff to put forth indirect evidence of discrimination to establish a prima facie case. The burden of production then shifts to the employer to articulate a legitimate, nondiscriminatory reason for the employer’s actions. If the employer provides such reason, the burden of production then swings back to the plaintiff to show that the proffered reason is in fact pretext for unlawful discrimination. At all times, the plaintiff bears the burden of persuasion, meaning the plaintiff must convince the judge or jury that his or her position is correct.

Many state courts have adopted the McDonnell Douglas burden shifting analysis when adjudicating employment claims brought under analogous state laws. In Curlee, the Idaho Supreme Court appeared to adopt the McDonnell Douglas analysis, but went on to rule that the analysis explicitly governed the burden of persuasion at tria, and did not apply at the summary judgment stage.

The Hatheway decision appears to change that. Without specifically mentioning or overruling its Curlee decision, the Court applied the McDonnell Douglas burden shifting analysis at the summary judgment stage of Hatheway’s IHRA discrimination claims against the University of Idaho. The Court reiterated that federal law guides the interpretation of the IHRA and applied the same degree of proof and standards to an IHRA age discrimination claim as is used to analyze discrimination claims under the federal Age Discrimination in Employment Act.

Why Employers Should Care

If this all sounds like legal mumbo-jumbo, let’s put it in practical, real-life terms. Employers want to get employment claims dismissed at the earliest possible stage for numerous reasons, including avoiding expensive litigation, disruption to their operations and unfavorable publicity. Following the 2008 Curlee decision, Idaho employers had to prove more of their case early on, making it difficult to get a favorable judgment prior to trial. This prolonged meritless cases and cost employers more in legal fees and litigation-related expenses. Now, with the application of the traditional burden shifting analysis at the summary judgment stage, employers facing employment claims in Idaho state courts will have a better chance of getting employment claims dismissed earlier in the legal process with fewer cases proceeding to trial.

Disclaimer: This article is designed to provide general information on pertinent legal topics. The statements made are provided for educational purposes only. They do not constitute legal advice and are not intended to create an attorney-client relationship between you and Holland & Hart LLP. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel.

March 4, 2011

Avoiding Policy or Reimbursement Liability for Unemployment Benefits

by A. Dean Bennett

To determine whether a former employee is eligible for unemployment benefits, the State of Idaho applies the “standard of behavior test.” Under this test, an employer can contest a former employee’s claim to unemployment benefits if it can show: “(1) the employee’s conduct fell below the standard of behavior expected by the employer; and (2) the employer’s expectations were objectively reasonable under the circumstances.”

But practically, how does the State apply the test, and how can employers make sure that under-performing employees do not continue to cost the employer money—even after being terminated? The Idaho Supreme Court recently addressed the standard, and gave employers some helpful guidance. See Adams v. Aspen Water, Inc., No. 36501, 2011 WL 322362 (Idaho Feb. 3, 2011).

The Court hurried past the first prong of the test, labeling it “subjective.” Whether an employee’s conduct falls below the standard of behavior expected by an employer is determined only by what the employer expected of the employee. Were the “standard of behavior test” limited to the first prong, no employer would ever lose a case contesting a claim for unemployment benefits.

The second prong of the test, however, is objective. Whether the employer’s expectations were objectively reasonable under the circumstances will likely turn on whether the employer communicated its expectations to the employee. The Court noted that it will sometimes recognize uncommunicated expectations as reasonable if they “flow naturally from the employment relationship.” But the safer route, and the route that will avoid protracted litigation and the associated costs, is for the employer to expressly communicate its expectations to the employee.

As with most liability-limiting advice—get it in writing. The best way to communicate employer expectations is through a written job description and/or an employment policy manual setting forth expectations for employee conduct. If an employee fails to meet the written expectations, the employer will be in a position to quickly and effectively contest an unemployment claim.

January 22, 2011

Understanding the Idaho Trade Secrets Act and its Relevance to Former Employees

by Nicole C. Snyder

It is often concerning when an employee is discharged or quits her job and goes to work for a competitor. In the absence of a non-competition agreement, the former employer may claim that the employee has stolen trade secrets and used them in her new job.

Idaho has adopted the Uniform Trade Secrets Act, codified under Idaho Code § 48-801, et seq. The Act prohibits the misappropriation of “trade secrets,” defined as:

[I]nformation, including a formula, pattern, compilation, program, computer program, device, method, technique, or process, that:

(a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

(b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy… .

If an employer claims a former employee has violated the Trade Secrets Act, is the claim likely to succeed?

Maybe. It is important for employers to recognize that there are significant limitations on the protections against former employers under the Trade Secrets Act. In a very recent case, Wesco Autobody Supply, Inc. v Ernest, the Idaho Supreme Court recited this language from a prior decision:

[T]he legislature did not intend the [Idaho Trade Secrets Act] to be read so broadly as to preclude the hiring of an employee from a competitor; the legislature also did not intend that merely hiring a competitor's employee constitutes acquiring a trade secret.” Instead, “[a]n employee will naturally take with her to a new company the skills, training, and knowledge she has acquired from her time with her previous employer. This basic transfer of information cannot be stopped, unless an employee is not allowed to pursue her livelihood by changing employers.

In the Wesco case, the Court found it was possible that one employee violated the Trade Secrets Act when the employee took and used the former employee’s customer lists, lists showing customer buying preferences, history of customer purchases, and custom paint formulas. The Court, however, was unwilling to say that other employees had violated the Trade Secrets Act based merely on the fact that their customer relationships caused the customers to follow the former employees to a new employer.

In sum, if a company’s leadership is worried about the risk of employees working for a competitor and using the knowledge and relationships they built for a competitor’s advantage, then reliance on the Idaho Trade Secrets Act may be inadequate. In such cases, it is important to utilize carefully-crafted noncompetition agreements.