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Can an employee be fired because his or her spouse works for a competitor?

Employment Law - For Employees

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A New York Court recently answered the question whether an employer, in order to protect trade secrets and proprietary information, can fire an employee whose spouse works for a competitor. The court’s decision should be a reminder to employers to be cautious when it comes to workplace decisions based on marital status.

The Appellate Division for New York’s First Department interpreted New York City’s Human Rights Law and determined that, although an employee’s marriage to an employee who works for a competitor might reasonably be considered a risk to the security of a company’s proprietary or confidential information, it may not justify firing that employee—at least in New York City.

In Morse v Fidessa Corp., an employee claimed that his dismissal from Fidessa Corp., a financial services company, violated New York City’s Human Rights Law (NYC Administrative Code 8–107), which prohibits unlawful discriminatory practices in employment matters.

The employee, Christopher Morse, was suspended and subsequently fired because his employer, Fidessa, thought that a former employee to whom Morse had been married (but from whom he was actually divorced), had left the company to work for a competitor. Morse was fired because of the perceived marriage and was told that if he got divorced, he would be considered for re-employment.

Morse noted that Fidessa had not dismissed another unmarried employee whose partner similarly had gone to work for a competitor. Morse said that his former wife’s subsequent employment was improperly considered a “disqualifying factor” that justified his termination.

Morse’s complaint indicated that he and his former wife were treated differently than the unmarried couple, raising the question whether an employer can fire an employee because of his or her marriage to a particular person.

Fidessa claimed that the law did not prohibit employment decisions based on the identity of an employee’s partner or spouse, but only prohibited discrimination on the basis of whether the employee was in fact married. The fact that Fidessa was biased against married couples in all circumstances is “of no moment,” the court determined, since Morse was terminated because he was married to the employee (the former wife) who left the company to work for a competitor. This is equivalent to being fired based on marital status, which is in violation of New York City’s Human Rights Law.

Leading up to Morse, New York City’s Human Rights Law was amended in an attempt to eliminate discrimination. The Local Civil Rights Restoration Act of 2005 (Local Law No. 85) changed the judicial landscape with respect to New York City’s Human Rights Law, and provides that the law be interpreted liberally and independently of similar federal and state provisions.

Local Law No. 35, established in 2016, went further by amending Administrative Code 8-130 “to provide additional guidance for the development of an independent body of jurisprudence for the New York city human rights law that is maximally protective of civil rights in all circumstances.”

While this decision may appear to be limited in application, employers should contact an employment law attorney for assistance in complying with local, state and federal laws regarding employee rights. It is a stark example of how liberal the NYC HRL can be interpreted.

 

Nicholas A. Devyatkin, Esq. is a New York City-based labor and employment attorney at Tully Rinckey PLLC.

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