If you have employees that work from home (WFH), you may be subject to PJ in their location.
During the last few months, the NC Supreme and Business Courts have answered some tricky PJ questions: Are pre-conflict contacts relevant? (Yes and Yes); Is a single contract with a NC resident always enough to justify PJ? (No, contacts not contracts matter). Is PJ defense waivable? (Yes, and this case tested the limits of waiver.)
Compared to these PJ questions, the one in Quidore v. Alliance Plastics, LLC seemed easy — and timely — as Chief Judge Bledsoe also considered the PJ implications of allowing an employee to work from home.
The precise question in Quidore v. Alliance Plastics, LLC was whether a Rock Hill, SC company is subject to PJ in NC for breach of an employment contract and severance promises with a NC employee who often worked from home in NC.
The answer, according to Judge Bledsoe, was an easy yes. The employment contract was negotiated in NC, the promises of severance and other benefits were made in NC, and the employee regularly worked from home (in NC) with the employer’s consent. With heavy reliance on the recent Supreme Court Case Beem USA Limited-Liability Ltd. P’ship v. Grax Consulting, LLC, — N.C. — , 838 S.E.2d 158 (2020), discussed here (contacts throughout the period of performance are relevant – not just during breach), Judge Bledsoe explained that the SC employer should have anticipated being haled into NC Court on employment matters with this employee. PJ in NC was proper.
One Takeaway: Businesses from other states that allow employees to work from home in NC need to keep their eyes on the PJ ball, as least for employment-related claims from those employees.
Alliance was SC corporation with its main office in Rock Hill, SC – a few short miles across the border from Charlotte. Alliance recruited Mr. Quidore, and convinced him to leave his job and home in California, move to the Charlotte area, and become Alliance’s COO. As part of this recruitment, Mr. Quidore made multiple trips to the Charlotte region – each time, flying into Charlotte’s airport, staying in Charlotte, and meeting with Alliance’s CEO (also a NC resident) in Charlotte. At these meetings, the alleged terms of employment were negotiated and, according to Mr. Quidore, promises were made. After accepting the position, Quidore moved his family to Charlotte (not Rock Hill). Thereafter, Quidore regularly worked for Alliance from NC – including daily emails and calls taken from his NC home; meetings with Alliance’s CEO (also a NC resident) at various Charlotte Starbucks locations; and regular and routine attendance at other NC meetings, lunches, and business functions. Alliance knew about and approved Quidore’s work activities in NC.
After about a year, the relationship soured, and Quidore was fired. When Quidore did not get the severance benefits he was promised, he sued Alliance – in NC – for breach of their employment agreement and for lying about his benefits.
Alliance challenged PJ. As a SC entity with operations and offices in SC, Alliance argued that it lacked requisite contacts with NC. Alliance also denied and disputed Quidore’s allegations of wrongdoing including where that supposed wrongdoing occurred.
Judge Bledsoe was not convinced by Alliance’s arguments. Weighing competing affidavits, Judge Bledsoe concluded that Alliance’s contacts with North Carolina were sufficient to justify PJ. Quidore performed “regular and continuous” work for Alliance in NC, including meetings, entertaining, and routine, daily after-hours emails and calls from his NC home. Alliance approved all of this NC work. And, the actual breach of the employment agreement occurred at a NC Starbucks, where Alliance’s owner met with Quidore, terminated his employment, and supposedly told him that Alliance would not honor the alleged severance promises. These contacts, and the lack of hardship in having to defend a suit a few short miles from Rock Hill, made answering this PJ question, well, Easy, Easy Like …
This decision raises some interesting questions for employers:
What if the employer’s only NC contact is the employee ‘working from home’? The theme of recent cases, including this one, suggests the answer may be yes. With Beem leading the way, these cases explain that the totality of the employer’s contacts with NC is relevant. As WFH proliferates, so too will the employers’ PJ contacts with their employees in these NC locations. Clever practitioners surely will highlight and expound on a foreign employer’s ‘regular and continuous’ contacts with employees as they work remotely.
So, how can a foreign employer avoid this result? A good Employee Handbook policy on the limits of teleworking would help. A written agreement with the employee that specifically addresses venue and jurisdiction would be even better. Employers should also watch for policies that overly entangle an employer in the employee’s home location; for example, has the employer retained (exercised?) the right to inspect the home office for safety? Has an IT department employee visited the employee’s home office to set it up? How many other employees are allowed to work in North Carolina?
Bottom line: The case before Judge Bledsoe is a good reminder that as employees increasingly scatter to their residences, employers who are not careful might well be exposing themselves to PJ where those employees live.