Drug testing triumph Featured

9:53am EDT July 22, 2002

An employee fired for refusing to submit to a random drug test was justifiably discharged for willful misconduct and was, therefore, not eligible for unemployment compensation, according to a recent Pennsylvania Supreme Court decision.

In Rebel v. UCAB, the Pennsylvania Supreme Court rejected the employee’s argument that the employer’s random drug testing program violated his privacy interests, and found instead that the manner in which the drug testing was conducted was not unduly invasive. For example, the drug testing was conducted in off-site medical facilities where employees are tested in a confidential and professional manner in conformity with standardized testing procedures.

The ruling gives employers additional support in managing personnel by giving notice to employees that failure to comply with a company’s drug testing policy may result in the loss of unemployment benefits if discharged for noncompliance. It also gives employers guidance in evaluating whether their drug testing programs are consistent with employees’ privacy interests.

William E. Adams

Go global, get sued anywhere

A profusion of often conflicting recent state and federal court rulings leaves a company with a Web site vulnerable to having to defend itself in court anywhere, even in a place where it may have done little or no business — and even if no evidence exists that anyone there saw the Web site.

For now, the way a business uses the Internet affects how likely it is to be sued. Consider the following:

  • Companies that use Web sites primarily for advertising won’t likely be sued in a given location unless that advertising is coupled with more traditional contacts in that location.

  • For companies that use the Internet to facilitate actual sales, the chances of lawsuits in distant places will increase in proportion to their customer base.

  • Those operating largely on the Internet, providing essentially electronic products or services online, should expect to be subject to jurisdiction anywhere on the globe unless they specifically restrict access from places where they want to avoid being sued.

A business thinking about venturing into e-commerce can minimize the risk of exposure to litigation far from its home base by consulting its attorney.

Mark A. Willard

Protecting your interests among friends

Starting a company with people you like and respect can be a rewarding experience. But personalities and emotions can get in the way of hard business decisions and lead to conflict and costly litigation.

Principals in an incorporated business, therefore, should have a separate shareholders’ agreement to protect their interests.

A shareholders’ agreement will typically cover the financial relationship among shareholders. It can, for example, define what happens to a principal’s shares in the corporation upon his or her separation from the corporation, whether voluntarily, by death or otherwise and can set terms for stock buybacks, including a procedure for determining the price at which the stock will be repurchased.

A shareholder’s agreement also can clarify the decision-making process. In particular, it can protect minority shareholders (those with less than 51 percent of the stock) by, for example, requiring a super-majority for votes on certain issues or giving a minority shareholder the right to elect one member to the board (usually the shareholder).

A shareholders’ agreement also should include a mechanism for transferring and selling shares. Shareholders in a business typically will want to restrict a shareholder’s ability to transfer stock to a third party. A shareholders’ agreement enables them to do this. A shareholders’ agreement, however, typically will provide a shareholder a right to sell his or her shares after giving the other shareholders and the corporation the opportunity to buy the shares first.

There are two advantages to dealing with these issues in a shareholders’ agreement:

1. A shareholders’ agreement typically requires the unanimous agreement of the shareholders, while articles of incorporation can be revised if shareholders holding 51 percent of the shares vote to do so.

2. Articles of incorporation are a matter of public record, while a shareholders’ agreement is a private document.

Eileen R. Sisca

Law Briefs is written by attorneys from Eckert Seamans Cherin and Mellott, a national law firm based in Pittsburgh.