June 10, 2013

Fired for Dating a Client, Employee Fails to Prove Violation of Colorado’s Lawful Activities Statute

By Mark Wiletsky 

MH900438796[1]Dating a client is probably never a good idea.  In some professions, it is a violation of ethical responsibilities.  In other cases, it may be bad for business when the relationship goes sour.  In the case of a family advocate for a social services organization, it created the appearance of a conflict of interest.  That conflict of interest saved a small Colorado employer from being liable for a violation of Colorado’s Lawful Activities statute when it terminated the family advocate for dating a client.  Ruiz v. Hope for Children, Inc., 2013 COA 91. 

Romantic Relationship as Lawful Activity Conducted Outside of Work 

Charlotte Ruiz worked as the only family advocate at a small non-profit social services organization in Pueblo called Hope for Children.  Seledonio Rodriguez became a client of Hope for Children when he attended a court-ordered fathering class there.  Ruiz didn’t meet Rodriguez until he completed his first class and needed assistance to sign up for a second class.  Shortly after completing his second class, Rodriguez ran into Ruiz at the Colorado State Fair and sometime thereafter, they began dating.  When Hope for Children’s executive director learned about the romantic relationship, she told Ruiz she could not continue to work for the organization if she wanted to continue to date Rodriguez.  Ruiz refused to give up the relationship, so she was fired. 

Ruiz sued Hope for Children alleging that she was terminated in violation of Colorado’s Lawful Activities Statute, which prohibits terminating an employee for engaging in a lawful activity outside of work.  After a two-day bench trial, the judge concluded that Ruiz was indeed terminated for engaging in a lawful activity outside of work.  However, the judge also found that the relationship raised a conflict of interest, or at least, the appearance of a conflict of interest which kept the termination from violating the statute.

Conflict of Interest Defense to Lawful Activities Statute 

Colorado’s Lawful Activities statute provides defenses that allow an employer to restrict employees’ off-duty, off-premises lawful activities, namely when the restriction: (1) relates to a bona fide occupational requirement or is reasonably and rationally related to the employment activities and responsibilities of a particular employee or group of employees; or (2) is necessary to avoid a conflict of interests with any responsibilities to the employer or the appearance of such a conflict of interest.  Before this opinion, no Colorado appellate opinions interpreted these statutory defenses.  In the Ruiz case, the Court of Appeals ruled that the conflict of interest defense was not limited to financial conflicts or an actual interference with the employee’s ability to perform a job-related duty.  Instead, the Court stated that the determination of a conflict of interest, or appearance of one, must be made in light of the facts and circumstances of each particular case looking at both the context and industry involved. 

In Ruiz’s case, the Court agreed that there was sufficient evidence to support the trial court’s conclusions that Ruiz’s romantic relationship with a client created an appearance of a conflict of interest with her job duties.  The relevant facts in this case included that: (a) Ruiz might be called to testify in court about Rodriguez’s completion of his court-ordered fathering class; (b) Hope for Children does not “close” its files and frequently worked with families over the course of many years, meaning Rodriguez would always be considered a client; (c) most of the organization’s budget was from a state agency grant and referrals from the agency would be negatively affected by permitting employees to date clients; (d) a romantic relationship between an employee and a client would negatively impact the credibility of the social services organization, as testified to by a former director of another social services agency and board member; and (e) the organization’s funding might be revoked if it allowed its employees to date clients.  Based on the appearance of a conflict of interest created by Ruiz’s relationship with Rodriguez, the Court agreed that Hope for Children’s termination of Ruiz fell within the statutory defense language contained within the Lawful Activities statute and therefore, did not violate the statute. 

What do we learn from this case?  First, be cautious before terminating an employee for otherwise lawful, off-duty activities, at least in Colorado and other states that protect such conduct.  Second, a romantic relationship can be a lawful, off-duty activity under the Lawful Activities statute.  Therefore, if you terminate an employee for a romantic relationship, be sure you are on solid footing to establish a defense to a wrongful termination claim. 

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