A New York appeals court has just sent a stern warning to Wall Street, fintech and other firms: you can’t fire any of your employees simply because of who they married to or are even romantically involved with.
The Appellate Division of New York’s First Department ruled that Christopher Morse, now vice president of electronic trading at Goldman Sachs, can proceed with his lawsuit against Fidessa for illegally firing him in July 2016 because his former wife and co-worker Lael Wakefield jumped ship to rival Ullinks. She is now president of the Americas in New York of the Paris-based firm which specializes in buy and sell-side trading applications. Ullinks recently merged with rival Swedish-based Itiviti.
The appellate court agreed with a lower court ruling that Morse, previously senior vice president of electronic execution at Fidessa, could not be fired strictly because of his marital status or perceived status. Neither Fidessa, Wakefield or Morse’s attorney Mark Lubelsky would comment for this article.
The UK-based Fidessa, well-known for its buy and sell-side trading applications, thought he was still married to Wakefield, even though he had divorced her. Fidessa recently rejected a takeover by Tenemos in favor of a US$2 billion buyout from Dublin’s Ion Investment Group.
According to court documents and Linkedin account information, Morse joined Fidessa in June 2001 as an implementation consultant, began his relationship with Wakefield in December 2004 and married her in December 2006 when he was a senior project manager and she was director of account management for North America. They were divorced in September 2011 when Wakefield was director of enterprise account management at Fidessa and Morse was vice president of equities business development for the Americas.
Wakefield left Fidessa in May 2016 after heading up high-value new business sales for about three years. She had joined Fidessa in September 2000 in a role in sales and account management after a two-year stint as a manager for satellite customer care at Honeywell Aerospace.
In his suit, Morse alleged that Fidessa told him he would be considered for rehiring if he were to divorce his wife. Apparently, Fidessa thought he was still married to Wakefield because he continued to live with his wife and children after their divorce. It is unclear why Morse never told Fidessa he had divorced Wakefield, but neither the lower court nor the appeals court considered it critical to the case. What was relevant was Fidessa’s presumption that Morse was married to Wakefield.
Morse claimed that Fidessa had not dismissed another unmarried employee whose domestic partner worked for a competitor. By using his Lakefield’s subsequent employment to justify his termination, Morse contended, Fidessa violated New York City’s Human Rights Law prohibiting discrimination based on marital status.
Fidessa countered that Morse’s complaint should be dismissed on the grounds that the HRL’s protection applied only to the employee’s marital status– whether they are married, single, or divorced– but does not provide protection because of the identity of the employee’s spouse. Last year after Manhattan Supreme Court Justice Arlene Bluth rejected Fidessa’s narrow interpretation of the HRL, the firm appealed the decision to the Appellate Division.
Writing for the appeals court, Presiding Justice Rolando Acosta ruled that although employers do have the right to limit business-related communications, Fidessa couldn’t justify its concerns over Morse’s marital status. The judge warned that a narrow interpretation of New York’s HRL would only open the door to a wide range of discriminatory conduct such as demanding two employees marry each other and firing them if they didn’t.
“If marital status ever was a legitimate proxy for a rule for protecting company secrets,” wrote Justice Acosta, “it is not an acceptable proxy now given today’s social reality, as reflected in a variety of intimate relationships including those of unmarried couples.” That means that the dismissal of an employee based on a “disqualifying relationship” must be based on more reasons than simply the employee’s marital status.
Legal experts say that the appellate court’s liberal interpretaton of New York City’s HRL should serve as a wakeup call for financial firms and others to be more cautious in their human resource policies. “The court’s emphasis on the later’s [Morse’s] point [of a disqualifying factor] should raise a flag for NYC employer swho maintain anti-nepotism policies or practices including spouses and are faced with managing sensitive employee departures,” write attorneys Michael Marra and Justin Reiter with the law firm of Fisher Phillips in New York in a recent blog. “While an employee’s marital relationship with the employee of a competitor might reasonably be considered as bearing on the security of confidential company information in the First Department, such a fact may not, standing alone justify an employee’s dismissal.”
Daniel Altchek, a principal at the law firm of Miles & Stockbridge in Baltimore, also warns that firms shouldn’t think the impact of the New York court’s decision is limited to New York employers. Other courts and legislatures may decide to adopt the expansive interpretation of employment law. “For the time being, employers should proceed with caution when making employment decisions that are based, even in part, on an employee’s romantic relationships, whether married or otherwise,” writes Altchek in a recent blog.