Texas Employment Law Update

Texas Employment Law Update

A Resource for Texas Employers

Texas Supreme Court Reverses Million Dollar Verdict in Retaliation Case

Posted in Case Summaries, Retaliation

Last week the Texas Supreme Court reversed a $1 million jury verdict in a retaliation case arising under state law. In San Antonio Water Systems v. Nichols, the court held that the former employee’s confrontation of a male executive about his repeated lunch invitations to other female coworkers occurring three years before the plaintiff’s termination could not reasonably be construed as protected activity and no reasonable person would believe that the invitations constituted actionable sexual harassment.  Therefore, the retaliation claim failed as a matter of law.

There is really nothing new or novel about the court’s holding and the Nichols’ opinion does not alter or amend the state of law as it applies to retaliation claims in Texas. It should remind employers, however, that they should not necessarily concede that the actions taken by a plaintiff constitute protected activity.

You read the full opinion in SAWS v Nichols here.

Follow me on Twitter @RussellCawyer.

Texas Employers Should Educate Themselves on Dealing with Transgender Employees

Posted in Sex and Gender

Diane Sawyer’s primetime interview with Bruce Jenner where he confirmed that he is transgender, and more closely identifies with the female rather than male gender, has raised awareness on the issues that affect these individuals. An estimated 19 million people watched the two hour interview.  There are an estimated 700,000 transgender individuals in the United States (about .3 percent of the population).  The State of Texas does not identify transgender individuals as protected class for employment discrimination law purposes (although some local governments in Texas have).  However, because the EEOC has expressed and shown its EEOC’s willingness to use existing civil rights laws (Title VII) to advocate and litigate for transgender rights, employers must educate themselves about on the three most common situations likely to arise in the workplace that has a transgender employees in it (i.e., restrooms, dress codes and treatment from supervisors and co-workers).

  • Consider establishing single occupancy toilet facilities, unisex restrooms or allow transgender employees to use the restroom facilities of the gender with which they identify.  Single occupancy restrooms can be used by both transgender employees or those employees uncomfortable sharing common restrooms with transgender employees.
  • Educate managers and supervisor about using the gender pronouns and names that are appropriate for the employee’s new gender and all employees about proper treatment of transgender employees (including anti-harassment and non-retaliation obligations).
  • Allow transgender employees to dress like and apply employer dress codes that apply to the transgender employee’s preferred gender.

While the population of transgender individuals is very small, human resources personnel who have transgender employees in their workplace should educate themselves on the issues that can commonly arise as well as how existing legal obligations in their jurisdiction might cause the employer to modify its existing policies and practices.  Employers looking for guidance on how to deal with transgender employees or an employee transitioning can look to other employers that have published their policies online.  Chevron and Ernst & Young have published guidance that is available on the web.

Follow me on Twitter @RussellCawyer

Oilfield Service Providers Should Consider WARN Act Implications Prior to Making Job Cuts

Posted in Layoffs and WARN

The price of oil has dropped significantly from its 2014 highs and the effect of this drop is trickling down to the oil field service providers.  Energy exploration and production companies are drastically cutting their capital expenditure budgets for the coming fiscal year.  Today, Schlumberger announced that it was laying off 11,000 employees in addition to the 9,000 previously announced.  Noble Energy announced a 10 percent reduction in force earlier this week.

In the list of newly filed cases I receive, I noticed a new case filed against an oilfield service provider for alleged violations of the federal Worker Adjustment and Retraining Notification Act.  WARN is the federal law that requires certain employers to provide up to 60 days of advance notice.  Many service providers are mid-sized companies where WARN may not apply.  However, prior to making any layoff decisions, the company should consider whether the 60 advance notice requirements of federal law are required.

WARN requires an employer to provide at least 60-day advance notice to employees and governmental officers of a plant closing or mass layoff.  A plant closing is a shutdown of an employment site (or one or more facilities or operating units within an employment site) that will result in an employment loss for 50 or more employees during any 30-day period. This does not count employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week for that employer although these employees are entitled to notice.  A mass layoff is a  layoff not resulting from a plant closing but which will result in an employment loss at the employment site during any 30-day period for: a) 500 or more employees; or b) for 50-499 employees if they make up at least 33% of the employer’s active workforce. Again, this does not count employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week for that employer.

One exception to WARN’s advance notice requirement exists when the employer orders a mass layoff or plant closing before the conclusion of the 60-day period when the closing is caused by business circumstances that were not reasonably foreseeable as of the time that notice would have been required.

Employers that fail to provide the 60-day advance notice can be required to pay employees back pay to each of the employees that should have received notice but did not (up to 60 days); benefits during the required notice period; civil penalties, court costs, and attorney’s fees.

Texas does not have a state law equivalent to the WARN Act, but service providers operating in other states should also determine whether those states may impose additional notice obligations in addition to the WARN Act.  Any employer considering a reduction in force or mass layoff should consider partnering with its labor and employment counsel at the early stages of planning to reduce the likelihood of missteps in the planning and implementation process.

Follow me on Twitter @RussellCawyer


Fifth Circuit Resolves Intra-Circuit Split on Important ADA Issue

Posted in Case Summaries, Disability, Discrimination

Last month the Fifth Circuit resolved an intra-Circuit split on the appropriate prima face case that should be used in a discrimination case under the Americans with Disabilities Act.  In EEOC v. LHC Group, Inc., the EEOC brought suit on behalf of a home health field nurse who was terminated after she was rendered unable to drive after she suffered an epileptic seizure.

Of significance in the LHC Group opinion is the prima facie case the Court articulated that applies to a case of disability discrimination under the ADA.  The panel held that the ADA prima facie case requires the plaintiff to show that: 1) she has a disability; 2) she is qualified for the job; 3) that she was subject to an adverse employment decision on account of her disability.  The opinion eliminated a fourth requirement found in some cases that required a showing that the plaintiff was replaced by someone outside the protected category or treated less favorably than non-disabled employees.

The court of appeal affirmed the trial court’s summary judgment as to the nurses inability to perform essential job function of the field nurse position (which clearly required the ability to drive) but reversed the summary judgment on issues related to whether the nurse could have performed the essential job functions of a Team Leader position which allowed employee travel commitments to be accomplished by car or public transportation.

You can read the entire opinion in EEOC v. LHC Group here.

Don’t Forget to Consider Whether Year-End Bonuses Trigger Overtime Adjustments

Posted in Wage & Hour

As we get to the end of the year, management committees and corporate boards are in the process of approving year-end bonuses for employees.  A frequently overlooked wage and hour mistake is failing to include non-discretionary bonuses in the regular rate of pay for non-exempt employees.

In calculating the regular rate of pay on which employer’s must pay overtime, the employer must generally include all remuneration paid to the employer.  Excluded from the regular rate of pay are, among a few other things, discretionary bonuses, gifts, Christmas and special occasion bonuses.

Discretionary bonuses are those where the employer retains the discretion over the payment and amount of the bonus until a time near the end of the period over which the bonus is paid.  If the bonus is promised to employees or is made pursuant to an agreement or contract, the bonus is not discretionary and must be included in the regular rate of pay for overtime purposes.  Gifts, Christmas and special occasion bonuses are those bonuses that are paid as a reward for service and the amounts are not measured by or dependent on hours worked, production or efficiency.

If a year-end bonus is one that must be included in the regular rate of pay, the employer must pro-rate the bonus over the prior year when it was earned and then recalculate the overtime due to employees as a result of the higher regular rate of pay.  This rarely results in significant overtime adjustments but such payments are required, nonetheless, to be in full compliance with the law.

For example, if an employer pays a $2,000 year end, non-discretionary bonus to a non-exempt employee, the employer allocates 1/52 of the bonus into each workweek over the prior year (i.e., $38.46 per week).  Assuming an employee worked 50 hours in a workweek, the employer would have to recalculate the overtime that was due during that workweek based on the increase in earnings caused by the bonus payment. 

$38.46 ÷ 50 hours = $0.77 (increase in the regular rate)

$0.77 x ½ = $0.39 (increase in the additional half-time premium)

$0.39 x 10 hours of overtime worked = $3.90 (increase in overtime earnings due to the bonus)

The resulting additional overtime that would be required to be paid because of the $2,000 bonus payment is $3.90 for that workweek.

If you have questions about whether your year-end bonuses should be included in the regular rate of pay, be sure and call you labor and employment lawyer.  Or better yet, call me.

Follow me on Twitter @RussellCawyer

Congress Should Provide Employers with Immunity to Identify and Correct Wage and Hour Mistakes

Posted in News & Commentary, Wage & Hour

One of the many problems with the Fair Labor Standards Act (the federal law that requires most employee be paid at least a minimum wage and overtime) is that it provides little incentive for employers that discover honest wage and hour mistakes such as a misclassification or a failure to correctly calculate overtime to fix those mistakes.  In many cases, where an employer discovers it has made an honest violation (usually through a wage and hour audit) and fixes the mistake, the employer is then subjected to lawsuits over the mistake for an additional year of pay, liquidated damages and attorney’s fees.

Rather that potentially subjecting the employer to potential wage and hour collective actions, lawsuits and attorney’s fees, employers should be incentivized to identify and correct wage and hour mistakes.  Doug Hass at Wage and Hour Insights proposed earlier this week that the Secretary of Labor should provide employers with a safe harbor “for those employers who want to remedy a wage or hour violation committed under a good faith belief that they were complying with the law. . . [and] pay any wages lawfully owed within a reasonable amount of time.”  I like Doug’s idea but think it is unlikely that a democratically appointed Secretary of Labor will provide any safe harbor for employers.  Building on the idea of a safe harbor provision, I suggest that Congress should act to provide a statutory safe harbor or immunity from collective action lawsuits for employers that discover, and unilaterially fix, wage and hour mistakes by correcting the pay practice on a going forward basis and paying back pay.  Indeed, Congress could further incentivize employers to identify and make these voluntary corrections by providing that safe harbor immunity would exist for employers that self-report violations to the DOL and provide voluntary back pay to employees for some period short of the limitations period (e.g., one year) that would exist if the violation were discovered and a lawsuit was filed by private plaintiffs’ attorneys or the DOL itself.  Providing the employer an economic benefit in self-disclosing and remedying the violation rather than sitting back and hoping the violation is never discovered would increase the likelihood that employers would engage in self-audits and make voluntary corrections.  Moreover, it would provide back pay to employees for honest mistakes that might otherwise go undiscovered (albeit for a shorter limitations period than if the employer didn’t self-report and voluntarily correct).

Just an idea.

Follow me on Twitter @RussellCawyer

Proper Planning Now Can Lead to Complaint-Free Company Holiday Party

Posted in Human Resources, News & Commentary, Uncategorized

Xmas 2012I’m sitting here trying to come up with an idea for this year’s family holiday card.  Last year’s theme was “Silent Night”.  But while I think about what I need to be doing to prepare for the holidays, I’m reminded that many employers are also planning their company end-of-year parties.  So, from the archieves are 9 tips to consider when planning the company Christmas party (and I violated one of those tips in the last sentence).  While you ponder the 9 ways I suggest you keep you company holiday party from turning into an internal harassment investigation or EEO charge, if you think of any ideas for my family’s holiday card, send them to me in the comments.

Follow me on Twitter @RussellCawyer


Texas Supreme Court Provides Defendants with Halloween Discovery Treat; Not Trick

Posted in Case Summaries, Discrimination

Last Friday, Halloween, the Texas Supreme Court delivered defendants a “treat” in the form of a mandamus opinion articulating the standard for when discovery requests seeking information related to claims other than the plaintiff’s claims crosses the line from seeking relevant information into an impermissible fishing expedition.

In In re National Lloyds Insurance Company, the Supreme Court considered whether a trial court abused its discretion in ordering the insurance company to produce information on claim files and claims other than the plaintiff’s claim.  This mandamus (mandamus is a fancy word that effectively means to appeal) proceeding arose in the context of a suit over the insurance carrier’s payment of a homeowner’s claim following the storm damage to her property.  The plaintiff sought discovery on:

  • All claim files from the previous six years involving six individual adjusters;
  • All claim files from the past year for properties located in Dallas and Tarrant Counties involving the two adjusting companies that handled Plaintiff’s claims;
  • A listing of the names, addresses, phone numbers, policy numbers and claim numbers associated with the requested files.

The insurance company objected to the requested discovery and the trial court ultimately ordered it to produce the files for the claims handled by the two adjusting companies and for all claims related to properties in Cedar Hill, Texas (a single municipality in Dallas County).  Despite the fact that the trial court narrowed the plaintiff’s requests before ordering production, National Lloyds filed a mandamus proceeding of the discovery order.

In quashing the ordered discovery, Supreme Court notably stated that:

[W]e fail to see how National Lloyd’s overpayment, underpayment, or proper payment of the claims of unrelated third parties is probative of its conduct with respect to Erving’s undervaluation claims at issue in this case. . .  . Scouring claim files in hopes of finding similarly situated claimants whose claims were evaluated differently from Erving’s is at best an ‘impermissible fishing expedition’  Without more, the information sought does not appear reasonably calculated to lead to the discovery of evidence that has a tendency ‘to make the existence of any fact that is of consequence to the determination of the action more probable or less probable.’

. . .

Because the information Erving seeks is not reasonably calculated to lead to the discovery of admissible evidence, the trial court’s order compelling discovery of such information is necessarily overbroad.

How is this discovery case in an insurance dispute relevant to discovery disputes in employment cases?  Plaintiffs in employment litigation frequently ask for all charges, lawsuits and claims of discrimination, retaliation or harassment that have been filed against the employer over the past several years.  Since individuals in companies, not companies, make employment decisions, I’ve always thought that, at most, these types of requests should be limited to charges, lawsuits and claims of discrimination involving the same decision maker as was involved in the plaintiff-employee’s case.  In re National Lloyds Ins. Co. supports that position and provides an employer with authority to utilize in seeking mandamus relief from a court of appeals from discovery orders that compel production of information that go beyond the plaintiff’s claim. 

You can download the full opinion in In re National Lloyds Insurance Company here.

Follow me on Twitter @RussellCawyer.

Light Duty Policies Limited to On-the-Job Injuries Going the Way of the Dinosaur

Posted in Human Resources, News & Commentary

As I wrote several months ago, light duty programs limiting participation to employees recovering from on-the-job injuries are being increasingly scrutinized by the EEOC (See post here) and that we have likely seen the end of those polices.   The Washington Post reports today that UPS, despite having a case pending before the U.S. Supreme Court over whether pregnant employees are entitled to reasonable accommodation in the form of light duty, has announced that it is expanding its light duty program to allow pregnant employees to participate and take light duty assignments.  According to the Post,

[S]tarting January 1, the company will offer temporary light duty positions not just to workers injured on the job, which is current policy, but to pregnant workers who need it as well.

UPS’s shift illustrates that light duty policies limited to employees recovering from on-the-job injuries are being phased out in corporate America.  If your company still has a light duty policy or program that limits eligibility solely to workers who had an on-the-job injury, you should reevaluate the eligibility factors for that policy (or whether the company should offer light duty at all) in light of the developments requiring employers with such policies to make them more broadly available.

Follow me on Twitter @RussellCawyer

I Quit! Constructive Discharge Serves as Substitute for Adverse Employment Action

Posted in Age, Case Summaries, Discrimination

An essential element of most employment discrimination claims is that the employee suffered an adverse employment action. An employee who resigns often has difficulty making out a prima facie case of discrimination. An exception to this general rule is where the employee suffers a constructive discharge. Stated another way, where the employee can prove that the employer, because of the employee’s protected category, made the work conditions so intolerable that a reasonable person would feel compelled to resign, a resignation may constitute an adverse employment action.

Because an employee’s resignation and claim of constructive discharge allows the employee to substitute his decision to quit for an employer’s decision to take advise action, the threshold for proving a claim of constructive discharge is, and should be, quite high.

A recent case from the Fifth Circuit exemplifies this high standard. In Perret et al. v. Nationwide Mutual Insurance Company, two employees sued the company in race and age discrimination suits (arising under the Texas Commission on Human Rights Act) after they resigned following their placement on a performance improvement plan.  One employee resigned after he was placed on a PIP and was thereafter denied a quarterly bonus (that he had otherwise apparently earned) because of a company policy denying bonuses to employees on PIPs.  The second employee resigned several months after taking a leave of absence which was immediately preceded by the company’s placing the employee on a PIP.  A jury found in favor of the employees but the Fifth Circuit reversed the judgment in their favor.

The Fifth Circuit identified the factors an employee can utilize to establish that the working conditions have become objectively intolerable.  Those factors include:

  • a demotion;
  • a reduction in salary;
  • a reduction in job responsibilities;
  • a reassignment to menial or degrading work;
  • badgering, harassment, or humiliation by the employer calculated to encourage the employee’s resignation;
  • offers of early retirement that would make the employee worse off whether the offer was accepted or not;
  • an ultimatum from the employer that the employee quit or be fired.

In reversing the judgment for the employees, the Court acknowledged that one plaintiff had a quarterly bonus withheld because he was placed on a PIP, but noted the absence any other factors to support of constructive discharge.  As to the second plaintiff who was only placed on the PIP (and did not suffer a missed bonus), the Court found significant, that following the PIP, the employee took two months of leave of absence where he was away from the work area.  Under those circumstances, the Court stated that it was difficult to conclude that he was placed under intolerable working conditions.  Finally, the Court found significant that there was no evidence that Nationwide Mutual’s PIP process inevitably led to the termination of employees and therefore a reasonable employee would not have been compelled to resign following placement on a performance improvement plan –even when coupled with a bonus denial.

The takeaway from Perret is that to establish a constructive discharge claim, merely placement of the employee on a performance improvement plan, even would coupled with a bonus denial, is insufficient as a matter of law to establish a constructive discharge.

You can download a full copy of Perret et al. v. Nationwide Mut. Ins. Co., here.

Follow me on Twitter @RussellCawyer.