Texas Employment Law Update : Texas Employment Lawyer & Attorney : Russell D. Cawyer : Kelly Hart & Hallman Law Firm : Dallas TX Labor Updates

On March 20, 2009 I posted an entry about several leave of absence bills pending in the Texas Legislature.  Today I want to highlight a few other bills that will effect Texas employers if passed.

• HB 32  Prohibiting discrimination against employees of workers' compensation nonsubscribers who sustain an injury in the course and scope of their employment.
• HB 183  A bill to link the Texas minimum wage to the federal minimum wage.
• HB 226 Prohibits an employer from discriminating against an employee that has refused to participate in an employer's charitable deduction campaign.  
• HB 978  To amend, and greatly expand, prohibited disability discrimination under the Texas Commission on Human Rights Act.
• SB 730 prohibits an employer from implementing policies prohibiting employees from keeping legal firearms and ammunition in locked vehicles on the employer's parking lot.
• SB 986 To extend the statute of limitations for discrimination claims alleging discrimination in the payment of compensation.  State law equivalent of the Lilly Ledbetter Fair Pay Act.

There are also a number of immigration bills pending this session.  Michael Fox has detailed those bills on his blog.

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Most wage and hour lawsuits in Texas focus on an employer's alleged misclassification of an employee as exempt from overtime.  However, a recent jury verdict from a federal court in Houston teaches that even in a highly unregulated wage and hour state like Texas, there are other wage and hour provisions employers must comply with and that can lead to expensive and protracted litigation.

The Lawsuit

On March 25, a federal jury in Houston, Texas awarded 55 employees $270,000 plus interest and attorneys fees.  The employees in this collection action were current and former waiters and waitresses working for the Chili's food chain who were required to contribute a percentage of their tips into the restaurant tip pool.  That tip pool allocated one percent of the total pool to "food expediters."    Food expediters are employees that set up trays of food and condiments that servers take out to customers.  The expeditors could be paid a salary or paid a higher hourly wage than the Texas waiters who are paid $2.13 per hour.  This dispute centered primarily around whether food expeditors were tipped employees under the Fair Labor Standards Act and whether the Chili's tip pool requiring the tipping of expeditors was voluntary.

Tipped Employees and Tip Pooling Arrangements

Tipped employees are employees that customarily and regularly receive at least $30 a month in tips.  Tip pools requiring tipped employees to contribute a portion of their wages to a tip pool that is shared with other normally-tipped employees (e.g., bartenders and bus boys) are legal as long as a tipped employee is not required to contribute more than 15 percent of his or her wages to the pool and the pool is not shared with non-tipped employees.  Tip pooling with non-tipped employees must be completely voluntary and each tipped employee must determine for himself whether and how much to contribute to the pool.  If the tip pool includes non-tipped employees and is not voluntary it is an unlawful deduction from wages.

The Verdict

In the lawsuit, the employees alleged that Chili's mandatory tip pooling arrangement that included typically non-tipped employees (i.e., the expediters) was an illegal deduction from wages.   A Houston jury agreed and awarded the servers the damages that resulted from these alleged illegal deductions.  And while the employees will only obtain an average of approximately $4,900 each from a final judgment, the significant cost to the employer will be in the court awarded attorney's fees that have not yet been determined and will likely be high six figures or more.  According to Dave Faries at the Dallas Observer's Food Blog (City of Ate), Chili's parent company has announced that it will appeal the jury verdict.

Because the defendant in this case was a national restaurant chain I expect the verdict will prompt more lawsuits against restaurant chains challenging their tip pooling arrangements.

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Following a GAO report that concluded that the Department of Labor inadequately investigated complaints from low-wage and minimum wage workers who claimed that their employers failed to pay the federal minimum wage, required overtime, and failed to pay employees their last paycheck the DOL has reacted. 

This week, Secretary of Labor Hilda Solis  announced that the DOL Wage and Hour Division would increase the number of investigators at its field offices by 150 to refocus the department on its enforcement responsibilities.  Since Texas has three field offices of the forty-five nationwide, on a prorata basis, Texas could see a net increase of ten investigators.

Additionally, Secretary Solis announced the intent to hire 100 new investigators to enforce the compliance of contractors receiving assistance under the American Recovery and Reinvestment Act. This renewed emphasis on enforcement efforts and an increased number of investigators will undoubtedly result in more frequent and active DOL investigations.  Texas employers should ensure that their classifications of employees as exempt are accurate and that their pay practices comply with the Fair Labor Standards Act to avoid being targeted by a more active DOL.

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It seems likely that there will be some manner of labor organization reform to the almost seventy-five (75) year old National Labor Relations Act.  Three bills pending before Congress offer differing levels of reform.  

Pro-Labor:  Employee Free Choice Act of 2009 (H.R. 1409) Would require the National Labor Relations Board certify a union (without a campaign or election) that obtains signed authorization cards from a majority of the employees; requires companies and unions to enter into binding arbitration over the terms and conditions of an initial contract (binding for two years) if it cannot be agreed to after ninety (90) days of negotiations and thirty (30) days of mediation; and increases the penalties that can be assessed against employers found to have discriminated against an employee in violation of the NLRA.

Pro-Management:  Secret Ballot Protection Act (S.B. 478)  This bill would make it an unfair labor practice for an employer to recognize a union that has not been selected by secret ballot and also make it unlawful for a union to cause an employer to recognize and bargain with it in the absence of a secret ballot election.

Pro-Labor:  National Labor Relations Modernization Act (H.R. 1355)  This bill would require employers to provide labor organizations with equal access to the employees in the run up to a representational election.  It would require employers that intend to make presentations, provide handouts, display signage or have meetings to allow the unions to conduct the same activities and have the same access.  This bill does not, however, in its current form attempt to eliminate the secret ballot as the EFCA does.  

Labor organization reform is a priority for organized labor.  Maintaining the status quo, preserving the right to secret ballot elections is a priority of business.  With the emphasis each side is placing on the issue it seems likely to me that some form of reform will become law during 2009.  Stay tuned for more developments as we see which bill or compromise bill becomes law.

 

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The EEOC recently released the latest statistics detailing the number of charges of discrimination filed in 2008.  Last year marked the largest number of charges filed in a single year totaling 95,402 charges of discrimination.  While every category of charges increased (and the total increased 15.2 percent over 2007), charges of age discrimination and retaliation increased the most at 28.6 and 22.6 percent respectively. 

Disability discrimination claims saw the least amount of growth at 9.6 percent.  However, with the passage of the ADA Amendments Act in 2008, I expect 2009 disability discrimination claims to be up sharply during 2009.  Equal Pay Act claims were also up 16.6 percent and with the passage of the Lilly Ledbetter Fair Pay Act, claims arising under that statute will also likely increase in 2009 and beyond.  With escalating unemployment, the deepening recession, and an increase in the EEOC’s budget, I expect charge filings for 2009 will again set an all-time record for charge filings across all categories and an uptick in resulting civil rights litigation against employers.

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There are several pending bills in the Texas legislature that could effect the leaves of absence private employers must make available to their employees.  Some of these types of leaves have already been passed in more liberal states such as California and Massachusetts.  Pending leave of absence bills in the Texas legislature include:  

• HB 615 Permitting employees with a child enrolled in a special education program and having at least one year tenure with the employer take 10 hours per year of unpaid leave to meet with certain school officials.
• HB 1005 Requiring employers to provide employees employed at least 90 days to take up to 40 hours per year unpaid leave to meet with teachers or attend to certain school events, ceremonies or meetings. The bill also contains anti-retaliation provisions.  (See also SB 649)
• HB 1057 Permitting employees with at least 6 months service to take not less than 2 weeks accrued paid leave for the birth or placement of adoption of a child.  Employees of employers that do not provide paid leave, who have insufficient paid leave or are ineligible for leave are entitled to between 2 and 6 unemployment benefits.  The bill does not mandate the creation of any leave programs but does provide a right to reinstatement for employees that utilize leave under this proposed law.  (See also SB 692)
• SB 60   Requires employers to provide for unpaid time off to employees who are the victims of certain violent crimes to attend court proceedings.  The bill also provides a civil cause of action, damages and anti-retaliation provisions for violations.

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On March 19, 2009, the U.S. Department of Labor issued four new model COBRA notices for use under the American Recovery and Reinvestment Act (ARRA).  ARRA authorized a 65 percent government subsidy for continuing COBRA health care coverage for employees laid off between September 1, 2008 and December 31, 2010. Additionally, the Department issued answers to 25 frequently asked questions regarding the premium reductions under ARRA.

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Weingarten rights are the rights a union member has to, upon request, have a union representative present during an employer’s investigatory interview that may lead to disciplinary action. For nearly thirty years Weingarten rights only applied to employees who worked at employers that had been organized by unions.

In July 2004 a primarily Democratically appointed National Labor Relations Board extended Weingarten rights to employees working for private, unorganized employers. In July 2004, a Republican appointed majority of the Board reversed its position and held that private employees not represented by a union do not have Weingarten rights. Now that the Democrats occupy the White House, are Weingarten rights on the horizon for non-organized employers?

The Board is currently comprised of two members –one appointed by President Bush and one by President Obama. With three open vacancies, President Obama can appoint a majority of the Board. Thereafter, with a Democratically appointed majority of the Board it is predicted that Regional Directors will once again begin accepting unfair labor practice charges by employees of non-organized employers who have been denied Weingarten rights. As those cases once again reach the Board level, I think it is likely that Weingarten rights will again apply to non-unionized employers.

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Since at least 2004 Texas law has permitted Texas employers to enter into predispute agreements with their employees to waive a right to a jury trial. The predispute waiver of the right to jury trial can be a desirable option for employers that would prefer to avoid the potential jury trial of a civil rights or employment dispute but also dislike the disadvantages that accompany the mandatory arbitration of disputes.

Last month the Supreme Court of Texas reinforced the enforceability of predispute contractual waivers of the right to a jury trial. In re Bank of America, N.A., --- S.W.3d --- (Tex. Feb. 27, 2009). The Court’s opinion should remind Texas employers of the availability of this option and of the advantages that such agreements may have over arbitration programs. For example, advantages that the wavier of the right to jury trial may enjoy over arbitration include: having a Texas state or federal judge decide the dispute; no expenses incurred in employing the decisionmaker (i.e., judge); and full rights to a meaningful appeal of an adverse decision.

Moreover, despite the current legislation in Congress that is intended to invalidate the predispute arbitration agreements between employers and employees to resolve employment disputes through arbitration, it is unlikely that contractual waivers of the right to a jury trial will be affected by any version of the Arbitration Fairness Act of 2009. Texas employers utilizing mandatory arbitration programs may want to consider adopting a policy or program to make use of contractual waiver of jury trial if the Arbitration Fairness Act of 2009 passes and invalidates the predispute agreements to arbitrate civil rights and employment disputes.

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Furloughs: An Alternative to Layoffs.

During challenging economic times employers utilize various ways to reduce payroll expenses. These include layoffs, pay freezes or pay cuts, hiring freezes and reduced workweeks. However, in this latest economic crisis, employers are using employee furloughs with increasing frequency. 

What is a furlough?

A furlough is a temporary, unpaid period of time away from work. Furloughs are usually involuntary; however, some employers have offered voluntary furlough employee programs to allow employees to volunteer from a period of unpaid time off. The largest employer in California –the state of California – is utilizing furloughs to reduce payroll by requiring employees of government offices to take at least two Fridays off per month without pay. Other employers have required each employee to take an additional week off away from work during the year without pay –similar to an additional week of unpaid vacation.

Advantages of Furloughs.

The advantages of furlough programs may include avoiding severance costs; retaining talented employees (employees the employer would like to retain when business improves); and avoiding or reducing increases in unemployment insurance premiums.  

Implementing the Program

In implementing a furlough program the employer must be mindful of the wage and hour requirements in the state where the employees will be furloughed. Compared to other populous states, Texas is highly unregulated in its state wage and hour laws. For nonexempt employees, furloughs provide few challenges. Nonexempt employees are paid their hourly rate for all hours worked. During periods of furlough the nonexempt employee performs not work and is not paid for those hours that they would have normally worked but for the furlough. Exempt employees, however, must be paid their full salary when they perform any work during the work week. Consequently, furloughing exempt employees requires that the employees be furloughed in full work week intervals and they must be completely relieved of their job duties for the employer to enjoy payroll savings without putting the employees’ exempt status in jeopardy.

Effects of Furloughs

Furloughs that reduce employee hours substantially may have an effect on the employee’s eligibility for benefits. For example, employee hours may drop such that they become part-time employees rather than full-time employees and lose eligibility under certain employer benefit plans. Additionally, where the furlough of an employee reduces his or her hours significantly, it may render the employee partially unemployed and eligible for unemployment benefits.

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