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

In a non-employment case of significant importance to employers and employment lawyers, the U.S. Supreme Court held today that imposing class arbitration on parties who have not agreed to class arbitration is inconsistent with the Federal Arbitration Act and is therefore not permitted.  This case arose out of an MDL antitrust case alleging that certain competitors were engaged in a price-fixing scheme.  The parties to the underlying transaction were signatories to an arbitration agreement that was silent on whether the arbitrator had the authority to conduct class action arbitrations. For a more detailed review of the factual and procedural background of the case, see the SCOTUS Wiki on the case here. 

The significance of this case to employers is that many employment agreements containing arbitration provisions are also silent on the issue of class arbitration (and some specifically exclude class action arbitration).  Without doubt this opinion will be used to argue that an arbitrator lacks the authority under the FAA to arbitrate class action employment disputes where the parties' agreement, or other probative evidence, fails to establish that the parties agreed to arbitrate those claims collectively. 

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In March 2010, the President signed the Hiring Incentives to Restore Employment Act (“HIRE Act”). The law was part of a $17.6 billion jobs creation package that includes incentives for businesses to hire unemployed workers. This law provides Texas employers with an opportunity to reduce some of their payroll tax obligations for 2010.

The HIRE Act provides, among other things, an exemption for the employer’s share of Social Security payroll taxes in 2010 (normally 6.2 percent for the first $106,800 of wages) for each eligible employee that is hired between February 3, 2010 and January 1, 2011. To qualify for the exemption, the employee must: 1) swear that he did not work more than 40 hours during the last 60 days; and 2) not replace another employee except one who voluntarily resigned or was terminated for cause.  Additionally, the eligible employee must not be related to the employer.  The IRS has published an affidavit for use by eligible employees. (Form W-11).  The affidavit is not filed with the IRS but is retained by the employer to justify the use of the exemption in the event of an IRS audit.

Additionally, the law provides a tax credit for retaining employees. Employers that retain newly hired employees for at least 52 consecutive weeks can claim a tax credit on their 2011 tax returns if they meet certain conditions.  To be eligible for the tax credit (i.e., a dollar for dollar reduction in tax), the employee must: 1) be employed for 52 consecutive weeks; and 2) the employee's wages in the last 26 weeks of the 52 week period must be at least 80 percent of his wages during the first 26 weeks of the period. The tax is capped at the lesser of $1,000 or 6.2 percent of the employee’s wages during the 52 week period. These provisions provide an opportunity for an employer to reduce its payroll tax obligations during this period of economic recovery in 2010.

For more information, see these links:

Two New Tax Benefits Aid Employers Who Hire and Retain Unemployed Workers

HIRE Act: Questions and Answers for Employers

Special Payroll Tax Exemption Form Now Available

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Last summer, I detailed the Dallas Court of Appeals' decision in Marsh USA, Inc. v. Cook where the court held a noncompetition agreement supported only by stock-options as consideration was unenforceable.  You can read that post here. Today, the Supreme Court of Texas announced that it would hear the appeal from the Dallas Court of Appeals.  You can view the order list here.  

Review of the Cook case gives the Court an opportunity to extend (or break) its streak of easing the standards for enforcement of restrictive covenants in Texas that I have previously detailed.  (Post here).

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Last week the EEOC issued two Informal Discussion Letters addressing employment practices or policies that might create liability under a disparate impact theory of discrimination.  Since the discussion letters do not constitute official opinions or interpretations of the Commission, the significance of back-to-back letters on the same topic is not the content (the letters do not break any new legal ground or make any surprising pronouncements), but that it suggests the Commission might be interested in finding and bringing more disparate impact claims.  The following is a brief summary of the discussion letters.

The first letter dated February 19, 2010, discusses whether a proposed qualification standard that Public Health Directors possess a master's degree, without the possibility of substituting experience or other education, violates Title VII.  The Attorney-Advisor of the Office of Legal Counsel noted that if the master's requirement had a significant disparate effect on a protected group, it might be unlawful if the employer cannot justify that the requirement is "job related and consistent with business necessity" and there is no alternative practice "that would be equally effective in predicting job performance, but that would not disproportionately exclude the protected group."

The second letter dated March 9, 2010, discusses employers' use of credit checks to screen job applicants.  While acknowledging that the EEOC has no authority to enact legislation to prohibit employer credit checks, its authority does extend to circumstances where an employer's use of credit information disproportionately excludes minority candidates and the employer was unable to show that the practice was needed to operate safely or efficiently.  The Commission's Assistant Legal Counsel also noted that in May 2007, an attorney who primarily represents class action plaintiffs against employers testified that "credit checks have not been shown to be a valid measure of job performance."  Including a reference in the discussion letter to testimony opining that credit checks do not effectively predict job performance (and then posting the letter on the Commission's website) suggests that some at the Commission may share a similar view about the use of credit checks to screen applicants.   

While these Informal Discussion letters do not constitute a written opinion or interpretation of the EEOC they are instructive in that they highlight an issue that the EEOC is focusing at least some of its resources.

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By Executive Order dated March 25, 2010, Houston Mayor Annise Parker, added sexual orientation and gender identity as protected categories under the City's anti-discrimination, harassment and retaliation policy.  The Order prohibits discrimination, harassment and retaliation based on gender identity and sexual orientation in all of the City's employment, contracting and vending activities and in the provision and accessing of all City services, facilities, programs and activities.

Specifically prohibited the policy are the following:

• Failing or refusing to hire, recruit, appoint, promote or train any individual or otherwise discipline, demote, transfer lay off, fail to recall, or terminate any individual because of such individual's sexual orientation and/or gender identity;
• Limiting, segregating or classifying employees or applicants in a way that would deprive, or tend to deprive, any individual of equal opportunity or otherwise adversely affect the status of the employee or applicant because of the individual's sexual orientation or gender identity;
• Failing or refusing to recommend any contract or purchase for award based on a contractor or vendor's sexual orientation or gender identity;
• Failing to make available to any member of the public or employee use of a city facility or receipt of city service because of their sexual orientation or gender identity;
• Impeding access by an employee or member of the public to a city restroom facility that is consistent with and appropriate to that person's expression of gender identity;
• Limit participation by any city employee or member of the public in any city-sponsored activity because of the person's sexual orientation or gender identity in which they would otherwise be permitted to participate.

 You can access a full copy of the Executive Order here.

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Yesterday the First District Court of Appeals in Houston issued an opinion I first thought was an April Fool's joke.  However, since this opinion hasn't been withdrawn, I presume the Court was serious in holding that the Lilly Ledbetter Fair Pay Act , an act of Congress that has the effect of extending the statute of limitations to certain pay practices, applies to claims filed under the Texas Commission on Human Rights Act.  The Court cites two federal district court opinions similarly holding, but this is the first state court of appeals to apply the federal amendment to Title VII to the state law.  This holding is even more surprising to me given that the Texas Legislature, in its last term, considered adopting provisions similar to the Ledbetter Act, but did not pass those provisions.

The effect of the Houston Court's opinion is to render state law claims that would have been previously time barred as timely. You can read the First District Court of Appeals' decision in Prairie View A & M University v. Chatha here.

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