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

In an issue of first impression, the U.S. Court of Appeals for the Fifth Circuit (the federal appellate court hearing cases from Texas), held that the Uniformed Services Employment and Reemployment Rights Act (USERRA) provides no cause of action for a hostile work environment that is created because of a service member's military service. 

The Plaintiffs, in Carder v. Continental Airlines, Inc.,  alleged that Continental created a hostile work environment through "harassing, discriminatory, and degrading comments and conduct relating to and arising out of" their military service through a continuous pattern of harassment.  They further alleged that "Continental has . . .  chided and derided plaintiffs for their military service through the use of discriminatory conduct and derogatory comments regarding their military service and military leave obligations."  Examples cited in the suit included: 

• placing onerous restrictions on taking military leave and arbitrarily attempting to cancel military leave;
• making derisive and derogatory comments to pilots about their military service such as "If you guys take more than three or four days a month in military leave, you're just taking advantage of the system.";  "I used to a guard guy, so I know the scams you guys are running."; "Your commander can wait.  You work full time for me.  Part-time for him.  I need to speak with you, in person, to discuss your responsibilities here at Continental Airlines."; Continental is your big boss, the Guard is your little boss."; "It's getting really difficult to hire you military guys because you're taking so much military leave."; "You need to choose between CAL and the Navy."

The Court affirmed the trial court's dismissal of the hostile work environment claim concluding that Congress never intended to create such a claim. The Court's rationale was premised on two important points.  First, unlike Title VII, which prohibits discrimination in the "terms, conditions or privileges of employment", USERRA merely covers "benefits of employment".  The Court reasoned that the use of different phrases expressed Congressional intent to cover a narrower set of circumstances that would give rise to a claim than Title VII afforded.  Second, the Court observed  that the Department of Labor had promulgated regulations interpreting USERRA and included no reference to harassment or hostile work environment thereby providing further support that it should not be interpreted as providing such a cause of action.

For these reasons, the Court held that USERRA affords no cause of action for discrimination or harassment based on a hostile work environment theory. You can access the full opinion in Carder v. Continental Airlines, Inc. here.

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Its getting near the end of the time to sponsor bills for consideration during this Texas legislative session.  Here are the most recently enrolled bills potentially effecting Texas employers.

HB 2609 (Guillen) (relating to employment at or by certain facilities serving the elderly or persons with disabilities)

HB 2695 (Davis) (relating to acquiring Human Health and Services Agencies to give preference to certain persons and making hiring decisions)

HB 2681 (Hartnett) (relating to the protection of trade secrets)

HB 2720 (Pitts) (relating to unpaid furloughs for state employees)

HB 2755 (Fischer) (relating to unemployment compensation, eligibility and charge backs regarding certain persons through victims or whose immediate family members or victims of sexual assault and family violence)

SB 1305 (Rodriguez) (relating to a prohibition of school districts’ retaliation against an employee for filing a grievance)

HB 2579 (Davis) (relating to relief for certain employers from penalties and sanctions under the Texas Unemployment Compensation Act)

HB 2549 (Crownover) (relating to the authority of a state employee to authorize a deduction from the employees salary or wage payment for a charitable contribution to certain agencies)

HB 2463 (Reynolds) (relating to access to service records regarding unemployment discrimination claim)

HB 2454 (Zedler) (relating to prohibiting discrimination by public institutions of higher education against faculty members and students based on the conduct of research relating to intelligent design)

HB 2450 (Jackson) (relating to the creation of an offense of employing an individual not lawfully present in the US)

SB 1268 (Whitmire) (relating to right of sheriff’s departments of certain counties to maintain local control over wages, hours and other terms of conditions of employment)

SB 1254 (Carona) (relating to the creation of the offense of employing an individual not lawfully present in the US)

HB 2227 (Coleman) (relating to an offense committed against a person because of bias or prejudice on the basis of gender identity or expression)

HB 2219 (Davis, Y) (relating to a prohibition placed on an open enrollment charter school against the employment of a person determined under certain circumstances to have engaged in misconduct that presents a risk to the health, safety and/or welfare of the student or minor)

HB 2306 (Alvarado) (relating to certain health and safety matters regarding appropriate places of employment in places that are accessible to the public)

SB 1216 (Estes) (relating to the determination of the validity and enforceability of a contract obtaining an arbitration agreement)

HB 2380 (Shelton) (relating to employment by school districts of certain persons under probationary contracts)

HB 2405 (Chisum) (relating to discrimination and restraint of trade against certain persons regulated under the Occupations Code)

SB 1001 (Carona) (relating to discrimination and restraint of trade against certain persons regulated under the Occupations Code)

SB 1042 (Haggar) (relating to the eligibility of an employees convicted of certain offenses that provide services under a contract with the public school)

HB 1888 (Miller, S) (relating to requiring employers to participate in the Federal Electronic Verification Work Authorization Program)

SB 1006 (Lucio, Ellis) (relating to unemployment compensation modernization)

HB 1827 (McClendon) (relating to the ability of a non-exempt employee to participate in certain academic extracurricular developmental activities of the employee’s child)

HB 1747 (Veasey) (relating to retaliation as unlawful employment practice)

HB 1700 (Coleman) (relating to employment of physicians by certain hospitals)

HB 1659 (Davis, Y) (relating to conditions of employee for certain sheriff departments)

HB 1565 (Coleman) (relating to the unemployment of physicians by hospital districts)

HB 1513 (Dutton) (relating to hearings on certain public school employees employment decisions before the Board of Trustees of the school district)

HB 1506 (Christian) (relating to unemployment compensation eligibility and charge backs regarding certain persons who are victims who whose immediate family members are victims of sexual assault)

HB 1447 (Dukes) (relating to the right of certain municipalities to maintain local control over wages, hours and terms and conditions of employment)

SB  761 (West) (relating to employment of physicians by certain hospitals associated with non-profit fraternal organizations)

HB 1490 (Naishtat) (relating to the accumulation of payment of sick leave for employees in certain sheriff departments)

HB 1488 (Gudeaires) (relating to examinations for hiring certain municipal fire departments)

HB 1166 (Zerwas) (relating to tobacco sensation program for certain public employees and their dependants and to assessment to a fee for certain public employees who use tobacco)

SB 314 (Zaffiri) (relating to unemployment compensation and eligibility and charge back regarding certain persons who are victims or whose immediate family members are victims of sexual assault)

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Don Cruse at The Supreme Court of Texas Blog reports that the Court has agreed to determine whether a plaintiff making a Sabine Pilot claim (i.e., alleging that he or she was terminated solely for refusing to perform an illegal act) can recover exemplary damages.

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According to the New York Times, Texas will consider whether to adopt a "loser pays" rules for civil cases.  The rule, similar to the English Rule, would  that require the losing party in a civil case to pay the attorney's fees and costs of the prevailing party.  It is unclear whether this rule, if passed, would have any effect on the number of employment discrimination, retaliation or harassment suits filed against Texas employers. 

Employers shouldn't get excited about a loser pays rule; however, because I think the likelihood of that legislation passing this session is remote.  

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Federal law prohibits private employers from terminating the employment of or discriminating with respect to employment against an individual because the individual is or was a debtor under the Bankruptcy Code.  In a recent decision of the U.S. Court of Appeals for the Fifth Circuit, the appellate court held that the anti-discrimination provisions of the federal bankruptcy code do not provide an an applicant for employment a cause of action against a private employer when the applicant is denied employment solely because of a previous bankruptcy filing.  (Burnett v. Stewart Title). 

The facts of Burnett are straightforward.  Burnett applied for employment with Stewart Title in 2007.  She was offered a job conditioned on the successful completion of a drug screening and background check.  The background check revealed that, in 2006, Burnett filed a Chapter 13 bankruptcy proceeding.  As a result of this bankrupcty filing, Stewart Title rescinded its conditional employment offer.  Burnett sued claiming she was discriminated against in violation of the bankruptcy code. (11 U.S.C. 525).  Section 525(b) provides that:

No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt--

(1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act;

(2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or

(3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.

Applying canons of statutory construction, the Court of Appeals concluded that the act of hiring is not encompassed within Section 525(b)'s prohibition against "discriminating with respect to employment" and therefore, Burnett had no claim.  Consequently, the Court held that "11 U.S.C. 525(b) does not prohibit private employers from denying employment to applicants based on their bankruptcy status."

You can access the full copy of the opinion here.

One caveat, the anti-discrimination provisions of the bankruptcy code do preclude a governmental employer from refusing to hire an applicant solely because of the applicant's prior bankruptcy filings.

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The U.S. Supreme Court recently considered the circumstances when an employer may be liable for employment discrimination based on the unlawful, discriminatory animus of an employee who influenced, but did not make, an ultimate employment decision.   This theory is commonly referred to as the Cat's Paw theory derived from fable about the monkey who convinces the cat to reach into the fire to pull out the roasting chestnuts.  The cat gets burned while the monkey makes off with the chestnuts.  In discrimination cases, the Cat's Paw theory refers to a situation where a supervisor with a discriminatory animus who influences, but does not make, the adverse employment decision.

The facts of Staub are straight forward.  In Staub, the employee complained that several of his direct supervisor were hostile to his reserve military service that periodically required him to miss work.  The employee complained that this hostile supervisors wrote him up on several occasions that were motivated by his military service.  Specially, Staub's direct supevisor issued him a corrective action for violating a company rule requiring him to stay in his work area when he was not working with a patient.  Several months later, a co-worker complained that Staub's frequent availablility.  On another occasion, the hostile supervisor reported that Staub had left his workstation without permission in violation of the earlier corrective action.  A hospital executive, whom had no discriminatory animus, reviewed Staub's file and made the decision to terminate his employment; at least in part on information contained in the file that was initiated by Staub's direct supervisors (and whom allegedly had discriminatory intent).  Staub appealed his termination through the hospital's grievance procedure but the decision stood.  Staub won at trial, but on appeal, the Seventh Circuit Court of Appeal reversed holding that since there was no evidence that the ultimate decisionmaker had a discriminatory animus, Staub could not hold the hospital liable for the discriminatory animus of a supervisor who was not the ulimate decisionmaker. 

The Supreme Court reversed the court of appeals.  As the Court stated, "If the employer's investigation results in an adverse action for reasons unrelated to the supervisor's original biased action . . . then the employer will not be liable."  However, "the employer is at fault [when] one of its agents committed an action based on discriminatory animus that was intended to cause, and did in fact cause, an adverse employment decision."  The core holding of the opinion is that "if a supervisor performs an act motivated by [discriminatory] animus that is intended by the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable under [the law]."

Staub substantially expands the scope of situations where employers can be held liable for discrimination based on the acts of nondecisionmaker supervisors. You can access a full copy of Staub v. Proctor Hospital here.

What others are saying about Staub.

Mrs. Palsgraf and the Cat's Paw Doctrine

With a Friend Like Justice Scalia . . . Cat's Paw Decision Not Very Employer Friendly

The Supreme Court Upholds Cat's Paw Theory of Liability in Anti-Military Discrimination Case

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I've written several posts advocating the advantages of employer's use of waivers of jury trials to resolve employment disputes with employees.  (See posts here and here).  To recap, the mutual waiver of jury trial provides the employer and employee a fair way to resolve employment disputes without some of the disadvantages that other forms of alternative dispute resolution present.  The Fort Worth Court of Appeals recently enforced an employer's agreement with its employee to waive the jury trial of any disputes between them.  

In In re Frank Kent Motor Company, the Court of Appeals found that the waiver of jury trial provisions contained in the employer's handbook, and that the employee was aware of, was enforceable even though the employee argued he did not sign the acceptance of the waiver knowingly, voluntarily or intelligently.  The employee argued that his acceptance of the policy was not knowing and voluntary because he feared he would lose his job if he did not sign the agreement; he wasn't represented by a lawyer when he signed; he refused on two prior occasions to sign the agreement; the agreement was not negotiated and the employer indicated no willingness to negotiate changes; and his supervisor told him he had no choice but to sign the agreement.  Despite these allegations, the Court of Appeals found the allegations insufficient to overcome the presumption that the agreement was knowingly and voluntarily accepted. 

You can find a copy of the full opinion in In re Frank Kent Motor Company here.

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