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

In 2010 Congress passed the Telework Enhancement Act of 2010.  The law requires federal agencies to assess and implement telework (aka telecommuting or work-from-home) arrangments for its workforce to the maximum extent practicable without sacrificing operations of the agency or employee performance.  The US Office of Personnel Managment recently published a Guide to Telework in the Federal Government.  The Guide is intended to provide practical information to assist federal agencies and employees in implementing telework arrangements.  

Some private employers have long used telecommuting as an option for certain types of employment.  Telecommuting (or telework) can reduce an employer's real estate and energy costs, promote management efficiencies, allow for work to get done during periods of inclement weather or other emergencies and allow greater employee flexibility for work-life balance.   The Guide published by OPM may provide useful guidance for employers considering allowing certain types of employees to telework.  Considerations include:

• Telework arrangements should have the expectations and understandings between the employer and employee set forth in a written agreement or document;
• Employee need to understand that telework is a privilege, not a right;
• Telework is only satisfactory so long as it does not reduce employee performance or the operations of the employer;
• Determine the location of the telework work site; 
• If the teleworking employee is nonexempt, outline how worktime will be recorded and reported;
• Ascertain what equipment will be needed for the telework assignment and who will be responsibile for maintaining it;
• Consider how injuries incurred during course and scope of telework will be reported and handled;
• Specify frequecy of telework anticipated (e.g., days of week or hours of day that are to be worked during telework);
• Communication expectations during telework (e.g., frequency of contact and whether the contact will be by telephone, e-mail, instant messages and the expected time frame for responses to inquiries made during telework);
• How illness or absences will be reported and handled on telework days.

Other Resources:

OPM's Telework Website

Manager Handbook for Measuring Employee Performance

Guidelines for Alternative Work Arrangements

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I almost never read the letters to the editor in my local newspaper because, well . . . opinion are like . . . noses; everyone has one. However, last week I “stumbled” on a letter that was thought provoking in this period of high unemployment and borderline recession.

Jack Durham of Fort Worth, Texas proposes that the elimination of overtime would create job growth. He writes:

End overtime

I have a plan to help create jobs. The government should eliminate or drastically reduce the amount of overtime an employee could work. Employers would then seek other full-time employees to cover the gap. Smarter people than me would have to draft the provisions, but we have lawyers for that.

Instead of trying to create jobs over the next two to six years, these new employees could be hired by Labor Day. The job increase should be significant. This would discourage employers from paying 20 hours of overtime to avoid paying benefits to a full-time worker. Just a thought.

Maybe Jack is on to something; although, I think the French tried something similar with the 35-hour workweek.  A prohibition against overtime might create jobs.  It might add to some employee's desire to have better work-life balance (i.e., less work time and more time to spend on the employee's personal endeavors).  It would also negatively impact those employees who are willing to work longer hours for more money and could have a adverse effect on business productivity thereby hurting job growth.

Are there other reforms to the FLSA that might also create job growth?  How about elimination of the "white collar" exemptions?  Rather than paying an employee a salary for all hours worked, employers could be required to pay employees covered by the white collar exemption overtime for hours in excess of forty per week.  Would that lead employers to hire more "white collar" workers to spread the work around and reduce overtime payroll costs?  Employers that wanted to do more with fewer workers would see increased overtime expenses but those employers that wanted to avoid overtime would increase the number of workers to spread the work around so that it would be paid at straight time rates. 

Are there other reforms in the employment law context that create job growth without unduly hampering the operations of employers?  Let me know and I'll post them in the comments section.

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Yesterday, the NLRB issued its final rule requiring all employer subject to the National Labor Relations Act to post notices to employees of their NLRA rights such as the right to form and join a union, bargain collectively over wages and to file unfair labor practice charges with the Board as well as instructing employees on how to file those charges. 

Highlights of the Final Rule posting requirement include:  

• Posting required not later than November 14, 2011;
• Posting must be at least 11 x 7 inches;
• Posted in conspicuous places where will be readily seen by employees and in all places where notices to employees concerning personnel rules or policies are customarily posted;
• Must also be posted electronically on employer's intranet or Internet site if the employer regularly communicates with its employees about personnel rules or policies in such manner;
• Must be posted in language spoken primarily by 20 percent or more of workplace; 
• Federal contractors are also covered;
• Excluded from posting requirements are U.S. (and its wholly owned Governmental corporations), Federal Reserve Banks, States or political subdivisions, persons subject to the RLA, labor organizations and a few others. 

You can access the full Final Rule here (skip to page 174 to see the text of the Rule).  The content of the required posting is found in Appendix A (beginning on p. 185).  The NLRB also published a Fact Sheet on the new posting requirement you can read here.

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The Texas Employment Law Update has been nominated for LexisNexis's Top 25 Labor & Employment Law Blogs and needs your help.  To be included in the Top 25, LexisNexis counts your comments as votes.

To vote for this blog, click here; register (sorry, voting for President and the Top 25 requires FREE registration) and vote for the Texas Employment Law Update in the comments.

If you enjoy reading this blog and want it to continue, vote early and often because voting ends September 12, 2011.  This is separate and apart from the ABA Journal's Top 100 Blawgs.  You can see how to vote (Free) for the ABA Journal Blawg 100 here.  I appreciate your support.

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Walter Olson at Overlawyered started they debate by asking “If I could press a button and instantly vaporize one sector of employment law…”  He answered age discrimination.  I'll let him defend his selection and you can read his explanation here. 

Jon Hyman and Daniel Schwartz weighed in that they would reform the depression-era outdated Fair Labor Standards Act and leave laws generally.  Both areas are ready for reform and simplification.  I asked my partners what area of employment law they thought most needed vaporizing (or at least reform).  One identified the varying mosaic of state immigration laws that are being passed across the country and that carry substantial (perhaps catastrophic) financial penalties for employing individuals not authorized to work in the U.S.  Another colleague identified the new health care law that requires employers to provide health plans or pay a penalty for each uninsured employee as an area of law that is stifling job growth --at least for small to mid-sized employers. 

My choice for vaporization is a little more specific.  I would target the FMLA regulations that limit how much information an employer can require from an employee on intermittent FMLA leave --particularly when the leave results from unexpected, anticipated and unscheduled flare-ups of serious health conditions.  These limitations place unreasonable restrictions on an employer's ability to manage and identify intermittent FMLA abuse.  Employers face regulatory barriers in determining whether the employee's absence on Friday was a result of his migraine headache (for which he was approved to take intermittent leave) or because he stayed out too late with friends carousing.  Verifying, in a meaningful way, that employees are using intermittent FMLA leave for approved purposes should not be prohibited or even discouraged.

If you think a particular area of employment law needs vaporizing (or at least reform), post it in the comments below and I'll publish them to continue the debate.

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The EEOC is reviewing whether the use of arrest and criminal conviction information acts as a hiring barrier and whether employers should be precluded from asking about criminal convictions.  The EEOC publicized the meeting in a press release titled  Striking a Balance Between Workplace Fairness and Workplace Safety.  Particularly troubling about this hearing is the fact that the EEOC appears to be looking at the issue as one of workplace fairness rather than discrimination.  Workplace fairness is admirable, however, the EEOC's mission and mandate is not to try and achieve workplace fairness.  The EEOC's mission is educate, investigate and enforce the protections put in place by Title VII and related laws.  Stated differently, the EEOC is charged with ensuring that individuals are not treated differently because of their race, sex, color, religion, national original, age, and disability; not to ensure that the workplace is fair.

In my experience, few (if any) employers ask for or rely on arrest information in making hiring decision.  I've never seen an employment application that stated that a criminal conviction would be an outright bar to employment.  Most employers that seek criminal conviction information consider the nature and severity of the offense, the length of time since the offense occurred and the position for which the applicant is applying.  Banning the box (i.e., prohibiting employers from asking about criminal convictions on applications) will result in employers needlessly interviewing applicants who, by the nature or severity of their crime, will not ultimately be hired.  This is a waste of employer time and resources.  Moreover, given the EEOC's limited resources, its time, effort and money would be better spent on core mission rather than trying to administratively expand the scope of Title VII to effectively make convicted felons a protected class.

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In Part 1, I covered some thoughts on enforcing noncompetition agreements in Texas following the Texas Supreme Court's new decision in Marsh USA.  Today I'm addressing some tips that employees (and their representatives) who are asked to sign or are attempting to bust a noncompetition agreement might consider.

Prior to signing the agreement, negotiate everything you can.  For example:

• Carve out customers or clients the employee serviced before becoming employed by the employer requesting the noncompete.
• Seek very specific scope of activity restraint rather than a very generalized restraint (e.g., employee shall not engaged in any business that competes with any of the products or services of the company).
• Negotiate a garden leave provision (i.e., the employee will receive some amount of money during the term of the noncompete period)
• Ask for a buy-out clause where the employee (or his new employer) can buy out of the noncompetition agreement.
• Ask that the noncompete be automatically waived if the employers ends the relationship through no fault of the employee (e.g., the employee is laid off).

When joining a new employer, the employee should seek an agreement the new employer will indemnify, defend and/or advance defense costs if the employee is sued over an alleged violation of the noncompete.  The employee should also try and ensure that his employment will not be terminated by the new employer in the event he is enjoined over a restrictive covenant with a former employer (Don't laugh, I've seen an new employer provide this protection in an offer letter when it expected the former employer would sue the new hire).

When litigating over the terms of a noncompetition agreement:

• Emphasize to the Court how limited the holding in Marsh USA is.  Marsh USA just ruled out a per se rule that noncompetes tied to stocks are unenforceable.
• Emphasize the lack of imminent, irreparable harm.
• Determine the primary purpose of the agreement and emphasize to the Court that the real purpose is to stifle competition rather than protecting goodwill or confidential information.
• Identify lesser restrictions that will protect the employer's interest.
• Distinguish your client from the long-term, highly valued Managing Director in Marsh USA.

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Yesterday, Ryan Miller and I were invited to speak at the Tarrant County Bar Association's Labor and Employment Section luncheon.  Our topic was the recent changes to Texas noncompete jurisprudence.  A copy of the Power Point presentation we jointly presented can be accessed here.

For my contribution, I presented some thoughts on the practical effect the Marsh USA decision will have for employers and employees that dealing with noncompetes.  Here is a summary of thoughts:

REPRESENTING THE EMPLOYER USING NONCOMPETES

• Employers should continue to tie noncompetes to promises to provide confidential information and trade secrets to the employees and the employees' return promises not to disclose that information to third parties.  Trial courts are familiar with this concept and will expect it Marsh USA notwithstanding;
• Consider linking the noncompete to some financial benefit provided to the employee that is reasonably related (Marsh USA eliminates the "gives rise to" requirement of Light) to encouraging the employee to generate goodwill for the company.  Who knows how far courts will take Marsh USA, but bonuses, salary, for cause termination provisions, favorable parking spaces, fancy job titles, business expense accounts to entertain clients are a few examples of financial benefits that might be reasonably related to encourage employees to create goodwill that come to mind.
• Resist the urge to make the restrictions broader than necessary.  Courts have a statutory obligation to reform overly broad covenants, but any damages that accrue prior to reformation aren't recoverable.  Remember, reformation kills damages.
• Marsh USA isn't a magic bullet.  Marsh USA doesn't change the standard to obtain a temporary injunction (and there is where the battle often lies).  Employers still have to show probable right of success on the merits (arguably easier post-Marsh USA) and imminent irreparable harm.

In the next post, I'll cover my thoughts on what employees who may be subject to a noncompete might consider.

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In a recent case out of the U.S. District Court for the Northern District of Texas, a federal judge entered summary judgment for the City of Fort Worth in an FLSA overtime case filed by four former police officers.   

In Clark v. City of Fort Worth, Texas, four retired City of Fort Worth police officers filed a FLSA putative collective action seeking to represent a class of current and former officers for unpaid overtime they claimed they worked when they provided security services for third-parties leasing City properties (e.g., events at the City owned convention center).  According to the plaintiffs, these off-duty hours providing security for sporting events and concerts on City property (but for non-City events) should have been added to their regular official law enforcement hours with any work over forty hours per week being paid at overtime rates.  The City moved for summary judgment arguing that the special detail exemption excluded those hours worked for the separate employers and that no overtime was due and owing.  There are only six reported cases involving the special detail exemption so this opinion is important if for no other reason than to add to the scant case law on the issue.

The special detail exemption applies to law enforcement and fire fighter employees who voluntarily perform work for separate and independent employers.  Under the exemption, the hours voluntarily worked for the separate and independent employer are excluded from the officer's hours worked on behalf of the the primary employer for FLSA overtime purposes.  In a well-reasoned opinion, the federal judge presiding over the case, concluded that the City has established its affirmative defense that the hours sued on were exempt under the special detail exemption and entered a judgment in favor of the City. 

You can download a copy of the Court's opinion here.

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Imagine this, its Friday and you are sitting in your office as Director of Verizon’s newly created Office of Reasonable Accommodation.  An employee, I’ll call him Joe, walks into your office.  Joe tells you he's recently converted to the Church of the Flying Spaghetti Monster (i.e., he is now a Pastafarian); that Friday’s are his religion’s holiday; and that his religion requires him to wear a spaghetti strainer on his head at all times. He requests, as a reasonable accommodation of his religious beliefs, all Friday’s off from work and to have the photograph on his employee identification badge retaken so that he be shown wearing a colander on his head. What do you do?

Most employment civil rights laws require that employers treat all employees equally without regard to age, sex, color, race, national origin etc.  The ADA and Title VII's protection of employee's religious beliefs, however, may require employers to treat employees differently (i.e., reasonable accommodation).  Here, Joe's request to accommodate his beliefs (which appear sincerely held) can only be denied if accommodating the belief would cause undue hardship to the employer.  Undue hardship under Title VII is different than under the ADA.  Under Title VII, a proposed religious accommodation is often an undue hardship where it requires the employer to incur more than de minimus expense; violates a CBA, law or valid seniority system; ignores safety risks or requires other employees to work longer or harder. 

Applying these rules to Joe's request, unless you can establish that for security reasons employee photographs on access badges must be taken without headwear, you should probably tell Joe to get his colander while you get out the Kodak.  With respect to the request for all Fridays off, unless Joe's request would violate a CBA provision regarding bidding for schedules or would otherwise make Joe's co-workers work longer or harder, Joe should probably be allowed to take his Fridays off.

Follow me on Twitter @RussellCawyer.

Church of Flying Spaghetti Monster Resources Facebook and Wikipedia.

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The ABA Journal is compiling its annual list of the 100 best legal blogs and is seeking nominations on the blogs to include.  Inclusion on this list (which is not limited to labor and employment law blogs but includes all legal blogs) is prestigious and is something that I, and others that blog regularly, aspire to achieve.

This post is a shameless request (read "beg") that, if you like the Texas Employment Law Update, you nominate this blog for the Blawg 100 list.  Nominating a blog is easy.  You can access the on-line ABA Journal nomination form to nominate the Texas Employment Law Update (or other worthy blogs) here.

Nominations must be submitted by September 9, 2011.  Thank you for reading the Texas Employment Law Update.

Follow me on Twitter @RussellCawyer.

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Yesterday Rob Radcliff over at the Smooth Transitions Law Blog wrote a post about a lawsuit filed by an attorney against the recruiter that placed him at his new law firm.  In essence, the attorney alleged that the recruiter made representations that she was independent (and not tied to any particular law firm) and fraudulently convinced the attorney to join a Washington D.C.-based firm with whom the recruiter had a retainer relationship.  Radcliff warned recruiters about being explicit in representations made to potential candidates and disclosing who has retained the recruiter to avoid claims of misrepresentation and breach of fiduciary duty.

There is another area where recruiters need to be careful when conducting their search activities.  Recruiters need to be careful about where they place a candidate when they know the candidate has a noncompetition agreement that restricts the candidate's post-employment activities.  Recruiters can be sued for tortious interference with contract and/or conspiracy when the recruiter knowingly assists a candidate in violating his or her noncompetition agreement by putting the candidate in touch with a client company or for a position that would violate the terms of the candidate's post-employment obligations. 

On a few occasions, I'm aware of recruiters (and their search firms) who have been sued along with the former employee and the new employer over violations of a noncompetition agreement.  In those cases, the recruiters expressed shock and surprise that he/she could be held liable for assisting the candidate in violating the noncompetition agreement.  In one particular case, when the recruiter was asked whether she was concerned about putting a candidate with a noncompete in touch with a direct competitor (that was prohibited by the noncompete), she proclaimed, under oath, "That is just not something that I worry about!"   

As recruiters increasingly become entangled in disputes among competitors over enforcement of noncompetition agreements, the existence of a candidate's noncompetition agreement is probably something that recruiters should be concerned about.

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In Texas, employees and employers are entitled to a telephone hearing before a hearing officer if either party disagrees with an initial determination issued by the Commission in unemployment benefit and Texas Pay Day Act claims.  There are some occasions, however, where an employer may consider foregoing these telephone conferences --even if it means losing the unemployment benefit claim.

Telephone hearings before hearing officers are conducted under oath and are recorded.  This constitute sworn testimony that will be binding on the parties in subequent proceedings.  Some attorneys representing employees use these telephone hearings to conduct discovery on potential discrimination, retaliation, harassment or wage and hour claims they may be thinking about filing.  If you appear for an administrative telephonic appeals hearing without your labor and employment counsel and the employee on the other side has a lawyer; think long and hard about whether you want to participate further in the proceeding without advice of counsel.  You might win the battle (i.e., the telephone hearing) but lose the war by having the testimony offered at the hearing used against the employer in a more significant lawsuit with more exposure.  Sometimes it may be better to just hang up and not oppose the unemployment benefit claim.

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In Part 1 of this two-part series, I examined the temporal, geographic and scope of activity restrictions for Texas physician noncompetition provisions.  Texas law provides another unique feature required only in agreements with doctors.  Noncompetes with physicians must include a provision that permits the doctor to buy-out of the noncompete for a reasonable amount. The buy-out can be determined at inception of the relationship by including an agreed liquidated buy-out amount or the parties can defer a determination of the buy-out amount and have an arbitrator determine the amount post-employment. What is a “reasonable amount” depends on the facts and circumstances but is normally an approximate value of lost profit the practice group would realize if the noncompete was not honored. Lost profits are determined by calculating the net income expected or actually made for the practice by the physician with appropriate adjustments for costs that would be incurred in earning that income. 

For liquidated (or agreed) buy-out amounts, an analysis should be done in arriving at the reasonable agreed amount. However, in practice, most employer groups and physicians merely choose arbitrary amount normally tied to a multiple of the physician’s annual income (e.g., a year or two of the physician's base salary).  This has little bearing on the actual value of the noncompete to the practice group. Moreover, the failure to conduct a buy-out valuation analysis prior to setting the liquidated buy-out amount may open the practice group up to allegations that it knew or should have known the buy-out amount was not reasonable and increases the likelihood the parties will have the arbitrate the amount of the buy-out. Moreover, this can also have an adverse effect on the practice group's ability to recover certain damages prior to a determination of a reasonable buy-out amount and may even allow the darting physician to recover his or her attorney’s fees.  Deferring a determination of the buy-out amount through arbitration at the end of the relationship can also result in the parties arbitrating the buy-out at a time when the relationship is most acrimonious (i.e., the end of employment).  For this reason, it is ideal to negotiate this amount at the beginning of the employment relationship.

The manner in which the buy-out amount is ascertained are all capable subjects to bargaining at the pre-agreement stage. For example, whether a  patient attrition rate will be used to lower the buy-out or will the lost profits be reduced by the amounts the practice group makes in mitigating its profits through the hiring or a replacement physician are a few examples of ways physicians can lower the buy-out amount. Minimizing the buy-out amount through negotiation increases the likelihood and feasibility that the physician can purchase his or her way out of the noncompete at the end of employment. Furthermore, decreasing the buy-out amount makes it more likely that a subsequent employer may pay some or all of the buy-out in order to be able to employ the physician from a competing practice group.

There is no end to the subjects of bargaining; however, the bargaining positions of the parties may not be comparable. Before entering into a noncompetition agreement that will restrict the right to practice medicine, the physician should retain experienced labor and employment counsel to advise and assist in minimizing the effects of the noncompete and buy-out clause.

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I’ve written before about the unique requirements that must be included in a noncompetition agreement with a Texas physician. The increasing likelihood that a Texas court will enforce a noncompetition agreement against any departing employee increases the importance that physicians and practice groups take great care in negotiating and drafting agreements with proper limitations as to time, geographic, scope limitations that are reasonable.  While no blog post is an adequate substitute for capable legal representation, this two part series is intended to outline some of the relevant issues that Texas practice groups and the physicians employ should consider before they sign an agreement restricting the doctor’s post-employment practice. 

The Texas statute requires that physician noncompetition provisions be reasonably limited in time, geographic scope and scope of activity to be restrained that are legitimate and necessary to protect the employer’s legitimate business interests and goodwill. Interests typically worthy of protection in medical practices usually include the employer’s confidential information, goodwill and referral sources. 

Determining the proper geographic scope of the restrictions can be done by looking as historical data from where the patients reside or the location where the referral sources are located (i.e., the doctors referring the patients to the practice group) that represent a significant amount of the practice group's revenue. Other options include whether the geographic scope is measured from the referring doctor’s office or the practice group where the physician signing the noncompetition agreement will practice. The importance of this designation will likely depend on whether the employer’s legitimate interests are in protecting its existing patient population or the referral sources from which it derives its new patients.

The proper temporal scope should be that amount of time it takes to recruit, hire and introduce to the referral community to the replacement physician. Some practice groups choose a year or two limitation while others choose the amount of time it took to recruit and hire the physician that is being hired and asked to sign a noncompete with some additional time added to account for the time it takes to introduce the new doctor to the medical community and referral sources. The more highly specialized practice (and conversely fewer number of qualified physician replacements) may justify a longer temporal scope of restriction. Conversely, practice areas that are less specialized or where there are an abundant number of replacement physicians eligible for hire, may only support a shorter noncompetition period.  

In the next post, I'll discuss the buy-out feature that Texas law requires to be included in every physician noncompete and that allows the physician to buy his or her way out of the noncompetition agreement.

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