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

With many employers considering whether and when to pay end-of-year or holiday bonuses, I thought it was a good time to review the rules for when bonuses or other compensation must be included in the regular rate of pay for purposes of paying overtime.  This is one issue that still trips up Texas employers.

Nonexempt employees are entitled to overtime compensation at 1.5 times the regular rate of pay for most hours worked in excess of 40 per week.  In determining the regular rate of pay an employer is to include all compensation paid to an employee unless it falls into one of nine general statutory exclusions.  Many end-of-year holiday bonuses will  fall into a statutory exclusion.  However, where the bonus is dependent on hours worked, productivity or efficiency, the bonus should be included in the regular rate of pay for nonexempt employees. 

Assume an employee receives a $5,200 end-of-year bonus that should be included in the regular rate of pay.  Presumably, that bonus was earned in equal portions over the course of the year despite the fact that it is paid in one workweek at the end of the year.  One hundred dollars of the bonus will be attributed to each workweek in the year.  If an employee worked overtime in a workweek, $100 of the end of year bonus has not been included in the wages for that week for purposes of determining the proper overtime rate.  Consequently, the employer must go back and recalculate the overtime pay for the week to make-up the fractional underpayment.  These underpayments are usually small, but they provide an employer with potential overtime exposure and the costs of defending such a claim normally far exceed the unpaid overtime.  

The takeaway from this post is to remember that if an employer is making a bonus or other payment that is not specifically excluded from the regular rate of pay, the employer may need to go back and make overtime adjustment payments to nonexempt employees for the pay periods over which the overtime was earned and in which the employees worked overtime.  This can be complex to perform and is beyond the scope of this post but a labor and employment attorney Board Certified by the Texas Board of Legal Specialization can help you calculate this overtime adjustment.

Follow me on Twitter @RussellCawyer.

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It is almost 2012 and here is a list of seven items you want to make sure you have, or consider adding, to your employee handbook for the new year.  

• Social Media Policy providing employees with proper guidance on acceptable and unacceptable uses of social media and containing a disclaimer that no provision of the policy is intended to infringe on employees' NLRA Section 7 rights (i.e., to engage in concerted activity for their mutual aid and protection and to collectively bargain).
• Social media policy that incorporates provisions regarding employee endorsements that comply with the Federal Trade Commissions guidance on those endorsements.
• Consider adding a mutual Waiver of Jury Trial or class action/collective action waiver --or some other form of alternative dispute resolution.  Check with your employment attorney to make sure the form in which you implement this renders it enforceable.
• Updated FMLA policy implementing the changes from 2008 and 2009 amendments if you have not had the policy updated since then.  
• Policy regarding the employer's commitment to providing reasonable accommodation to qualified individuals with disabilities and explaining the process an employee can initiate to request reasonable accommodation.
• Ensuring that any neutral absence control or maximum duration of leave policy carves out protected leave such as FMLA, military leave and leave provided as a reasonable accommodation to a qualified individual with a disability.
• A provision prohibiting the surreptitious audio or video recording by employees during working hours or while on the employer's property along with a NLRA section 7 disclaimer.

Follow me on Twitter @RussellCawyer.

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I want to thank my clients and other readers of the Texas Employment Law Update for your loyalty and support.  More importantly, I hope that you and your families have a safe and happy Thanksgiving holiday.  For my part, our family will be spending a traditional Thanksgiving (traditional for us) with extended family and friends, both a smoked and cajun fried turkey, and as much football as is humanly possible to consume in a single day.  While I won't be participating, much of my family will brave the Black Friday crowds looking for deals and kicking the holiday season off in full force.

Despite the fact I'll be enjoying the holiday, employment law and related-matters won't be far from my mind.

Here are a few Thanksgiving-related employment items for your consumption.

Department of Labor is encouraging retailers to take steps to provide for crowd managment and safety during Black Friday sales.  Additional resources for retailers, employees and shoppers related to Black Friday sales and safety can be found here.

Facts about Texas Employment Law and Thanksgiving.

• Texas has no law requiring employers to provide a day off at Thanksgiving.
• Texas law does not require premium pay for working on holidays like Thanksgiving.
• Employees on FMLA leave may be entitled to the paid Thanksgiving holiday under company policy if the company's policy provides holiday pay if the employee were on vacation instead of FMLA leave.  

Next week I'll turn to seven things you should consider adding or confirming are in your employee handbook for 2012.

Happy Thanksgiving!

Follow me on Twitter @RussellCawyer.

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Yesterday, the President signed a bill that is good for veterans and employers.  The law provides new and enhanced tax credits for employers hiring veterans.  The law, effective immediately, allows employers to claim certain tax credits for hiring unemployed veterans ($2,400 in the case of a veteran unemployed at least 1 month; $5,600 for a veteran unemployed at least 6 months; and $9,600 for hiring an unemployed veteran with service-related disabilities).  You can review a full copy of the act here.  Its nice to be able to write about a new law that provides benefits for both employers and employee --particularly for our veterans that have served this country so well.

Follow me on Twitter @RussellCawyer. 

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Penn State announced that it selected former federal judge and FBI Director Louise Freeh to lead an independent investigation of all aspects of the University’s actions related to the child sexual abuse allegations that have been reported.  While federal and state (two states) authorities are investigating the allegations, Penn State’s investigation is likely to be more widespread than the criminal investigations as it will also evaluate the University’s governance, controls, protocols and oversight and not just the actions or inactions of school officials.  Penn State’s actions are laudable in that criminal investigations will be designed to prosecute and punish those that have broken the law while the University’s investigation may lead to changes and reforms at the school that will prevent similar kinds of actions from being unreported, undiscovered or unpunished.

I’ve written before about the things an employer should consider in selecting an investigator to conduct an inquiry into employee misconduct.  In selecting an independent investigator in a matter that is of such high profile and subject to intense media scrutiny, it is important that the investigator be truly independent.  While some have already questioned Freeh's independence, according to Penn State, the scope of Freeh’s inquiry “will be expansive, and he is free to take his work to whatever conclusions he deems appropriate. No one at Penn State will be exempt from this review, including the Board of Trustees itself.”

Penn State’s decision to appoint an independent investigator like Major League Baseball’s appointment of George Mitchell to investigate the use of steroids in baseball in 2006.  However, Penn State’s inquiry purports to be potentially unlimited in scope and goes further than in that no one will be exempt from Freeh’s review (although some current and former employee may refuse to cooperate for Fifth Amendment or other reasons and the University will have little control over those former employees that decline to participate).  Mitchell, during the time period he investigated baseball, had close ties to the Boston Red Sox; initially limited his inquiry to the time period after 2002 when baseball began testing for steroids; was limited to player’s voluntary cooperation in providing interviews and information; and he (and MLB) had no authority to discipline players (of course where were represented by a union).  That Penn State’s independent investigation appears to provide Freeh with unfettered access to university information and officials and the pronouncements that Freeh may take the investigation wherever it leads shows the University’s commitment to uncovering the truth.  

Follow me on Twitter @RussellCawyer.

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Recently, the Supreme Court of Texas heard oral arguments in an interesting case regarding the outer limits of the attorney-client privilege with respect to a workers' compensation insurance carrier attorney's communications with its insured.  The communications at issue were made between the carriers and the insured/employer during the administrative proceeding before the Texas Workers' Compensation Commission over the compensability of a workers' compensation claim.  The case is styled In re XL Specialty Insurance Company and Cambridge Integrated Services Group Inc. (No. 10-0960).

At issue is a trial court's order that the workers' compensation insurance carriers turn over, in a civil lawsuit over the allegedly bad faith denial of workers' compensation benefits, communications they had with their insured/employer during the course of the underlying administrative litigation over the compensability of the workers' compensation claim. 

This case could have important ramifications for the Texas law of attorney-client privilege of communications between an insured and its insurance company's counsel.  Employers, and their attorneys, routinely communicate with insurance companies about the status of potential and pending claims.  Similarly, counsel for insureds routinely provide litigation updates about the potential strengths, weaknesses, potential exposure and likely outcomes on pending litigation.  These types of communications are normally treated as confidential and subject to the attorney-client privilege under the common legal interest doctrine (i.e., the privilege extends communications between parties or attorneys that share a common legal interest).  And while the case before the court is slightly different from the way EPL claims are handled because the insured/employer is not party (and is therefore a third-party) to the underlying lawsuit, the Court's pronouncements regarding the limits of the attorney-client privilege could have wide reaching effects on the manner in which employers communicate with their insurance carriers about pending claims.

We'll have more from this case when the Court renders its opinion in the case. 

Follow me on Twitter @RussellCawyer.

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Several years ago I took the deposition of the business owner who hired several employees from a competitor in violation of a noncompetition agreement the employees had with the competitor.  As part of enforcing the agreements against the former employees, the competitor sued the new employer for tortious interference with contract because the new employer/business owner was aware of the noncompetition agreements and hired the employees nonetheless.

During the deposition the indignant business owner repeatedly justified the hiring of the employees that had noncompete agreements as being appropriate because, "Texas is a right to work state!"  It made me realize that some employers, and probably many employees, don't know what it means to be a right to work state.  Here is what it means.

A right to work state is one in which prohibits employers and unions from agreeing to make membership in a union a condition of employment.  The fact that Texas is a right to work state has no effect on the enforceability of a noncompete agreement nor does it provide any legal excuse or justification to ignore the employees prospective employees have with their former employers.   So if you are a business owner considering hiring employees from a competitor who have noncompetition agreements, don't think that the fact that Texas is a right to work state will justify that behavior and contact a labor and employment lawyer to ensure that the hiring of those employees will not result in litigation.  There may be other good and sufficient grounds to have the noncompetition agreements set aside, but the the fact Texas is a right to work state is not one of them.

Follow me on Twitter @RussellCawyer.

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If you have not experienced it already, the EEOC is very active under the Obama administration.  Proof of this heightened activity is evident in the most recent statistics released by the EEOC for the fiscal year ending September 20, 2011.

Here is a summary of some of the highlights from the EEOC FY 2010 statistics (the Commission's fiscal year ends September 30, 2011)

• Total Charges of Discrimination filed reaches all time high of 99,922 (an increase of 6,645).
• Cause findings of discrimination were up over 1,000 from last year (and the highest number in 5 years).
• Disability charges of discrimination increased by almost 5,000 totaling a full 25% of all charges filed (expect that percentage to increase under the ADAA).  Only race, retaliation and disability showed an increase in percentage of total charges over last year.
• EEOC's backlog of charges is decreasing indicating that the Commission is processing charges faster.
• Conducted or are conducting 580 systemic investigation and filed 23 lawsuits alleging systemic allegations of discrimination.

Unless a projected budget cut decreases the EEOC's ability to process charges and conduct investigations and litigation, it is expected that next year's charge filing statistics will meet or exceed this year's record numbers.

Follow me on Twitter @RussellCawyer.

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Its the time of the year again when companies begin planning whether and how to sponsor an end-of-year holiday parties.  Two years ago I wrote about how companies can plan their employer-sponsored celebrations to reduce potential liability resulting from those events.  The advice is as timely today as it was two years ago.  You can access my 9 tips to consider when planning the end-of-year holiday here:  Keeping Off Santa's Naughty List Because of What You Did at the Company Christmas Party: Minimizing Employer Liability Arising From Employer-Sponsored Holiday Parties .
 

Follow me on Twitter @RussellCawyer.

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Many employers understand the need for having a neutral reference policy (i.e., a policy whereby only dates of employments, positions held and sometimes last salary is disclosed). The policies help prevent and defend against potential defamation claims by former employees. Last week, I attended a panel discussion on Post Employment Conduct by Employers and Employees:  Not the Time to Let Your Guard Down at the ABA 5^th Annual Labor and Employment Law Conference. 

During conference, Jeffrey Shane of Allison & Taylor made an interesting presentation on the services his company provides. Allison & Taylor specializes in conducting personalized reference checks. One aspect of the company’s business is conducting reference checks on behalf of applicants who believe they are getting negative references from their prior employers and supervisors. The company boasts over 300 attorneys with whom they’ve worked and a 100 percent success rate in stopping untruthful negative references that they discover.

So, if you are an employer that has a negative reference policy, or a supervisor working at a company with such a policy, beware. If you are not following the policy, every reference check you get may not necessarily be on behalf of a genuine prospective employer and may instead be being used to establish evidence for a defamation claim.  Remember, defamation claims are one of the relatively few employment law claims where supervisors can sued and held individually liable.  Thumper said it best, "If you can't say something nice, don't say nothin' at all."

Follow me on Twitter @RussellCawyer.

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I have already written about the Herman Cain story and won't opine further on it here except to say, I have no idea who is telling the truth in the he-said-she-said (and she-said; and she said) story.  The headlines do remind me about what little rights the accused harasser has when, as Herman Cain claims, a false complaint of harassment has been made.   And before you start sending me the hate mail over this HSO, read the remainder of this post.

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The recent scandal at Penn State University is both shocking and troubling.  That high level officials of a such a prestigious university would allegedly overlook or cover-up allegations of the sexual abuse of a child is truly reprehensible.  Notwithstanding the intense media coverage of these events, each of those accused is presumed innocent until proven guilty.  But how does the scandal at Penn State tie into Texas employment law?  Here is the nexus.

Texas, like many other states, is a mandatory reporting state when it comes to the suspected abuse or neglect of a child.  Every person who has cause to believe that a child is being abused or neglected is required to report it.  Certain Texas professionals are required to report with 48 hours.  Similarly, federal law requires employers and IT professionals to report violations of involving child pornography on employer computers to the Cyber Tip Line at the National Center for Missing and Exploited Children (who will in turn report to the appropriate law enforcement agencies).  Employers and employees must understand their legal reporting requirements.

Employees and employers who believe that child abuse or neglect is occurring or that an employer's computer system possess child pornography should immediately report their concern to the in-house legal department or human resources and also to the NCMEC, the Texas Department of Family and Protective Services or another appropriate law enforcement agency.  Failure to do so may subject the employer and employee to significant criminal jeopardy, fines and a a potential Penn State size media catastrophe --not to mention delaying an end to the abuse of the child.

Follow me on Twitter @RussellCawyer.

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The Fort Worth Star Telegram has reported that the Texas Rangers are investigating the leak of Manager Ron Washington's pre-game speech to the team before Game 7 of the World Series.  The speech was reportedly taped by a member of the clubhouse staff and then leaked to JoeSportsFan.com.  You can listen to the full recording here.  (Foul Language Warning).

Where every employee, customer and vendor carries a high capacity telephone, video camera and tape recorder in the form of a PDA or smart phone, employers should adopt written policies prohibiting employees from making video or audio recordings during working time and while on the employer's property.  These audio and video recordings can be posted to Facebook, YouTube or Twitter and can have the effect of embarrassing an corporation or disclosing confidential, trade secret information.  Written policies provide a deterrent for employees who would attempt to harm the company through surreptitious records and provide a basis for disciplining employees who violate the policy.  And of course, if employees record communications in Texas to which they are not a party, they are potentially subject to criminal prosecution.  Keep in mind that any policies that prohibit these recordings must either be tailored so as to not violate employees' NLRA Section 7 rights or should contain a disclaimer that the policy is not intended to nor will it be applied to trample on those rights.

Follow me on Twitter @RussellCawyer.

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Last week I was in Seattle attending the ABA's 5th Annual Labor and Employment Law Conference.  While there have been a number of interesting and informative sessions, I wanted pass along an interesting demonstration that was done by Dr. Anthony Greenwald to demonstrate implicit bias (i.e., the internal, subconscious stereotypes we all allegedly have from our past experiences).

In large scale class actions, lawyers representing the classes have attempted to show systemic discrimination in corporations using, in part, implicit bias science.  Implicit bias science attempts to measure the extent to which individuals have implicit bias and how such bias might be predictive of discrimination.  Dr. Greenwald is the developer of the Implicit Association Test.  The test is designed to measure implicit attitudes people may harbor but are unaware of or would otherwise be unwilling to admit.

For example, in the test demonstrated last week, the group was shown a series of names and asked to answer whether the names were male or female names.  Response times were measured and the quicker the response time, the easier a person's brain has in processing a response.  Next, the group was shown a series of job titles and asked categorize each as being a leadership position or non-leadership position (e.g., Boss, Supervisor, Leader, Executive, Assistant, Co-worker etc).  After measuring response times, the group's response times tended to show that male names more closely correlated with leadership positions and female names correlated with non-leadership positions.  This, the test administrator believes, shows that the implicit bias of our group was to associates leadership job titles with males and lower job titles with females.  Dr. Greenwald observed that he has measured implicit bias in many areas such race, gender, appearance (obesity) and age; all useful things in employment discrimination cases --if valid.

While I didn't come away from the demonstration with the belief that the IAT is useful evidence to prove discrimination or predictive of discriminatory behavior, it was interesting.  Do you have implicit bias?  Dr. Greenwald's computer based test is available on-line and you can take it here (We took the Gender Career IAT).  What do you think?  Are you more likely to discriminate because your implicit bias?

Follow me on Twitter @RussellCawyer.

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 Herman Cain is in the news for all the wrong reasons.  During his tenure at the National Restaurant  Association the Association apparently settled two complaints of sexual harassment involving Cain.  

I have no idea what the underlying allegations were against Cain or whether the settlements were made to avoid inconvenience and buy peace or because the allegations had legs and carried potential exposure.  I know one thing about the Cain complaints --continued defense of the complaints would carry additional significant expense to the Association.

Employers settle employment disputes for all manner of reasons; but rarely because the employer believes it violated the law.  Litigation is expensive, distracting and inconvenient for companies.  While the statutory damages caps for federal employment civil rights claims have not increased in twenty years, the rates of attorneys defending those cases have increased many times over.  A $300,000 damages cap case in 1991 was much more significant compared with the fees that would be incurred in defending that case.  Today, the attorney's fees incurred in defending the same case would be a much greater percentage of the potential damages as it would have been in 1991. 

For the same reasons employers should not use arrest records in making hiring decisions (i.e., arrests are no indicia of guilt), the mere fact a company settled an employment dispute is no indication that the law was violated.

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By the time most of you read this, I will be headed to Seattle for the ABA's 5th Annual Labor and Employment Law Conference.  Attended this year by approximately 1,300 labor and employment attorneys from across the country, the ABA's conference provides some of the most comprehensive coverage of current developments in U.S. labor and employment law.

One great thing about the annual ABA conference is that it makes the program materials available on-line.  If you can't get to Seattle this year, but want to review the materials, check out the dozens of papers that will be presented at this year's conference here.

Also, if you want to follow the Seattle Conference live on Twitter, you can by following @abalel or #abalel.

Follow me on Twitter @RussellCawyer.

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