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

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 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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I wrote about an unusual dispute between the EEOC and a San Antonio law firm where the EEOC sought enforcement of an administrative subpoena seeking law firm records in connection with a charge of discrimination filed by a former employee of the firm.  You can read that post here.

Well, like Spring itself that blows in like a lion and out like a lamb, the law firm has provided the information sought by the EEOC subpoena and the EEOC has requested dismissal of its application to enforce the administrative subpoena (which has been granted).  Much ado about nothing after all.  You can review the EEOC's Motion to Dismiss here.

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Since at least 1995 Texas law has provided that women has a right to breastfeed in public in any place in which they are legally authorized to be.  Last week, the health care reform signed by the President amended the Fair Labor Standards Act to require covered employers to provide reasonable break time for nursing mothers to express breast milk for nursing children.  The FLSA is the federal law that requires most employers to pay minimum wages and overtime for hours worked in excess of forty per week.

The new law provides that:

• Employers must provide reasonable break time for an employee to express breast milk for her nursing child for one year after the child's birth;
• Provide a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk;
• Break time is unpaid in Texas (unless of course the employee is an exempt employee entitled to full salary in workweeks where any work is performed).

The law does not apply to employers with 50 or fewer employees if "the requirements would impose an undue hardship by causing the employer significant difficulty or expense when considered in relation to the size, financial resources, nature or structure of the employer's business."

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With Congress finalizing a health care reform bill to send to the President, what exactly will the 2,000 page bill mean for Texas employers?  As reported today by U.S.A Today, employers should expect, among other things:

• A health care exchange where small businesses can comparison shop for insurance policies;
• Fines for employers with 50 or more employees if any full-time workers qualify for health care subsidies; and
• Increases in Medicare payroll tax.

Only time will tell what the true cost of this reform will be for employers and whether the benefits cost.  

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This week the Department of Labor published a poster that must be used by all employers employing employees under H-2A visas.  H-2A visa holders are non-immigrant employees employed in temporary or seasonal agricultural jobs.  A copy of the required poster (in English) can be accessed here.  (Spanish here)  This poster is required by federal rules published February 12,  2010 and must be posted in the place of employment both in English and any other language other than English spoken by a significant portion of the workers. 

For more information on the eligibility requirements to employ H-2A employees, see the Department of Labor's fact sheets that can be accessed here.

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When investigating a charge of discrimination, the EEOC has the authority to issue administrative subpoenas requiring employers to produce relevant information.  This power, however, is rarely used because most employers voluntarily comply with the EEOC's reasonable requests for information. 

In San Antonio, a law firm respondent is testing the EEOC's powers to require information be produced via administrative subpoena.  In EEOC v. Malaise law firm, the EEOC is seeking the names and addresses of employees working for the law firm as potential witnesses.  The request was made in connection with the Commission's investigation of a claim of sexual harassment.   The firm responded that this information was not relevant, constituted a fishing expedition, and invaded the privacy rights of nonparties   The EEOC persisted in its efforts to obtain the information and ultimately issued an administrative subpoena to the firm.  The law firm filed objections to the subpoena which the EEOC overruled (Yes, the EEOC gets to make the rulings on objections made to its subpoenas).  The law firm still failed to comply with the subpoena and the EEOC filed a Petition to Enforce the subpoena in the U.S. District Court. 

The interesting part about the fact the EEOC had to go to court to get this information is that the Commission's court filing shows some insight into how it goes about investigating charges of discrimination. You can read the EEOC's Petition to Enforce here and the affidavit in support of the petition (with all of the fun-to-read exhibits containing the charge and letters between the firm and EEOC)  here.

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As a light dusting of snow falls on much of North and West Texas, I thought it was a good time to review the rules regarding deductions from exempt employee salaries for weather-related absences.  Employees qualifying for the white collar exemptions (e.g., professional, administrative and executive exemptions) are generally entitled to receive their entire salary for any workweek where they perform work, regardless of the amount of work performed during the week (like most things, there are some exemptions not addressed here). 

When an employer closes its business for less than a full week due to weather-related conditions such as snow, the employer must pay the exempt employee the full salary for the week.  In this case, while the employer must pay the exempt employee the full salary for the workweek, nothing prohibits the employer from deducting that period of time from the exempt employee's PTO or vacation bank --so long as the employer's written policies do not prohibit it from doing so.  If an exempt employee has exhausted all available PTO or vacation, the employer should still pay the full salary for the workweek under this situation.

Conversely, where the workplace is open for business and the exempt employee elects not to report to work for a full day because road conditions are treacherous, the employer may reduce the exempt employee's salary for the workweek for the period of full day absences caused by weather.  An absence under these circumstances constitutes an absence for personal reasons.  An employer could also pay the employee and deduct the time from the employee's PTO or vacation balance.  An employer should not, however, deduct from the exempt employee's salary a partial day deduction (e.g., where the employee reports late for work due to road conditions).  Treating exempt employees' pay for absences occasioned by weather-related absences is important because failing to do so may jeopardize the employees' eligibility for exempt status.

DOL Opinion letters here and here.

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Companies using independent contractors to perform work normally performed by employees beware; state and federal governmental taxing authorities are challenging those classifications in an effort to increase tax revenue on wages that are not properly reported.  According to a recent article by the Associated Press, "the Internal Revenue Service and 37 states are cracking down on companies that try to trim payroll costs by illegally classifying workers as independent contractors rather than as full employees." 

In September 2009, the IRS announced that it would (beginning in February 2010) audit at least 6,000 randomly-selected companies to investigate employment tax compliance.  Among other things, one of the areas targeted is worker misclassification as independent contractors. Companies may misclassify workers for a variety of reasons.  Companies have greater tax withholding obligations and employment tax liabilities with respect to employees.  Moreover, independent contractors are not entitled to overtime compensation, unemployment insurance and other employee benefits.  It is estimated that classification as an employee rather than independent contractor may add up to 30 percent to the labor cost of the worker.  The Government Accountability Office estimates that employee misclassification results in an estimated underpayment of $2.72 billion in social security, unemployment insurance and income taxes by companies annually.  

The 2011 federal budget proposes up to $3.8 trillion in spending measures to eliminate legal incentives for employers to misclassify employees, such as using budgeted funds to investigate, prosecute and penalize employers misclassifying employees as independent contractors and provide states with competitive grants to boost enforcement initiatives targeting misclassification.  There is also legislation introduced in Congress, the Taxpayer Responsibility, Accountability and Consistency Act of 2009, designed to make it more difficult to classify workers as independent contractors and to increase penalties for such misclassification. 

Secretary of Labor Hilda Solis also announced that her Department will hire more than 90 new wage and hour investigators and enforcement personnel to target worker misclassification.  According to Secretary Solis:

When employees are misclassified as 'independent contractors,' they are deprived of benefits and protections to which they are legally entitled. For example, independent contractors do not receive overtime and are ineligible to receive unemployment benefits. The FY 2011 budget includes an additional $25 million for a Misclassification Initiative to target misclassification with 100 additional enforcement personnel and competitive grants to boost states' incentives and capacity to address this problem.

With heightened Executive and Legislative enforcement efforts, companies using independent contractors should be sure their relationships have been vetted and are in strict compliance with the labor and tax laws.  The Departments of Labor and Treasury will surely be watching and scrutinizing those relationships.

Other Related Links:

Bill Would Make it Harder to Qualify Workers as Independent Contractors

Proper Classification of Workers as Employees or Independent Contractors May Reduce Litigation Exposure

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Last night CBS launched its new series "Undercover Boss" following the Super Bowl.  The premise of the semi-reality series is the president of a large company goes undercover as a rank-and-file employee to work for the company and get a bottom-to-top look at how the company operates.  [Spoiler Alert --Don't read further if you have the show DVR'd to watch later].  Last night's episode exemplified a situation where appropriate and legal policies formulated at the corporate level sometimes get contorted or twisted at the tactical level.

In last night's episode the President and COO of Waste Management (Larry O'Donnell) went to work undercover as a new employee in various operations of his company over the course of a week.  At a recycling plant operated by Waste Management, the company apparently had a policy requiring employees to take exactly a thirty minute meal period.  It was unclear from the show whether the policy was required by state law, but an employee had to clock-out for exactly thirty minutes.  If the employee clocked in a minute late, local management, docked the employee for 2 minutes of pay.  Presumably, if the employee clocked in 5 minutes late, she would be docked 10 minutes of pay.  In any event, it is unlikely that Waste Management's Human Resources or Legal Departments encouraged or condoned the application of the policy in this manner given the potential that such docking of work time (depending on the state and whether the total time docked is de minimus) could result in a wage and hour violation . 

The lesson employment lawyers and human resources personnel can take away from "Undercover Boss" is that there is often a difference in how a policy is designed to work and how it actually works in practice.   When investigating a potential legal claim to answer a complaint or draft a statement of position to the EEOC, it is often important to talk to the people who are actually responsible for implementing company policies to determine how they really operate in the field rather than relying on middle or senior management who may only know how the policies are supposed to work.  Failing to do so can cause employers to make misrepresentations to governmental agencies or courts and can lead to accusations that the employer either doesn't know what is going on in the workforce or to claims that the stated reasons for taking some action against an employee are pretextual or false. 

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Recently I wrote about ADP's 12th Annual Screening Index summarizing employment screening and hiring trends.  Employers using third-party background screening services must remember to comply with the Fair Credit Reporting Act's (FCRA) procedures prior to using consumer reports, in whole or in part, employment taking employment actions.  Moreover, while Texas has no specific statutes governing use of consumer reporting information in the employment context, some states have laws or regulations imposing more restrictive requirements than the FCRA that must also be followed.

In summary, the FCRA requires employers using consumer reports (i.e., information about your personal and credit characteristics, character, general reputation, and lifestyle) to:

• Disclose, in writing, your intent to obtain consumer reporting information before requesting the information;
• Obtain written authorization to obtain the consumer reporting information before requesting the report;
• Prior to taking an adverse employment action, provide the applicant/employee with pre-adverse action notification containing a copy of the report and a summary of rights under the consumer reporting act;
• After taking the adverse employment action, provide the applicant/employee with post-adverse action notification that contains the name and contact information of the consumer reporting agency (CRA) that prepared the report; a statement that the CRA did not make the decision and advising the individual of his or her right to dispute the information in the report with the CRA within 60 days.

Background checks and pre-employment screening are effective tools to use in hiring qualified employees.  Doing so,  however, without understanding an employer's obligations under state and federal law, can give rise to liability. The Federal Trade Commission enforces the FCRA.  For more information on an employer's rights and obligations under the FCRA, click here.

Earlier: Annual Survey of Employment Screening and Hiring Trends Released.

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This month ADP released its 12th Annual Screening Index report summarizing its evaluation of employment screening and hiring trends.  The summary was gleaned from nearly 5.5. million individual background checks and 1.7 million criminal background checks performed during calender year 2008.  The Screening Index:noted several interesting data points:

• Nine percent of background checks contained an adverse record (concerning criminal history, credit and driving records).
• Forty-six percent of reference and credential verifications revealed a discrepancy between information provided by candidates and what the screening revealed on employment, education and/or reference checks.
• More than one-third (37 percent) of driving record checks showed “one or more violation(s) or conviction(s).”
• Approximately six percent of the criminal record checks revealed a criminal record within the last seven years (out of 1.7 million checks performed).  

Because employers utilize background screens to identify appropriate candidates for employment; confirm the veracity of information provided on employment applications and as part of a comprehensive strategy of maintaining a safe workplace, the ADP summary provides interesting information about the American workforce --on a macro level. A copy of the full report can be downloaded here (must provide ADP with some identifying information prior to download).

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Manpower has published its most recent research on jury verdicts and the news is not good for employers.  According to a summary of the full report:

• Employers won the lowest percentage of discrimination jury trials this decade; only 39 percent.  Employers won on 33 percent of age cases and 52 percent of disability discrimination cases.  Expect employer's winning percentage to decrease in disability discrimination cases in the next years as post-ADAAA cases make their way to juries.
• Age discrimination cases result in the largest verdicts followed by disability, sex and race.
• Employers are better off in federal court than state court.  Employers won 43 percent of the cases in federal court versus only 37 percent in state court.  The median federal jury award was also lower at $164,925 v. $270,000 in state court.
• Median settlement rose to the highest this past decade at $90,000.

Several reasons may explain Manpower's most recent findings.  First, the economy, and juror attitudes may be affecting outcomes.   In my two most recent jury trials this year, there was a significant number of potential jurors who were either out of work or had a close family member who was unemployed.  With the national unemployment rate topping 10 percent, the increase in the unemployment rate may signal that there are more prospective jurors who may sympathize with an unemployed plaintiff-employee. 

Second, in a poor economy, some employers may choose to try cases they might have settled in the past.  Some employers may elect to try those cases that can be tried to verdict for less than they can be settled.   This may be a fiscally sound decision only in the short term or if the employer prevails at trial.

Finally, the results may reflect the fact that employers are having to try tougher cases to defend.  In any event, Manpower's research suggests that juror attitudes in employment discrimination cases are swinging in favor of plaintiff-employees and against employers.

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Last week's season finale of AMC's critically acclaimed series "Mad Men" shows a prime example of how to get involved in big time litigation when leaving a former employer to start-up a competing enterprise or work for a competitor. Mad Men is a made for cable series set in the 1960's about a Madison Avenue advertising firm.

In the season finale, Don Draper, Roger Sterling and Bert Cooper learn that their New York subsidiary of a London-based advertising firm ("PPL") is being sold to a competitor.  Shackled by noncompetition agreements they signed when their firm was purchased by the London firm and intent on not working for their competition, they evaluate their options. 

The solution --conspire with the office manager (a long-time PPL employee who will be cast aside following the sale) to terminate their contracts (fire them) in return for a partnership interest in the new venture.  To ensure that their plans are not discovered, the office manager strategically waits to advise PPL's home office of the terminations until the close of business Friday afternoon thereby ensuring that PPL will not learn of the change until Monday morning.  Over the course of the weekend, Draper and company loot client files; take account and marketing materials; and go on a wholesale campaign to solicit firm clients to join the new firm.  This is the season finale and so we don't yet know whether the 1960's London-based company response will be to file lawsuits or do nothing. 

In today's times, I would expect the next season would begin, and end, as follows.  The episode opens in a courtroom where Draper, Sterling and Cooper are about to be sentenced for certain criminal offenses.  The next scene then flashes back to last season's finale with Draper and company wheeling out boxes and boxes of information from their old employer; making solicitations to the customers of their old firm; and competing fiercely for new business.  Lawyers are engaged; lawsuits are filed.  Draper and company are slapped with injunctions that prohibit them from calling on or doing business with old firm clients and from using the confidential, proprietary information that was misappropriated from the old employer.  Next, a grand jury is summoned by the U.S. Attorney for the Southern District of New York. Our heroes are indicted for theft of trade secrets and a whole host of other misconduct.  Draper files for bankruptcy since his resources are drained by being a partner in an advertising firm that is enjoined from working with clients --not to mention the divorce from his lovely wife Betty.  Finally, our Mad Men plead guilty to criminal offenses and are sentenced to moderately lengthy prison sentences.  Next season's opener ends up being the series finale because the protagonists misappropriated and used information that belonged to their old employer.

What this episode of "Mad Men" teaches is that if one is going to leave an employer and either work for a competitor or start a competing venture; don't do it like the Mad Men.  Departing employees should 1) honor reasonable and enforceable contractual agreements regarding competition and nondisclosure of confidential information; 2) not take or use anything from the former employer; and 3) compete fairly.

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Let the Festivities Begin.

It’s that time again. The leaves are changing; there is crispness in the air and it’s time to start planning the company’s annual end of year or holiday party. While these events are wonderful opportunities for employees and their families to get together to celebrate the season, they can have unanticipated legal implications and bring with them the potential opportunity to create employer legal liability. 

Not only can the fun and festivities of a company Christmas party lead to employer liability resulting from alcohol related accidents or injuries, but the relaxed environment and the introduction of alcohol can also lead to allegations of sexual harassment. The following ideas are a few suggestions an employer should consider in planning and carrying out a company-sponsored event.

Don’t Require Attendance And Don’t Take Roll.

There are several reasons why an employer does not want to mandate that its employees attend the company party as a condition of employment. For example, if the company sponsors an annual Christmas party, there may be some employees who subscribe to religious faiths that do not celebrate or recognize Christmas. Mandating employees attend these parties, or disciplining employees because they do not attend, could result in charges of religious discrimination. For this reason, many companies have elected to use secular names for their seasonal parties such as “Holiday” or “Winter” party.

Another reason to avoid mandating attendance at the company party is to minimize the possibility of accidents or injuries to employee-guests occurring at the event being compensable injuries and covered by workers’ compensation.

Discourage Overindulgence of Alcohol.

One of the most effective ways of avoiding many of the adverse issues that arise from company sponsored events is to avoid serving alcohol. However, if a company is going to supply or permit the use of alcohol at a company event, it should plan effectively so that alcohol is used responsibly. 

Through pre-party meetings or memos, employees can and should be subtly reminded that, while occurring outside of working hours, the party is still a company-sponsored event and to avoid excessive alcohol consumption (i.e., drink in moderation). Employees should also be reminded that while certain workplace conduct policies may be relaxed during this nonworking time, the policies directed at prohibiting harassment (sexual and otherwise) continue to apply at all company-sponsored events. 

Unfortunately, some employees incorrectly believe that the company party is the time and the place to let it all hang out and that there will be no consequences for their conduct occurring outside of regular working hours. Unlike Las Vegas, things that are said and done at the company party don’t necessarily stay there and may have to be investigated by Human Resources after the event. Employees must understand that there can be consequences for their behavior –even at the company holiday party.

Pay To Play Or Distribute Drink Tickets.

Two ways to reduce the alcohol consumption at the company party include offering a cash bar or distributing a limited number of drink tickets to each guest. Many companies have elected to use cash rather than open bars at company-sponsored events. Frequently, when guests have to purchase their own drinks, they tend to consume fewer drinks. If an employer is going to have an open bar at its expense, another alternative is to distribute drink tickets that can be redeemed for a beverage of choice. While there is always the possibility of a guest collecting unused drink tickets from teetotaling guests, drink tickets can help limit or reduce the amount of alcohol consumed by guest employees.

Location, Location, Location/Hire A Caterer To Operate The Bar.

Another consideration should be the location of the event. It is often appropriate to schedule the event away from the office at an offsite location. This helps protect the employer’s property and assets. It can also be particularly important in preventing unauthorized access to confidential or trade secret information in the workplace or access to hazardous or dangerous equipment that may be used in the employer’s business. 

Employers can also employ the use of a coat check system where guests can check their coats and other personal articles. Guests should also be encouraged to leave their automobile keys with the coat check. Prior to leaving, guests can be individually observed to ascertain their ability to drive home when retrieving their coats and keys. Another alternative is to use a complementary valet system. Most guests will use the valet service. The employer (or its third party valet service) will then have possession of the guests’ keys and can evaluate each guest at the end of the party before returning the car keys. In either situation, it is important to have a responsible person that is trained in identifying the signs of intoxication. Off duty, plain-clothed law enforcement officers can usually be employed for this task.

Finally, hire a caterer or other third party to operate the bar. Ensure that the caterer is instructed verbally (and even better yet in writing) that they are not to serve any guest that appears to be intoxicated and the employer should designate a representative whom the caterer should notify in the event a guest may have overindulged.

Offer Plenty of Food and Non-Alcoholic Beverages.

Be sure that as a part of the event the company offers a variety of food and that it stays well-stocked so that employees can eat plenty with their cocktails. While everyone loves salty, greasy and sweet foods, those kinds of foods make guests feel thirsty and can have the effect of increasing alcohol consumption. Try to include foods that are high in starch and protein which stay in the stomach longer and slow the absorption of alcohol into the bloodstream.

Last Call and No Roadies.

Close the bar long before the party is expected to conclude. After the bar has closed, continue to serve food and other non-alcoholic beverages. This will give guests an opportunity to let some of the effects of any alcohol they may have consumed subside and may give the employer additional time to identify guests who need additional assistance getting home.

Arrange alternative transportation.

Despite your best efforts, there may be an employee who needs assistance in getting home. Anticipate this need and make arrangements for some alternative means of transportation such as a taxi or car service. Encourage all employees to make use of this service if they consume any alcohol.

If the event is being held at a hotel, negotiate discounted room rates when booking the event. Some employees might prefer to stay the night after the party rather than travel home. If this is negotiated in advance, it can be advertised to employees with the holiday invitations and they can better plan their evening activities.

Investigate Complaints.

Occasionally, a company sponsored event like a holiday party may spawn an employee complaint such as an unwelcome sexual advance. Some employers incorrectly believe that because the conduct complained of occurred during non-working hours or away from work that such conduct need not be investigated. This can be an expensive mistake. Prudent employers investigate all complaints that they receive from their employees having any nexus to the workplace. Complaints about conduct occurring at the annual party should be investigated like any other complaints as the conduct may affect an employee’s working relationship with co-workers.

Company parties are intended to be fun, rewarding occasions for co-workers and their families to share time away from the stresses of the workplace. With careful planning an employer can maximize the opportunity for fun and celebration and minimize the chances that the event becomes something the company might prefer to forget.

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The EEOC issued a new poster that incorporates provisions of the Genetic Information Nondiscrimination Act (GINA).  The new poster also includes updates from the Department of Labor.  A copy of the poster can be printed here.  Covered entities are required to post GINA notices not later than November 21, 2009.   Covered entities include, among others, employers with 15 or more employees.  

According to the EEOC, there are several ways to comply with the new posting requirement by November 21, 2009.

• Print the supplement (download here) and post it alongside EEOC’s September 2002 “EEO is the Law” poster or OFCCP’s August 2008 “EEO is the Law” poster.
• Print and post the EEOC’s November 2009 version of the “EEO is the Law” poster.  (here)
• Order a new poster through the EEOC Clearinghouse.  The new posters is currently on backorder and will be shipped when available. 

Of course, employers can also order new posters from their vendor that provides multiple required employer posters in a single poster. 

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I recently wrote about the importance of documenting employee performance deficiencies.  I also tried to outline several items to consider including in that performance documentation.  You can read my post here.

This week, two fellow blawggers posted additional examples about why documenting employee performance problems is essential.  Jay Shepherd at Gruntled Employees provides a humorous post on why "writing it down" is essential to winning a suit against a disgruntled employee.

Next, Michael Fox at Jotting by an Employer's Lawyer summarizes a real world example where the employer's failure to document the alleged performance problems caused it, in part, to lose a case against a former employee.

Keep these examples in mind when considering whether to document instances of employee misconduct or performance deficiencies.

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Employees frequently stay connected with work through company issued smart phones.  Smart phones, like the iPhone, Blackberry, and Treo, allow employees to have access to their work e-mails, calenders and contacts --in addition to making and receiving calls.  In my practice, a smart phone is incredibly useful in staying in touch with my client's needs when I'm in court or out  of the office.  However, with every advance in technology, come employment law challenges.

As recently reported in the WSJ.com, several lawsuits have been filed seeking damages for unpaid work time spent reading and responding to e-mails and customer complaints outside of regular business hours.  For example,T-Mobile USA Inc. was sued in July 2009 by three current and former employees for unpaid working time claiming they were required to use their T-Mobile issued phones to read and respond to message outside of working hours. (View the Complaint here).  In March 2009, CB Richard Ellis Group, Inc. was sued by a maintenance worker for unpaid work time after hours that included reading and responding to e-mails on his company-issued smart phone.  (View the Complaint here). 

Jon Hyman at the Ohio Employer's Law Blog argues that even if employees use smart phones for isolated and sporadic short-term reading and responding to business e-mails, that time is not necessarily compensable time.   Hyman argues that:

Most messages can be read in a matter of seconds or, at most, a few short minutes.  The Fair Labor Standards Act calls such time de minimus, and does not required compensation for it.  "Insubstantial or insignificant periods of time beyond the scheduled working hours, which cannot as a practical administrative matter be precisely recorded for payroll purposes, may be disregarded."

Hyman's point is a good one; however, can this time be precisely recorded for payroll purposes?  Redwood Technologies, for example, has a smart phone application (Momentum) that allows the user to capture time spent reading and responding to e-mails and time spent on the telephone.  It allows the user to allocate that time to different client accounts.  Although this same technology could be used by employers to capture the time nonexempt, hourly employees spend reading and responding to e-mails.  This may not resolve the administrative impracticality of determining which e-mails are personal or business related, I suppose that there are applications out there which would allow an employer to capture this time if it was so inclined. 

While is remains to be seen whether the time spent reviewing and responding to e-mails outside of normal business hours will be recoverable in an FLSA lawsuit, some commentators have suggested implementing polices to either pay employees for this time or to prohibit (by policy) employees from using company issued smart phones outside of working hours.  The following is a menu of options employers may consider in deciding how to deal with the issue of providing company issued smart phones to nonexempt, hourly employees. 

• Do not provide nonexempt, hourly employees with company issued phones capable of reading or responding to e-mail (i.e., smart phones). 
• Purchase a technology solution that captures the amount of time the user spends reading and responding to e-mail and pay nonexempt employees for that time.
• If the employer does not intend to pay for this off-hours review of e-mails, it should clearly set out its expectations that employees should not read and review those messages outside regular work hours.  For example, implement policies that prohibit employees from reading and responding to e-mails outside of regular working hours; require employees to leave company issued smart-phones at work; require employees to program the smart phones to turn themselves off during non-working hours. 
• Limit the employees that are provided with company issued cellphones to those who have a legitimate business need to be routinely contacted outside of business hours and limit that outside contact for matters where it is necessary.
• Pay employees who submit time for the nonbusiness hours review of e-mail and then discipline the employee for violating the employer's policy prohibiting business use of company cellphones outside working hours (if the employer has implemented such a policy).

If the lawsuits referenced above conclude with successful results for the employees (or in class certification), employers can expect to see many more of these kinds of cases filed. 

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Employees occasionally sue Texas employers for breach of contract claiming the employer violated its handbook policies in taking some action against the employee.  Texas law precludes most breach of contract claims premised on violations of an employee handbook where the handbook contains a provision expressly disclaiming any intent to create binding or contractual rights --whether express or implied.  

John Hyman at the Ohio Employer's Law Blog recently wrote a post explaining the importance of handbook disclaimers.  (See post here).  While John is an Ohio practitioner, the seven vital elements he explains should be included in a comprehensive handbook disclaimer apply equally to Texas employers.  John's seven vital elements include:

1. A specific statement that employment is at-will, without exception.
2. An explanation, in plain English, of what at-will employment means.
3. A statement that no one can create a contract contradictory to the provisions of the handbook.
4. A statement that the handbook is merely a unilateral statement of rules and policies which creates no rights or obligations.
5. A statement that the handbook is not a contract and not intended to create an express or implied contract.
6. A statement that the employer has the unilateral right to amend, revise, or eliminate policies and procedures as needed.
7. A statement that employees should not rely on any statement in the handbook as binding on the company.

One word of caution.  If the handbook contains some provisions where the employer does intend to create binding, enforceable contractual rights, such as an arbitration provision or waiver of right to jury trial, those provisions should be specifically carved out of the disclaimer.   Including an effective handbook disclaimer can provide a powerful defense to any breach of contract claim based on handbook provisions. 

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In the trial of most employment discrimination, harassment or retaliation cases, the employer's documentation of its actions is critical.  An employer defending against these claims will need to be able to prove to a jury that it was its legitimate nondiscriminatory or non-retaliatory reason that motivated its actions as opposed to unlawful animus.  Contemporaneous written documentation of an employee's performance problems, while not required, can go a long way in persuading a jury what, more likely than not, motivated the decision.  In writing effective performance documentation, here are some tips that can be considered.

• Address the performance deficiencies or misconduct timely.  Rather than waiting for the "last straw" counsel employees on areas where they need improvement contemporaneously when those issues arise.  This provides the employee with fair notice that his or performance is deficient and will generally provide them with sufficient warning and opportunity to improve the performance.  Jurors, many of whom are employees themselves, expect plaintiff-employees will be given notice of their performance problems (unless sufficiently severe) before they rise to the level of terminable offenses.  
• While it sounds simple enough, describe what it was that the employee did that violates the employer's policies or expectations.  Be specific with the dates, times and places of the misconduct or poor performance.  If the employee has only been provided with verbal warnings in the past, describe the dates, times and places of those verbal warnings when it comes time to move to more formal discipline like a written write-up.
• If the employee has received previous warnings or performance improvement documentation for the same or similar violation, include that information along with the date of the previous write-up and the specifics of that incident(s) as well.
• If the employee has been advised of the policy or expectation that has been violated, set forth how the employee was informed of the policy or expectation.  For example, if the policy is set forth in the employer's handbook, note that fact as well as the fact that the employee has been provided a copy of the handbook and signed a written acknowledgment of receipt. 
• Be sure that the documentation advises the employee that improvement is expected and which such improvement must be accomplished.  For example, a warning for insubordination or safety violations might require immediate improvement whereas improvement based on a performance quota might be accomplished over time --e..g, 90 days.
• If there is to be some follow-up by the employer, make sure that follow-up takes place and that the employee is given honest feedback on his or her progress toward accomplishing the improved performance.
• Consider whether you will provide an area for the employee to provide a rebuttal or what the employee intends to do to improve his or her performance.   While this provides the employee with an opportunity to provide an excuse or justification for the poor performance, it also provides employees with an opportunity to give thoughtful consideration to the concrete steps he or she will implement to improve the performance.  This increases the likelihood that the employee will be successful in improving his or her performance.
• Have a place for the employee to sign and date the form (or for a witness to sign that it was presented and discussed with the employee in the event the employee refuses to sign).  In cases where the employee has not signed the performance documentation, there is the possibility that the employee will deny that the events occurred.  Even worse, the employee could accuse the employer of fabricating the performance documentation for purposes of the termination or litigation.  The presence of an employee signature reduces the ability or effectiveness of an outright denial by the employee that he or she was warned of the prior performance deficiencies or misconduct.
• Use a preprinted form for performance issues.  This will assist in ensuring that the information suggested in this post is included.  A sample form is available here.

With these tips, employees can be better apprised of their performance deficiencies and the documentation can be valuable evidence in the event the employer has to defend its actions in court.

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Driving home recently, I was nearly run off the road by another commuter.  This driver appeared to be driving with her knees while text messaging on her phone.  As I avoided the swerving car and slowed to let the other driver proceed on her merry way, it was clear that this driver never noticed that she almost caused a collision.  

According to studies referenced in a recent NY Times article, drivers using cell phones are 23 times more likely to be involved in an automobile accident and drive about as well as drivers having a .08 blood-alcohol level --over the legal limit in most states.  As the Fort Worth Star-Telegram reported today, talking and texting on cell phones account for more automobile deaths each year than drunk driving.

Most employment and corporate fleet vehicle usage policies prohibit operating company vehicles under the influence of alcohol or other substances likely to have a detrimental effect on the driver's alertness or responsiveness. Many employer policies also prevent the usage of cell phones in company owned vehicles or while on company-sponsored business unless hands-free devices are used. Given that we live in a world where Darwinian principles don't work quickly enough to thin the herd of those too "distracted" to realize that they should not text message while driving, employers should considering adding specific prohibitions against using laptop computers, personal handheld devices, GPS/navigation devices and text messaging while driving to their vehicle fleet usage policies and other policies that govern employees who may drive as part of their duties and responsibilities.

One of the first highly publicized lawsuits dealing with distracted drivers using cell phones involved the case against Jane Wagner.  Ms. Wager was an associate for a large law firm.  On her way home from working long hours she struck and killed a 15 year old girl.  The girl's family not only sued Wagner but also sued her law firm alleging that she was on a business call at the time of the accident.  The lawsuit initially sought 25-30 million dollars.  The law firm settled for an undisclosed amount but Wagner's case proceeded to trial.  The jury awarded the family $2 Million.   In another case, an Arkansas lumber wholesaler, Dykes Industries, paid $16.2 Million to a woman who was severely disabled in a car accident involving one of its employees who was talking on his cell phone at the time of the accident. 

These cases involved drivers who were allegedly only distracted by talking on their cell phones.  Imagine what the verdicts or settlements would have been had the employees been texting while driving.  Employers should ensure that their fleet usage policies are updated to prohibit the types of activities employees may engage in while using company vehicles or on company business and should vigorously enforce those policies.  Failure to do so can give rise to potential tort claims when those employees are involved in accidents and there is an indication that the driver was distracted because of cell phone, PDA or other non-driving activity.  

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This legislative session the Texas Legislature passed, and the Governor signed, amendments that significantly expands the scope of the Texas Commission on Human Rights Act ("Act") as it relates to individuals with disabilities.

The amendment provides that:

• The definition of "disability" is to be broadly construed to the maximum extent possible and shall include impairments that are episodic or in remission that substantially limit major life activities when active;
• Whether an impairment substantially limits a major life activity should be made without consideration of the ameliorative effects of mitigating measures;
• Being "regarded as having [a substantially limiting] impairment" does not include an impairment that is minor and is expected to last or actually lasts less than six months, regardless of whether the impairment limits or is perceived to limit a major life activity.
• No claim exists for non-disabled individuals for reverse discrimination;
• No reasonable workplace accommodation is required if the individual's disability is based solely on being regarded as having an impairment that substantially limits a major life activity.

The new law also adds a definition of "major life activity" that was missing from the Act.  Major life activity under the Act means:

caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, and working. The term also includes the operation of a major bodily function, including, but not limited to, functions of the immune system, normal cell growth, and digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions.

The new law becomes effective September 1, 2009 and is not retroactive to conduct occurring prior to the effective date. 

What should Texas employers do to prepare for the new law?  Since the Texas amendments are identical to the ADA Amendments Act of 2008 (which was effective January 1, 2009), employers that have already taken steps to comply with the federal amendments may need to do very little.  For employers that have not addressed the changes made to the federal law should consider doing the following sooner rather than later:

• Review all policies and procedures to ensure that they comply with the new laws (e.g., if there were definitions or examples of major life activities, conform the definition to the amendment; if there are instructions to consider mitigating measures in determining the severity of limitations, change those provisions to conform to the law);
• Train your supervisors, human resources staff and employees responsibility for assessing requests for reasonable accommodation on the amendments;
• Update Job Descriptions to ensure that capture all of the essential elements of the relevant job;
• Focus in the interactive process --determine what the barriers are that need to be accommodated and then provide an effective accommodation that has the least adverse impact on the business.

With the state law mirroring the post-amendment ADA, there is no incentive for plaintiff-employees to file lawsuits under the ADA or in federal court as there might have been in the absence of the Texas amendments. 

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Texas does not require employers to provide a prospective employee with a formal offer letter.  Many employers chose to do so to avoid misunderstandings and clarify some of the important aspects of the proposed employment.  For employers that use offer letters, here are a few items that an employer should consider including in every offer letter.      

• Identify the job title, work location and start date for the proposed employment.
• Add an at-will disclaimer.  If the employment is intended to be at-will, advise employees in writing of that fact and specifically disclaim any intent to create any actual or implied contract.  
• Set forth the manner in which the employee will be compensated.  For example, if the arrangement is an hourly arrangement it may be sufficient to say that the employee will be paid $20.00 per hour. If the compensation arrangement is a salary; state the salary in a weekly or monthly amount rather than on an annualized basis.  If the employee will be paid commissions consistent with a commission plan, make sure that you say so.  Tell the employee that he or she will be paid consistent with the terms and conditions of the employer's commission plan and state when that plan will be provided to the employee.  There is a significant amount of litigation over commission payments when there is no written commission arrangement or the commission plan is vague, ambiguous, or otherwise poorly drafted.
• If the employee is being hired from a competitor,  confirm that the employee is not subject to any restrictive covenants or noncompetition agreements that would prohibit the anticipated employment.  If the prospective employee has no such agreements, have the employee represent, in writing in the offer letter, that he or she is not bound by any covenants not to compete or restrictive covenants.
• Expressly advise the employee not to bring any information from his or her former employer.  Tell the employee that your company doesn't need that information and doesn't want such information.  Furthermore, specifically instruct the employee that he or she is not to use or disclose any confidential, proprietary or trade secret information from the old employer in furtherance of the new employment.
• Have the employee sign, date and return the offer letter.  Under Texas law, a signed acceptance is not necessary to show acceptance (only knowledge of the terms and then the beginning of employment).  However, a signed acceptance is very persuasive evidence that the employee knew and accepted the terms.

These drafting tips may help employers and prospective employees avoid disputes over offer letters and the resulting employment.

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I've described how Texas calculates an employer's state unemployment tax rate.  (See post here).  In this post I want to outline a series of steps an employer can implement that may decrease its unemployment tax rate and taxes.  The state unemployment tax rate is the only tax rate that an employer can effectively control.  Because the tax rate is calculated over a three year rolling average, it may take a year or two to start realizing these savings.  Here are the steps. 

• Document employee problems and rule violations at the time those issues occur.  Keep thorough, accurate records of these issues in the employee's personal file.  An even better record is one where the employee signs, at the time the performance is documented, that he has had an opportunity to review the documentation.
• Make solid hires and don't over hire.  Turnover can dramatically increase your unemployment tax rate.  Consequently, make sure that you take all reasonable steps to ensure you are hiring good, qualified candidates for employment.  Do background checks (but comply with the Fair Credit Reporting Act) and check references.  Don't hire more employees than you think you will need for the foreseeable future. 
• Designate a specific person to receive and review unemployment claims.  Ensure all employees responsible for receiving and distributing company mail know where to route correspondence from the Texas Workforce Commission.  Ensure that when the designated person is away from work for vacation or leave of absence that another person is responsible for timely receiving and reviewing claims.
• Review every claim immediately.  Ensure that all information on the claim form is correct.  Errors in the employee's stated compensation or termination date can result in the Texas Workforce Commission paying at incorrect rates or for improper periods.  
• Timely respond to the TWC's requests for information.  This seems obvious, but the deadline for opposing unemployment benefit claims is jurisdictional and it is difficult to convince the Commission that good cause exists for a late response.  Moreover, keep in mind that the deadline for the response runs from the date of mailing; not the date you receive the claim or determination.
• Timely appeal determinations that incorrectly award benefits.  Some reasons for benefit ineligibility include: 1) misconduct connected with the work (this includes policy violations and intentional acts --not general poor performance); 2) voluntarily leaving work (i.e., a resignation that is not a constructive discharge or due to injury, illness or pregnancy); 3) aliens not authorized to work in the United States; 4) failure to apply for, accept or return to work; 5) leaving work pursuant to a labor dispute (i.e., union strike); 6) any periods where the employee is receiving wages in lieu of notice or is receiving workers' compensation benefits for temporary or permanent disability.
• Attach evidence to support the reasons for benefit disqualification.  For example, in a resignation case, attach the letter of resignation.  In misconduct cases, attach copies of the policies the employee violated; evidence that the employee received notice of and/or training on those policies (e.g., handbook acknowledgments signed by the employee); and any copies of written warnings the employee received related to the ultimate reasons for termination.
• Appear at the telephone appeal hearing.  Provide supporting evidence to the hearing officer several days prior to the hearing and bring witnesses that can testify and support the reasons that the employee should be disqualified from the receipt of benefits.

One final word of caution.  If you think the former employee is likely to file a lawsuit or charge of discrimination against the company and the employee shows up at the appeal hearing with a lawyer (Remember: appeal hearings are recorded testimony under oath), the employer should seriously consider whether it might be prejudiced by moving forward with the hearing in the absence of counsel.  Stated another way, consider whether it is worth winning an unemployment benefit hearing only to give the employee's lawyer a preview of the company's defenses that might be used in later litigation.  Some plaintiff's lawyers use unemployment benefit hearings as opportunities to conduct early free discovery and they know that most employers use nonlawyers to appear and attend these hearings.

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A recent Wall Street Journal article described the controversy that e-cigarettes are creating.  As Lauren Etter writes,

[E]lectronic cigarettes, [are] the smokeless nicotine products embraced by a growing number of people trying to kick the habit or avoid bans on smoking in public.  Electronic cigarettes typically consist of a metal tube containing an atomizer, a battery and a cartridge filled with liquid nicotine. When a user sucks on an e-cigarette, a light-emitting diode causes the tip to glow and the atomizer turns the liquid nicotine into a vapor -- thus it is called vaping instead of smoking. The vapor can be inhaled and then exhaled, creating a cloud that resembles cigarette smoke but dissipates more quickly and doesn't have the lingering odor.

Etters' article started me thinking about whether employers can or should prohibit electronic cigarettes in the workplace.   I'm not a proponent of anything as addictive as nicotine.  However, could employers realize some increase in productivity by permitting smokers to use electronic cigarettes at work?  Presumably, smokers use their regular breaks as their smoke breaks.  Some employees complain, however, that employers tolerate more frequent and longer breaks for smokers than for non-smokers.   Could employers benefit by allowing employees to satisfy their nicotine fix at their desk or break room rather than taking 20 minutes every hour or two?  Indeed, how is the use of an electronic cigarette meaningfully different from the use of nicotine gum or the morning caffeine fix that employees consume at work?  Are there health benefit savings that employers might enjoy by allowing or even encouraging employees to use e-cigarettes instead of smoking regular cigarettes?

Do existing employer policies prohibiting smoking in the workplace (as well as building codes and local ordinances) prohibit the use of vaping at work?  While courts have historically rejected the argument that nicotine addiction is a disability, the Americans with Disabilities Amendments Act and its more expansive definition of disability could call the courts to revisit and closely scrutinize those holdings.  If nicotine addition was recognized as a disability, could employers be required to allows the use of electric cigarettes as a reasonable accommodation?  Would it be difficult for an employer to show the use of an electric cigarette in the workplace is an undue hardship when the employer allows the use of nicotine infused gum or other prescription medicines at work? 

When I started writing this post I was inclined to recommend prohibiting the use of this new technology in the workplace.  After thinking about the answers to the questions I proposed above, I'm not certain I would recommend an employer prohibit the use of electric cigarettes in the workplace.  In the end employers should carefully consider and be able to articulate their legitimate business interest before electing to prohibit the use of electric cigarettes in the workplace.  As of the writing of this post, there are no reported employment court opinions discussing the use of e-cigarettes in the workplace.   With the widening use of this new technology, reported cases are sure to be on the horizon.

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In 2008 the Genetic Information Nondiscrimination Act (GINA) was passed.  Earlier this year the EEOC issued proposed regulations interpreting GINA and those regulations are expected to be finalized this month.  GINA generally prohibits employers from possessing and using genetic information about individuals or from making employment decisions using that information, with several limited exceptions.  A number of other commentators have provided a great deal of thoughtful analysis about GINA and its proposed regulations.  The Employer Law Report, Connecticut Employment Law Blog and the Ohio Employer's Law Blog all have useful information on GINA.

In thinking about GINA's likely impact, I question whether it will have a significant effect on Texas employment practices.  First, the type of information protected by GINA is not the kind of information typically used or gathered by employers.  With the exception of employers who use healthcare providers to conduct business-related, post-offer of employment physicals, it is difficult to imagine a systemic employment practice an employer might engage in that would run afoul of GINA.  For those business-related, post-offer of employment physicals, employers can avoid violating GINA by instructing the healthcare provider to either take no family medical history from the individual or make sure it does not pass that information on to the employer.

Second, Texas has prohibited discrimination in employment on the basis of an individual's genetic information or refusal to submit to a genetic test since 1997.  Like GINA, the Texas statute also requires that any person holding genetic information must keep it confidential with few exceptions.  Although the law has been in effect for 12 years, there are no reported Texas state or federal opinions where an applicant or employee sued an employer alleging violation of the Texas statute.

At first blush GINA appears to be a solution looking for a problem.  While I think GINA  is an interesting statute --one which employers must pay attention to and comply with --it is unlikely to have a significant impact on the way employers operate on a day-to-day basis.

Follow the Texas Employment Law Update on Twitter (here).

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There has been a substantial increase in the number of unemployment claims filed by Texas employees. This increase has the potential to raise the unemployment tax rate for employers that do not take proactive steps to manage their Texas unemployment tax rates.  The state unemployment tax rate is the only business tax an employer can control.

To understand how to manage the unemployment tax rate, an employer first must understand how the tax rate is calculated. For calendar year 2009, Texas employers pay state unemployment tax on the first $9,000 of wages paid to each employee. The unemployment rate ranges from a minimum of .26 percent to a maximum of 6.26 percent.  An employer’s state unemployment tax rate is the sum of three components: Replenishment Tax Rate (RTR); Employment and Training Investment Assessment (ETIA); and the General Tax Rate (GTR).  The effective tax rate is calculated by adding the ETIA, RTR and GTR.

The RTR is a flat tax rate assessed to all Texas employers to replenish ½ of the unemployment trust fund payments made to claimants that were not charged back to (i.e., assessed against) a specific employer. The RTR is calculated by dividing ½ of the unemployment benefits paid, but not charged to a particular employer, by the total taxable wages for the year. The rate is then spread across all experience-rated employers.  An individual employer has no meaningful way to reduce its RTR. 

The second component of the Texas unemployment tax rate is the ETIA. It is a fixed rate of .10 % which is taxed to fund the Skills Development fund.  The ETIA is fixed and applies to all Texas employers, so there is no way to manage or reduce this tax rate. 

The final component, the GTR, is based on the employer’s individual responsibility for repaying unemployment benefits to its former employees.  The GTR is the employer's only opportunity to reduce Texas unemployment tax by lowing the employer's experience rating.  Experience ratings can be reduced by limiting the unemployment benefit claims paid to former employees. This is principally done by limiting employee turnover and timely challenging claims for unemployment benefits filed by former employees who should not be eligible for benefits. The GTR is calculated by multiplying the RTR by the ratio of three years of chargeback by three years of the employer's taxable wages.    

By understanding how the Texas unemployment tax rate is calculated, an employer is in a better position to manage its overall tax rate and ensure that it is not taxed more than it should be. 

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With the increased number of layoffs and reductions in force, many Texas employers are paying out large amounts of severance payments and wages in lieu of notice. Employers making these payments must not forget to comply with any court orders they have received regarding the deductions or garnishments from employee wages on these payments. A Texas employer that has received a spousal or child support order from a court must be sure to deduct the amount set forth in the order from any severance payments or wages paid in lieu of notice.

For example, if a child support order requires the employer to deduct $150 per month from the employee’s wages and the employer promises to make a 6 month severance payment to the employee, the employer must deduct $900 from the severance payment to comply with the court order. Since this wage deduction is made pursuant to a court order, no written authorization from the employee is necessary.

For more information on compliance with spousal and child support orders in the context of severance payments, see the Texas Attorney General website.

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On April 30, 2009, the Department of Homeland Security announced that it distributed new enforcement guidance to Immigration and Customs Enforcement.  The new enforcement guidance emphasizes the Department's focus on targeting employers who knowingly hire illegal workers and thereby cultivate illegal workplaces.

According to Ginger Thompson of the New York Times, the guidelines state that "ICE must prioritize the criminal prosecution of actual employers who knowingly hire illegal workers because such employers are not sufficiently punished or deterred by the arrest of their illegal work force."  ICE will also be looking for evidence of worker mistreatment, identification document fraud, trafficking, smuggling, harboring and money laundering.  Susan Carroll of the Houston Chronicle reports that “The guidelines require that field agents have either an arrest, indictment, search warrant –or at least a commitment from the U.S. Attorney’s office to prosecute the employer –before arresting employees for civil violations at the work site.”

Given the heightened targeting of employers by the Department and the increased possibility of criminal prosecution, employers should train their hiring officials to ensure they understand the importance of hiring only workers legally authorized to work in the U.S.  Employers should also conduct periodic I-9 audits to ensure that all employees have proper documentation authorizing them to work in the United States.  Finally, employers may also consider whether voluntary enrollment in the E-verify program is appropriate for their operations.  By taking these proactive steps, employers may be able to avoid the imposition of harsh monetary penalties and criminal prosecution.

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With our close proximity to Mexico and the outbreak of reported swine flu infections in that country, Texas employers have a greater need to prepare their workforces for a swine flu pandemic.  There are now reported cases of swine flu in Fort Worth, Richardson, and Guadalupe County (near San Antonio).  Additionally, the World Health Organization's recent increase in the pandemic alert level from phase 3 to phase 4 suggests that employer preparation of the workplace is prudent.

There is a great deal of public information available to employers that desire to prepare for and deal with an influenza pandemic. The U.S. Department of Health & Human Service has a full web page dedicated to workplace planning for a pandemic outbreak. OSHA also has guidance on preparing the workplace for an influenza pandemic.  The IFMA Foundation also has a Pandemic Preparedness Manual that contains specific steps for preparing a business continuity program designed to insure that business operations are not substantially disrupted during a disaster or crisis.

Suggestions for Employers.

• Discourage nonessential business or recreational travel to Mexico and other high risk areas;
• Make sure employees recognize the signs and symptoms of swine flu;
• Instruct employees on influenza avoidance behaviors;
• Discourage sick employees from coming to work;
• Identify and designate "essential personnel" for the organization as key roles in the event nonessential personnel need to be told to stay home;
• Prepare a Business Continuity Plan.

These simple suggestions may help employers minimize the effects of this potential pandemic and better weather the consequences if the pandemic becomes more widespread. 

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As we approach local elections, it is good to remember that Texas law may require an employer to provide an employee with paid time off to vote.  The Texas Election Code makes it a Class C misdemeanor for an employer to refuse to allow an employee to be absent from work on election day for purpose of attending the polls to vote.

An employer is not, however, required to allow time off to vote if the polls are open on election day for voting for two consecutive hours outside of the employee's working hours.  For example, if you have an employee that regularly works 8:30 a.m. to 5:30 p.m. with a one-hour lunch break, an employer may have to give that employee time off from work on election day to attend to the polls and vote. In Texas, the election polls are generally open from 7:00 a.m. until 7:00 p.m. 

Because the term "penalty" means a loss or reduction in wages, an employer should provide paid time off for the employee to attend the polls to vote if the polls are not open on election day for at least two consecutive hours outside the employee's working hours.

An employer can avoid this interruption and the payment for otherwise nonworking time by rescheduling work schedules on election day so that employees have two consecutive hours off while the polls are open (e.g., reschedule the employee to work 8:00 a.m. to 5:00 p.m. on election day). 

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For several years the EEOC has enhanced its education and enforcement efforts using existing laws to protect employees with caregiving responsibilities (i.e., caring for children and ill family members).  This week the Commission issued guidance for employers it describes as "Best Practices" to assist employees in balancing work and family responsibilities.  Best Practices are proactive measures going beyond federal nondiscrimination requirements to help employees achieve a satisfactory work-life balance.

Acting EEOC Chairman Stuart J. Ishimari remarked that "Today we take another step forward, articulating not just the bare minimum required to avoid unlawful discrimination, but also thinking broadly about the ways in which family-friendly workplace policies can improve workers' ability to balance caregiving responsibilities with work."

The new guidance supplements the EEOC's 2007 guidance on Unlawful Treatment of Workers with Caregiving Responsibilities.  In addition to some common sense recommendations (e.g., train managers; develop, disseminate and enforce a strong EEO policy; investigate complaints), the most interesting suggestions to me are those related to flexible work arrangements. Some of the alternative work arrangements suggested include:

• Flexible work hours (i.e., permit a varying starting and stopping time within a certain range);
• Flexible week opportunities (e.g., work week consisting of four 10-hour days);
• Allowing for voluntary rather than mandatory overtime and allowing overtime to be scheduled in advance;
• Telecommuting, work-at-home or flexplace programs;
• Reduced-time options (i.e., part time work or job sharing programs).

EEOC's guidance provides a useful reference for any employer desiring to become more family-friendly and better assist its employees in achieving a balance between family and work. 

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