Texas Employment Law Update

Texas Employment Law Update

A Resource for Texas Employers

DOL Publishes Final Rule Requiring Federal Contractors to Provide Paid Sick Leave

Posted in Employee Benefits, News & Commentary

This week the DOL published its final rule requiring federal contractors to provide paid sick leave to employees working on or in connection with federal contracts.  The sick leave required by the final rule would allow an employee to use accrued paid sick leave for their own illness, the need to care for a sick family member, to see a doctor or take a family member to a doctor’s appointment or when the employee or a family member is a victim of domestic abuse, sexual abuse or stalking.  Covered contractors must provide employees with 1 hour of paid sick leave for every 30 hours worked on a covered contract with a cap of 56 hours earned each year (i.e., 7 days).  Paid sick leave accrued but not used in a year, rolls over to the next year but rollovers hours may be capped at 56 hours.

The Department estimates that the final rule will provide or increase paid sick leave benefits to approximately 1.15 million workers.

Key provisions of the final rule include:

  • Prohibitions against interference, discrimination or retaliation in connection with use of paid sick leave;
  • Posting obligations of the paid sick leave rights;
  • Substantial recording keeping and retention requirements on paid sick leave accruals and usuage;
  • Requires segregation of medical records and records of domestic abuse, sexual assault and stalking obtained for purposes of administering paid sick leave program;
  • May only require medical documentation to substantiate the sick leave, under the final rule, for absences of 3 or more days;
  • Not required to pay out accrued paid sick leave on termination unless required under state law.

The final rule will apply to all federal covered contracts that are solicited or awarded after January 1, 2017.

A copy of the Final Rule can be accessed here.

A link to the DOL’s 3 minute video on the final rule is here.

Expect a Showdown at the Supreme Court over Class Action Waivers in the Employment Context

Posted in Arbitration, Jury Waivers, News & Commentary

Arbitration agreements containing class action waivers can be an effective way for employers to mitigate risk against defending large scale mass actions filed by employees. And in the Fifth Circuit, the federal Court of Appeals covering Texas, and three other federal circuits, individual arbitration agreement containing class-action waivers are enforceable.

In a recent Seventh Circuit Court of Appeals panel opinion, the court of appeals covering Illinois, Indiana and Wisconsin, held that individual arbitration agreement containing class-action waivers were not enforceable.  In Lewis v. Epic Systems Corporation, the company required employees to enter into individual arbitration agreements requiring the arbitration of wage and hours disputes.  The agreement did not authorize the arbitrator treat claims as a class or collectively. When Lewis brought an FLSA collective action against his employer, the company moved to compel arbitration.  The trial court refused to enforce the agreement and a panel of the Seventh Circuit Court of Appeals affirmed.

The rationale for the panel’s decision was that the agreement violated the employees’ Section 7 rights under the National Labor Relations Act.  Section 7 rights are those statutory rights that preserve employees’ right to self-organize, form, join or assist unions in collective bargaining and to engage in other concerted activity for employees mutual aid or protection.  Section 7 rights apply to employees in unionized and non-union work environments.  A wage and hour class action was, in the court’s opinion, an attempt to exercise Section 7 rights.

The court ignored, and did not discuss, the other Section 7 rights of employees that the class action waiver advanced.  Section 7 also explicitly gives an employee the right to refrain from engaging in concerted activity.  Section 7 provides, in relevant part, that “Employees shall have the right to …engage in other concerted activities…and shall also have the right to refrain from any or all such activities…”  Section 7’s “refrain from” language gives support to the legal conclusion that an employee’s waiver of the FLSA procedural right to litigate collectively is permissible under the NLRA.  And in my opinion, an employee entering into a class action waiver is exercising his or her right to refrain from participating in a wage and hour collective action.  At a minimum, the “refrain from” language should minimize or neutralize the importance of the argument that Section 7 only prohibits class action waivers.  When read as a whole, if Section 7 protects the employees’ right to engage in “concerted activity” and concerted activity includes filing wage and hour collective actions, then Section 7’s “refrain from” language must also be read to authorize class action waivers.

Because four federal courts of appeals have reached the opposite conclusion from the Lewis panel, expect this issue to be appealed to the Supreme Court to resolve the circuit split.  Employers utilizing arbitration agreements containing class action waivers should watch closely for developments in this area.  If companies do not get the benefit of class action waivers through their arbitration programs, they may reconsider whether mandatory arbitration of other employment disputes provides them with sufficient benefit to retain those programs.

You can read the Seventh Circuit decision in Lewis v Epic Systems Corporation here.

Supreme Court Holds Constructive Discharge Administrative Filing Deadlines Commence When Plaintiff Gives Notice of Resignation

Posted in Case Summaries, Discrimination, Retaliation

Plaintiffs and employers often dispute when an employee’s time period for filing a charge of discrimination commences.  Plaintiffs argue that it commences on the date the adverse action is effective (e.g., the termination date) where employers often argue that it commences earlier when the employee is advised of the decision (i.e., notice of termination that is effective at a later date).  In today’s Supreme Court opinion, the Court held that in a federal sector Title VII constructive discharge case, the applicable administrative remedies that must be exhausted commence on the date the employee tenders his notice of resignation and not the later effective date of that resignation.

In Green v. Brennan, an employee of the United States Postal Service believed that he was denied a promotion because of his race and that his supervisor’s wrongly accused him of intentionally delaying the mail –a federal crime.  The USPS and Green reached an agreement that it would not pursue criminal charges against Green and Green would either retire or accept a lesser paying position in a remote location.  Thereafter, Green elected to retire by tendering his notice and then claimed a constructive discharge.  Ninety-six days after signing the non-prosecution agreement but forty-one days after tendering his notice of retirement, Green contacted an EEO counsel to commence his charge of discrimination against the USPS.  Federal sector employees must contact an EEO counselor within 45 days of the discriminatory act complained of in contrast to private-sector employees who must file a charge of discrimination within 300 days of the discriminatory event.  Depending on when Green’s administrative remedy deadline commenced, his claim could have been deemed untimely.

Green’s administrative remedies deadlines could have commenced on several dates:

  • December 16, 2009 when he signed the non-prosecution agreement with USPS to retire or accept a lesser paying position in a remote area;
  • February 9, 2010 when he tendered his notice of resignation for an effective date March 31, 2010;
  • March 31, 2010 the effective date of his resignation.

The courts below both found that the commencement date was the earliest date and therefore Green’s efforts to exhaust his administrative remedies on March 22nd came too late.  The Supreme Court reversed the courts below and held that the “clock for a constructive discharge begins running only after the employee resigns”.  In this case, the employee resigned when he tendered his notice of resignation with a later effective date.  While the regulation that applies to federal sector employees exhausting Title VII administrative remedies is different for private-sector Title VII plaintiffs, the Court noted that the EEOC treats the federal and private-sector limitations identically.  It is likely that the Supreme Court would reach a similar result as it did in Green if it were faced with a private-sector Title VII constructive discharge claim under similar facts.

And perhaps most important outside the constructive discharge context, the Court reaffirmed its commitment that an employee’s charge filing deadline runs from the date when an employer communicates an adverse employment decision to an employee and not the date later date when the decision becomes effective.

You can download the full opinion in Green v. Brennan here.

Follow me on Twitter @RussellCawyer

Use the New Overtime Rules to Correct Misclassified Workers

Posted in Human Resources, Wage & Hour

This week the DOL announced changes to the white collar overtime exemptions that take effect December 1, 2016. Every employment lawyer with a newsletter, blog or soapbox has written some summary of the new regulations. And while the regulations only effect the executive, administrative, professional and high compensated exemptions, Daniel Schwartz, a Connecticut employment lawyer with a highly informative blog, notes that these regulations provide a unique opportunity for employers to correct other positions where it may have potential exposure for misclassified workers.

As Dan wrote last night:

Too often, employers who discover that they have misclassified employees believe that they are in a conundrum. Keep their head down and hope no one notices, or properly classify the employee and keep their fingers crossed that they don’t get sued for back pay. Neither option is a great one for employers who need to get into compliance. . .

But here is where the opportunity comes in: As I highlighted at the start, the new overtime rule has received unprecedented amounts of publicity in the workplace. No doubt most of your employees have now heard something about it. So, some won’t be surprised if they are notified that things are changing for their position as a result of the new rule.

While the rule doesn’t provide amnesty for employers who make such changes, the new rule does remove some of the suspicions employees may have about the changes — even when those changes are perfectly legal. Employees may be more understanding.  Employers can explain truthfully that the new rule has required them to review the classification of all of its employees and the changes are as a result of the rule.

Some employers are aware that they have some positions that are likely misclassified either as exempt or workers as independent contractors. One reason employers don’t reclassify these positions is the lack of any safe harbor provision from liquidated damages or attorney’s fees for voluntary changes in classification and the prospect that such changes will raise a red flag triggering a wage and hour lawsuit.

The new DOL regulations may allow an employer the “cover” to correct these misclassified areas without drawing as much scrutiny as it would in the absence of the regulatory change and the significant public awareness that changes were made. Of course, communications to employees about changes in classification should always truthful.

If your company has positions that might be misclassified, consult the company’s labor and employment counsel to determine the publicity surrounding the new overtime regulations makes it the right time to make changes and get compliant.

Follow me on Twitter @RussellCawyer.




DOL Announces Details of Final Rule Changing Regulations on the Overtime Exemptions

Posted in Human Resources, News & Commentary, Wage & Hour

Last night the U.S. Department of Labor announced details of its long-awaited Final Rule on changes to the regulations interpreting the overtime exemptions to the Fair Labor Standards Act (FLSA).  The FLSA is the federal law requiring most employers to pay minimum wages and overtime to nonexempt employees.  The Final Rule raises the minimum salary an exempt employee must be paid qualify under most frequently used overtime exemptions.  The change is expected to make an additional 4.2 million workers eligible for overtime and is expected to impact managers at retailers, hotels and restaurants.  While the impact may be greatest felt in those businesses, the rule is not limited to those industries.  The Final Rule made no changes to the duties test necessary to qualify for exempt status.

The new rule takes effect December 1, 2016.  This gives employers two hundred days to prepare.  Exempt employees who do not exceed the minimum salary threshold for the salary basis after December 1, 2016 will lose the exemption.

To satisfy the new salary threshold for an exemption requiring an employee be paid on a salary basis, the employee must make an annual salary of $47,476 ($913 per week) up from $23,660 per year ($455 per week).  This is a slight decrease from the proposed salary threshold that was published in the proposed rule.  The rule also raises the salary threshold to qualify as a “highly compensated employee” from $100,000 to $134,004.  This is over a $10,000 increase in the salary that was originally proposed by the Department in the proposed rule.

Nondiscretionary bonuses and incentive payments (including commissions) can satisfy up to 10 percent of the standard salary level so long as those payments are made on a quarterly or more frequent basis.  Employers with shortfalls may make catch-up payments as well.

The salary threshold is set to adjust every three years and is tied to equal to the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region.  The salary threshold for the highly compensated exemption is also set to automatically adjust ever three years and is tied to the 90th percentile of annual earnings of full-time salaried workers nationally.

Employers should act now to take steps to prepare for the effective date.  Preparations include identifying exempt positions where an employee is making less than the new salary threshold.  For each of those positions, the employer must determine how it will treat that employee beginning on December 1, 2016.  Options include:

  • Increasing the employee’s salary to meet the new, higher threshold and maintain the exemption;
  • Convert the employee to nonexempt, track hours and pay overtime; or
  • Limit the employee to 40 hours per week.

Additionally, employers should begin preparing their communications to employees who will no longer qualify for the exemption after December 1st to explain the change; the reasons for the changes; and how the changes will impact how the employee reports his or her time and will be paid.

You can access additional information about the new Final Rule below:

DOL Summary and Overview

FAQ Final Rule: Non-Profit

DOL Final Rule Information for Higher Education

FAQ Final Rule: States and Local Governments

Comparison Table: Current Regulations, Proposed Rule, and Final Rule

If you need additional information about the impact on these changes or how to prepare for and comply with these changes, don’t hesitate to reach out to me.

Follow me on Twitter @RussellCawyer.

EEOC Publishes Resource on Employer-Provided Leave and the Americans with Disabilities Act

Posted in Disability, Leave of Absence, News & Commentary

This week the EEOC published a resource document intended to provide guidance on providing disabled employees with leave of absence as a reasonable accommodation.

According to the Commission,

[It] continues to receive charges indicating that some employers may be unaware of Commission positions about leave and the ADA.  For example, some employers may not know that they may have to modify policies that limit the amount of leave employees can take when an employee needs additional leave as a reasonable accommodation.  Employer policies that require employees on extended leave to be 100 percent healed or able to work without restrictions may deny some employees reasonable accommodations that would enable them to return to work.  Employers also sometimes fail to consider reassignment as an option for employees with disabilities who cannot return to their jobs following leave.

The new publication articulates the Commission’s view on certain aspects of how employers should handle leaves of absence as a reasonable accommodation.  It’s worth quick review for a refresher on the rules for provide leave as a reasonable accommodation.  Unfortunately, it doesn’t provide any meaningful guidance on what are the tough leave issues like providing a guidance on when an employee leave of absence is so long as to become indefinite or open-ended so as to become unreasonable.

You can download the new publication here.


DOL Publishes The Employer’s Guide to the FMLA: And its Pretty Good!

Posted in Leave of Absence

Last week the U.S. Department of Labor Wage and Hour Division published The Employer’s Guide to the FMLA. The Department intended the Guide to be an informational resource to “provide essential information about the FMLA” and increase employer’s knowledge of the law, obligations and options available to employers administering FMLA leave.

The Guide is broken out by section in the various stages an employee’s leave will typically traverse including the employer’s initial notice, posting and disclosure obligations; the certification process and the employer reinstatement obligations.  I thought the most interesting part of the Guide was the FMLA Roadmap (page 8) that graphically tracks the typical employee’s FMLA leave process.  While the Guide won’t answer every question likely to come up in administering FMLA leaves, it provides a good overview and general information in a relatively easy to read format.  I recommend anyone responsible for administering FMLA leaves include the new Guide in his or her FMLA toolbox.

You can download the complete guide here.

Follow me on Twitter @RussellCawyer.

Congress Federalizes Trade Secret Cause of Action

Posted in Legislation, Trade Secrets

Congress passed, and the President indicates he will sign, the Defend Trade Secrets Act of 2016 (“DTSA”) creating a federal cause of action for the misappropriation of trade secrets.  Until now, misappropriation of trade secret claims have been litigated under state or common law theories of recover and usually in state courts unless the parties were diverse in their citizenship.  The new law grants federal courts original, although not exclusive, jurisdiction to hear claims involving the misappropriation of trade secrets related to products or services used in, or intended for use in, interstate or foreign commerce.

The Act allows, in extraordinary circumstances, for the ex parte application and seizure of property necessary to prevent the propagation or dissemination of trade secrets covered by the law as well as reciprocal penalties against parties that wrongfully or excessively obtain ex parte seizures.  The Act also provides damages to a party who has trade secrets misappropriated including actual damages, damages for unjust enrichment, reasonable royalties and punitive damages of up to two times the amount of economic damages as well as for the recovery of attorney’s fees and injunctive relief.

A person that discloses a trade secret in confidence to an Federal, State or local governmental official (directly or indirectly) or to an attorney solely for the purpose of reporting or investigating a suspected violation of law or is made in a complaint or other document filed in a lawsuit under seal, has immunity from criminal or civil liability not only under DTSA but also under state trade secret law.  The DTSA otherwise does not preempt state law and its remedies are cumulative.

Employers using contracts or agreements governing employee use and disclosure of trade secrets or other confidential information are required to include disclosures outlining the immunity provisions of the Act.  Failure to provide the required disclosures can preclude the employer from recovering exemplary damages or attorney’s fees against an employee who was not afforded the notice.

The new law provide new and unique tools as well as a federal forum for owners of trade secrets to enforce their rights in the event of trade secret misappropriation.  A complete copy of the DTSA can be accessed here.

Follow me on Twitter @RussellCawyer.

Austin, Texas Passes Fair Chance Hiring Ordinance for Private Employers

Posted in Human Resources, News & Commentary

The City of Austin, Texas has joined the long list of municipalities nationally that have adopted ordinances restricting employers ability to make inquiries into an applicant’s criminal background and to act on that information.  Under Austin’s new Fair Chance Hiring Ordinance, an employer with fifteen or more employees in the City of Austin may not:

  • publish or cause to be published information about a job that states or implies that an individual’s criminal history automatically disqualifies the individual from consideration for the job;
  • solicit or otherwise inquire about the criminal history of an individual in an application for a job;
  • solicit criminal history information about an individual or consider an individual’s criminal history unless the employer has first made a conditional employment offer to the individual.
  • refuse to consider employing an individual who submits an application for a job because the individual did not provide criminal history information before the individual received a conditional employment offer.
  • take refuse to hire, promote or revoke an offer of employment or promotion because of the individual’s criminal history unless the employer has a good faith belief that the individual is unsuitable for the job based on an individualized assessment of the individual’s criminal history.

An employer who does uses an individual’s criminal history to deny employment or a promotion must inform the individual in writing that the adverse action was based on the individual’s criminal history.  The ordinance also includes an anti-retaliation provision and administrative enforcement provisions.  Importantly, the ordinance creates no criminal penalty but does impose a modest civil penalty of $500 per job that violated the ordinance.  However, no civil penalty will be issued for an offense occurring prior to the first anniversary of the ordinance.  Furthermore, the ordinance does not create a private right of action.

One consequence of this ordinance is that Austin employers will likely have to revise their initial employment applications to remove questions about an applicant’s criminal history.  Questions about an applicant’s criminal history will now have to wait until after the employer extends a conditional job offer.

You can review the draft ordinance here.

HR Directors Beware: You Too Can be Sued for FMLA Violations

Posted in Case Summaries, Human Resources, Leave of Absence

A recent case from the Second Circuit Court of Appeals should remind HR Directors (and supervisors) to be particularly vigilant in handling employee FMLA leaves of absence. In Graziadio v. Culinary Institute of America, the appellate court reversed a trial court victory for the employer and the two individual supervisors (one of whom was the HR Director) who were sued for alleged FMLA violations of interference with and retaliation for taking FMLA leave. While the facts, if true, suggest that the Director of Human Resources acted relatively cavalierly with respect to the employee’s repeated requests for FMLA forms and clarification about what documents the employer required to approve her leave of absence, the case does not break new ground on the issues of individual supervisory liability under the FMLA (although the case may be the first time the Second Circuit dealt with the question). It is well-established in the Fifth Circuit (the federal court of appeals covering Texas appeals) that individual managers or supervisors who participate in FLSA violations can be sued and held individually liable for violations of the Fair Labor Standards Act. Because the FMLA’s definition of employer is the same as in the FLSA and not the definition found in Title VII, it is not surprising that the Second Circuit joined other circuit courts concluding that individual managers or supervisors acting directly or indirectly in the interest of an employer with respect to its employee may also be deemed employers subject to suit under the FMLA.

The case is, however, an important reminder that HR generalists, managers and directors (those who routinely administer the leave of absence programs of employers) can and are often sued along with the company when an FMLA claim is asserted and should therefore process employee leaves with extreme care. Documentation of efforts to obtain FMLA documentation from employees along with summaries of the communications had with those employees can be critical in defending the company and individual human resource employees from FMLA suits.

A full copy of the Second Circuit’s opinion in Graziadio v. Culinary Institute of America is available here.