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

In its first FMLA opinion, the Texas Supreme Court held that agencies of the State of Texas cannot be sued for FMLA violations arising out of an employee's FMLA leave taken for his own serious health condition.   In University of Texas at El Paso v. Herrera, the Supreme Court of Texas held that, unlike the family care provisions of the FMLA, Congress did not abrogate Texas' sovereign immunity for violations of the FMLA self-care provision and therefore the State of Texas cannot be sued for such violations.

The underlying facts are as follows.  Alfredo Herrera was an HVAC technician for the University of Texas at El Paso.  Herrera sustained a work-related injury to his elbow requiring a nine month leave of absence.  One month after he returned to work, his employment was terminated.  He sued alleging that he was terminated for taking personal medical leave under the self-care provision of the FMLA and exercising his First Amendment rights by complaining about unsafe work conditions.  UTEP challenged the court's jurisdiction over the claim asserting that it was barred by sovereign immunity.  The trial court and court of appeals found that jurisdiction existed. 

Acknowledging that the U.S. Supreme Court held that Congress effectively abrogated state sovereign immunity for the FMLA family-care provisions, the Texas Supreme Court found that there was no evidence in the FMLA legislative history or Congressional findings that women took more personal medical leave (or were thought to do so) than men.  Because, according to the Court, the self-care provisions of the FMLA were not targeted at an identified pattern of gender discrimination on the part of the States, Congress overreached when it attempted to apply the self-care leave provisions to the states. 

While the opinion analyzes complex issues of state sovereignty and Congressional findings, the simple take away from Herrera is that the State of Texas cannot be sued for FMLA violations arising out of an employee's need for leave for self care.   

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The Supreme Court of Texas served up a significant victory for Waffle House in a case holding that a plaintiff alleging both a statutory sexual harassment claim and a negligent supervision and retention claim based on the same conduct is limited to recovering solely on the statutory remedy.  

Here are the facts as reported by the Court.  Cathie Williams worked as a Waffle House waitress for approximately eight months beginning in 2001.  During her employment she was subjected to offensive sexual comments from a  male co-worker cook.  These remarks were sometimes accompanied by physical gestures or attempts at unwelcome flirting.  Additionally, the harasser occasionally pushed Williams into the counters and grill; rubbed his arm against her breast; and on one occasion came up behind her, held her arms and pressed his body against hers.

Williams complained to the restaurant manager, but the conduct did not stop.  Williams then complained to the district manager.  According to Williams, little effort was made to investigate or remedy the offensive conduct.  Williams ultimately resignedly complaining that she was constructively discharged.

Williams filed her lawsuit against Waffle House alleging a statutory sexual harassment claim under the Texas Commission on Human Rights Act (TCHRA) and a common law negligent supervision and retention claim for retaining the harasser after Williams' complaints.  The jury returned a total verdict on both claims of approximately $3.89 million.  Williams elected her remedies under the common law negligence claim which provided her a greater recovery than the statutory claim (and its caps) allowed.  The trial court ultimately entered judgment in Williams' favor for $900,000.

Waffle House appealed arguing that Williams' common law negligent supervision and retention claims were completely preempted because her exclusive remedy for workplace sexual harassment was the statutory claim under the Texas Commission on Human Rights Act.  Waffle House argued that, at a minimum, the damages had to be reduced to reflect the lower damages caps provided for under the TCHRA.

In its analysis, the Court was persuaded that the statutory remedies should be the exclusive remedies under these facts given the comprehensive procedural rules and remedies the Texas Legislature crafted in creating a statutory sexual harassment claim.  Although not specifically articulated, the Court also appeared to be concerned that plaintiffs subjected to workplace harassment might forego the comprehensive administrative procedures under the TCHRA to pursue potentially more lucrative negligence claims, thereby rendering the Texas Workforce Commission's Civil Rights Division less relevant.

The Court held that a sexual harassment plaintiff cannot recover under a negligence theory where the negligence is entwined with the facts of the complained-of harassment.  Stated differently, where the "negligence is rooted in facts inseparable from those underlying the alleged harassment," the plaintiff's sole remedy is a statutory harassment claim.  However, where a negligence claim arises from facts unrelated to the sexual harassment (e.g., assault-based negligence claim), the TCHRA may not necessarily provide the sole remedy. 

You can download the majority opinion and dissent here. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Texas courts routinely enforce arbitration agreements between employers and their employees. In most parts of the state, lawyers representing employees agree to go to arbitration upon being presented with a copy of an arbitration agreement signed by the plaintiff-employee. On occasion, however, there are disputes over the enforceability of an arbitration agreement. The Supreme Court of Texas’ recent opinion spotlights another challenge to an employer’s alternative dispute resolution program.

In In re Odyssey Healthcare, Maria Morales sued her El Paso-based employer (and her supervisor) for negligence after she was injured at work when she tripped on an uneven step at a patient’s home. Odyssey is a non-subscriber (i.e., it does not have workers’ compensation insurance) and provides its employees with an “Occupational Injury Benefit Plan.” All Odyssey employees must enroll in the program as a condition of employment. The program requires that all disputes between the employer and employee must be resolved through mandatory, binding arbitration. The arbitration was to be conducted with an arbitrator selected from a panel based in Dallas. The employer reserved the right to modify or terminate the arbitration program, but only after providing the employees with advance notice.

The plaintiff challenged the arbitration program arguing that it was invalid, unenforceable and substantively unconscionable; it violated the Texas Workers Compensation Act’s non-waiver provisions; the Federal Arbitration Act violated the Tenth Amendment by encroaching on a state’s power to enact and regulate its workers’ compensation system; and the agreement was illusory. The Texas Supreme Court rejected each of these arguments and directed the trial court to vacate its prior order and grant the motion to compel arbitration.

You can access the full opinion here.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Last summer, I detailed the Dallas Court of Appeals' decision in Marsh USA, Inc. v. Cook where the court held a noncompetition agreement supported only by stock-options as consideration was unenforceable.  You can read that post here. Today, the Supreme Court of Texas announced that it would hear the appeal from the Dallas Court of Appeals.  You can view the order list here.  

Review of the Cook case gives the Court an opportunity to extend (or break) its streak of easing the standards for enforcement of restrictive covenants in Texas that I have previously detailed.  (Post here).

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The Texas Supreme Court held that unilateral contracts can be formed with at-will employees when employers make promises to employees and those employees perform based on that promise.  In Vanegas v. American Energy Services, Inc. the Supreme Court was asked to decide the enforceability of an employer's alleged promise to pay five percent of the proceeds of a sale or merger of the company to employees who were still employed at the time of the merger.  The alleged promise arose in the context of a period when the company was performing poorly and the employees were complaining about working long hours with antiquated equipment. 

According to the Court's opinion, a vice-president of the company, in an effort to encourage employees to stay with the company, promised those original employees (of whom there were eight) that if they stayed with the company, they would be paid five percent of the value of any sale or merger.  When the company was sold, the seven remaining employees demanded their share of the proceeds.  The company refused and the employees sued.

The company argued that because the employees were at-will, any promise to pay those proceeds to the employees was illusory and unenforceable because the employer could have avoided the promise by firing the employees at any time.  The employees argued that the promise represented a unilateral contract that, once performed, became a binding enforceable obligation on the part of the employer.

The Court agreed with the employees and held that where an employer makes a unilateral promise to an at-will employee and the employee performs, a binding contract is formed upon that performance.  

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Texas courts strongly favor the resolution of disputes through arbitration. When parties to a dispute have signed an agreement to arbitrate covered disputes, Texas courts will rarely disregard that agreement.   A recent per curiam opinion of the Supreme Court of Texas continues that trend by conditionally granting mandamus relief in a case alleging national origin discrimination and retaliation for reporting alleged sexual harassment. (Opinion available here).

In In re Polymerica, LLC, a plastics manufacturer hired Angelica Soltero in 1998. In 2002, Polymerica retained Dickason Staff Leasing Company to manage its human resources operations. Soltero signed a Dispute Resolution Plan with Dickason that required all disputes (including disputes over discrimination, wrongful termination and harassment) between Polymerica, Dickason and/or Soltero be submitted to a four-step dispute resolution process. The final stage in that process included mandatory, binding arbitration under the Federal Arbitration Act.

Thereafter, Polymerica distributed an employee handbook that purported to take “precedence over, supersede[], and revoke[] any previous memo, bulletin, policy or procedure issued prior to [the handbook effective date], by [the employer] on any subject discussed in the Handbook.” The handbook included a section on arbitration that discussed the existence of the Dickason Dispute Resolution Plan. At the end of 2005, Polymerica and Dickason terminated their relationship and Polymerica took the human resources functions in-house. Five days later Soltero’s employment was terminated.

Soltero challenged the arbitration agreement first by claiming that the 2003 handbook provisions nullified the Dispute Resolution Plan she signed with Dickason. The court rejected that argument stating that “the Handbook provision, however, does not cover contracts like the Plan’s arbitration agreement” and observing that if the handbook nullified the Plan, the Handbook’s discussion of the Plan’s arbitration procedures and other multiple references to the Plan would be rendered meaningless. The court also made quick work of Soltero’s second claim that the Plan was illusory because the Handbook reserved the right to be modified at any time. Because the Plan, according to its own termination procedures, could only be modified with notice to the employees, and even then, only modified prospectively, the Plan was not illusory.

And finally, the Court rejected Soltero’s argument that Polymerica could not avail itself of the arbitration procedures of the Plan because it was a nonsignatory to the Plan. The Court noted that it has never required that an employer be a signatory to an arbitration agreement before it may insist on arbitrating a dispute with its employee. Because the arbitration agreement was enforceable and the scope of Soltero’s claims fell within its scope, the Supreme Court conditionally granted the writ of mandamus and directed the trial court to stay the proceedings and compel arbitration of all of Soltero’s claims.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On April 17, 2009, the Supreme Court of Texas continued its trend of finding ways to enforce covenants not to compete in the employment context.   In Mann Frankfort Stein  & Lipp Advisors, Inc. v. Fielding, the Court considered "whether a covenant not to compete in an at-will employment agreement is enforceable when the employee expressly promises not to disclose confidential information, but the employer makes no express return promise to provide confidential information."

Fielding was hired by an accounting and consulting firm as a CPA and Senior Manager in the Tax Department.  When he accepted the at-will senior manager position he was required to sign the firm's standard at-will employment agreement.  The agreement contained a client purchase provision.  The client purchase provision required that in the event Fielding performed work for Mann Frankfort's clients in the year following his termination of employment, Fielding was required to purchase that portion of Mann Frankfort's business the particular clients represented. 

The agreement lacked any affirmative promise from Mann Frankfort to provide confidential information to Fielding.  However, Fielding affirmatively promised not to use or disclose Mann Frankfort's confidential information.  When Fielding left employment and began competing, the parties litigated over the validity and enforceability of the employment agreement and client purchase provisions. 

The evidence showed that after signing the employment agreement Fielding was provided with access to and use of confidential information of Mann Frankfort and its clients.  The information included "clients' names, billing information and pertinent tax and financial information."  When Fielding was hired as a senior manager in the firm's Tax Department, he would be required to have and use information confidential to the firm by the nature of his duties. 

The Court held that the lack of an affirmative promise to provide Fielding with confidential information in the agreement was not fatal to the enforceability of the agreement or the client purchase provisions in this case.  The Court explained that when the nature of the employment will reasonably require the employer to provide confidential information to the employee for him to accomplish his job duties, the employer has implicitly promised to provide the confidential information and the covenant is enforceable as long as the other requirements of the Texas Covenant Not to Compete Act are satisfied.

The effect of this holding will be to make it easier to enforce covenants not to compete in Texas.  Additionally, the Court has at least tacitly endorsed those intermediate court of appeals decisions that have concluded that restrictive covenants other than noncompete provisions (e.g., client purchase provisions or forfeiture clauses) should be analyzed like noncompetition provisions that strictly prohibit competition rather than merely providing a monetary penalty for such competition. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link