With the spectacular crash of the centralized cryptocurrency exchange FTX and the potential bankruptcy of a second high-profile cryptocurrency exchange called BlockFi, now is a good time to revisit whether an employer would want to pay or employees receives all or part of their wages in Bitcoin or other cryptocurrency.

Let’s go back to 2014:  Guardians of the Galaxy was a box office hit, Russell Wilson and the Seattle Seahawks were the defending Super Bowl champs, Taco Bell finally released a breakfast menu, and we first wrote about paying employees with cryptocurrency.  So what’s new in the eight years since we first wrote about cryptocurrency?  Not much.

Over the past several years, Bitcoin and other various forms of digital cryptocurrency have skyrocketed in popularity. This popularity is shown through celebrities and politicians taking their salaries, at least in part, in Bitcoin (e.g., Aaron Rodgers and New York Mayor Eric Adams).  Despite this popularity, several crashes and bear markets have plagued the cryptocurrency market.  While some employees may find pleasure in receiving Bitcoin that is on a decline, others – and the FLSA – do not.

The volatility of the cryptocurrency market, which can best be described as very high when its high and very low when its low, may expose Texas employers to liability for unpaid wages.  One crash, which occurred as recently as last week, has failed to recover in light of the exchange company FTX’s bankruptcy filing announcement.  This announcement, which raised security concerns regarding the exchange platform, was as unexpected as it was detrimental to the world of cryptocurrency.  In fact, over a week later, the future of the digital market is still in fluctuation.  So, what does this have to do with Texas employers?

Texas law allows for employers and employees to agree, in writing, for an employee to receive part or all of their wages either in kind or in another form—including Bitcoin or cryptocurrency.  The FLSA, however, requires the compensation required by law (i.e., salary, minimum wage, and overtime) to be paid in cash or negotiable interest payable at par.  Because the FLSA supersedes Texas law when the two conflict, Texas employers are limited to paying bonuses, commissions and sums in excess of minimum wage and overtime in cryptocurrency.  If a Texas employer wants to pay these sums cryptocurrency, and the employee wants to accept that method of payment, they must make an agreement in writing to do so.  The agreement should clearly outline the payment structure and the risks associated with such payment, including the potential for a decrease in worth between the time of payment and the payment’s receipt.  As a reminder, however, for non-exempt employees, bonuses and commission still must generally be included in the employee’s regular rate of pay—making this strategy even riskier in terms of FLSA compliance.

Texas employers cannot always accurately predict the market.  However, they can minimize their risk of running afoul of the FLSA by paying their employees through more traditional methods of payment.  As the old saying goes, if it isn’t broke, don’t fix it – and the traditional payment methods (when paid correctly) aren’t broken.

 

Want to evaluate whether you need to improve your company’s sexual harassment and gender discrimination policies or get recommendations for potential improvements to those policies?  A company can spend tens or hundreds of thousands of dollars to engage a large law firm to study the company’s policies and make recommendations for improvement.  Alternatively, a company can piggyback on Microsoft’s investment in a publicly released, comprehensive report done by an outside, independent law firm on the effectiveness of its policies and recommendations to improve those policies and practices.

In January 2022, Microsoft retained an outside, independent law firm to review the effectiveness of the company’s sexual harassment and gender discrimination policies.  In November 2022, the independent firm provided its final report to the Microsoft Board of Directors.  Moreover, Microsoft just released the report to the world.  While most companies cannot afford the significant investment Microsoft undertook in the audit of its policies and practices, here are the key takeaways from the report and recommendations that any company can consider implementing in its own policies.

Key Improvements Recommended in the Report

  • Have the CEO sign the anti-discrimination and harassment policies
  • Revise the anti-harassment and anti-discrimination policies to provide more examples and clarify expectations
  • Require disclosure of certain consensual relations where a conflict of interest could develop and define inappropriate relationships
  • Adopt a formal procedure to request reconsideration of an investigation’s findings that a party disagrees with
  • Advise employees of the right to seek external relief
  • Develop an effective tool to track and remind senior leaders that they need to take required training on gender discrimination and sexual harassment issues
  • Ask complainants to complete surveys about their investigation experience
  • Establish Credible Transparency around Remedial Efforts
  • Take steps to minimize a perception that senior leaders are not held accountable
  • Coordinate data among the various HR teams and groups that investigate allegations of misconduct
  • Make improvements in the investigation process
  • Continue efforts to increase the percentage of women in senior leadership positions.

The report is impressive in its thoroughness and comprehensiveness.  More impressive is the fact that Microsoft released it publicly.

You can access the final report here.

In a recent case out of a federal court in Houston, a former African American sales representative for FedEx received a jury verdict in the amount of $366M.  In that case, Jennifer Harris claimed that she opposed racial discrimination and that she was retaliated against and terminated for engaging in her protected activity.  She brought her claim under Section 1981, a federal law that lacks the EEOC administrative exhaustion requirement or the damages caps that apply to civil rights claims under Title VII.  And while the $366M verdict will likely be reduced because the punitive damages represented 314 times the compensatory damages found by the jury, the judgment entered by the Court will be significant.  FedEx apparently has insurance that may cover the portions of the judgment between $10M and $75M although there may be disputes over whether the punitive damages are covered by the applicable insurance policies or insurable under Texas law.  And, the jury verdict does not include amounts for back pay, front pay and attorney’s fees which will likely be awarded by the court and also significant.

FedEx had to know the case was not going well.  In Jury Question No. 3, the jury asked:

 

And then in Jury Question No. 4, they asked:

While Title VII cases can have significant liability, racial discrimination and retaliation claims under Section 1981 carry all the risk and danger of a Title VII race claim without the guardrails of statutory damages caps, administrative exhaustion requirements and a truncated statute of limitations.  Take these claims seriously or the jury may ask for a calculator.

Complaint

Jury Note 3

Jury Note 4

Jury Verdict

Employers are booking venues and planning for the annual company holiday party.  As these preparations are made, Human Resources should review these tips to reduce the likelihood of post-holiday party human resources hangovers.

Keeping Off Santa’s Naughty List Because of your Behavior at the Company Christmas Party

Proper Planning Now Can Lead to a Complaint Free Holiday Party

There are important mid-term elections occurring in Texas on Tuesday, November 8, 2022, from 7 a.m. to 7 p.m.  Early voting runs from October 24  though November 4, 2022. There are many statewide, state district and U.S. representative races to be decided in this election.

In Texas, employers are required provide employees with time off to vote if:

  • The employee has not already voted early by Election Day;
  • The employee does not have at least two consecutive hours off to vote on election day while the polls are open.

Time off to vote on election day must be paid only if the employee does not have sufficient time off to vote outside the voter employee’s working hours (i.e., two consecutive hours when the polls are open).  For example, an employee working from 8:30 a.m. to 5:30 p.m. does not have two consecutive hours to vote when the polls are open from 7 a.m. to 7 p.m.

The employer can proscribe the hours the employee will have off to vote so long as it is reasonable and sufficient for the employee to vote.

Employers with workforces that might the employer to provide time off to vote may consider a variety of options that may help reduce the impact on Election Day.  For example, employees can be encouraged, but not required, to vote early.  Similarly, an employer may consider an Election Day late arrival for the beginning of the shift or early departure at the end of the shift to provide voting employees with at least two consecutive hours to vote when the polls are open.  In addition, an employer could designate a particular two-hour block of time or schedule designated times when employees are released from work in order to vote and better accommodate the operations of the particular workforce.  Careful advance planning, with the advice and input of legal counsel, can balance the important need for employees to vote while reducing or minimizing the potential disruption to an employer’s operations.

 

EEOC regulations require employers to post notice of employee rights that protect employees from discrimination.  These posters must be posted in conspicuous places.  The EEOC has updated its “Know your Rights” posters.  Employers should update their posters with the most recent versions from the EEOC.  You can access the English and Spanish versions for posting below.

EEOC Know Your Rights Poster (English)

EEOC Know Your Rights Poster (Spanish)

In the weeks and months following the start of the COVID-19 pandemic, many employers were faced with the need to quickly conduct substantial reductions in force.  In making these decisions, the question frequently arose around whether an employer had to provide 60 days advance notice of a plant closing or mass layoff under the Workers’ Adjustment and Retraining Notification (“WARN”) Act or whether COVID-19 constituted a natural disaster giving rise to the natural-disaster exception to the notice provision.  Two years later, we have an answer –at least in Texas, Mississippi and Louisiana.

On June 15, 2022, the Fifth Circuit Court of Appeals held that the COVID-19 pandemic is not a natural disaster under the WARN Act.  The WARN Act requires covered employers to give affected employees sixty days’ notice before conducting a plant closing or mass layoff.  One exception to the sixty day notice requirement is the natural-disaster exception.  When this exception applies, shorted notice or no notice is required.

In Easom v. U.S. Well Services, Inc., U.S. Well Services, Inc., an oil and gas producer, experienced a substantial loss of business beginning in March 2020.  This loss of business was caused by a combination of factors including a price conflict between Russia and Saudi Arabia and a precipitous drop in the price of oil resulting from the reduced demand for travel, oil and gas caused by the COVID-19 pandemic.

U.S. Well Services laid off a substantial number of its crews sufficient to qualify for WARN Act notification.  Rather than providing any period of advance notice, the company terminated the employees with no notice and told them:

Your termination of employment is due to unforeseeable business circumstances resulting from a lack of available customer work caused by the significant drop in oil prices and the unexpected adverse impact that the Coronavirus has caused.

The laid off employee filed suit alleging violations of WARN.  U.S. Well Service defended that it was not required to provide any advance notice under the natural-disaster exception.  The employee countered that COVID-19 was not a natural disaster and even if it was, it was not the direct cause of the layoffs.

The district court certified two questions for interlocutory appeal to the Fifth Circuit.  First, does COVID-19 qualify as a natural disaster under the WARN Act’s natural-disaster exception?.  Second, does the WARN Act’s natural-disaster exception incorporate but-for or proximate causation?  For the reasons explained by the Court, it held that the COVID-19 pandemic is not a natural disaster under the WARN Act and that the natural-disaster exception incorporates proximate causation.

And employer’s beware (and mass action attorneys rejoice), the statute of limitations for a WARN Act claim is at least two years.  Thus if there was a  plant closing or mass layoff caused by COVID-19 where the employer failed to provide 60 days advance notice of the employment action believed the pandemic was a natural disaster, there may still be time for employees to bring claims over those actions.

You can download Easom v. U.S. Well Services, Inc. here.

Many employers have implemented mandatory arbitration programs to resolve disputes with employees.  When sued by an employee, an employer with a mandatory arbitration provision occasionally delays seeking an order compelling the lawsuit into arbitration.  When a delay occurs, the party seeking to keep the case in court (usually the employee), may resist arbitration arguing that the employer waived its right to have the case decided in arbitration by delaying seeking to compel the case into arbitration.

Historically, to show that a party waived its right to arbitrate rather than litigate the dispute, the party opposing arbitration had to show that the party seeking arbitration waived its right to arbitrate by acting inconsistently with that right –usually through delay and proceeding in the court system.  Additionally, the opposing party also had to show that it was prejudiced by the inconsistent actions or delay.  Showing prejudice was very difficult.  So long as the party seeking arbitration had not sought rulings on dispositive issues or waited an unreasonably long period (often more than six months of engaging in litigation or right before trial), courts rarely found that a party was prejudiced by the delay in seeking arbitration.

Last month, the U.S. Supreme Court dispatched the prejudice element required to show waiver.  No longer is a party required to show that it was prejudiced by its adversary’s delay in seeking arbitration.  The prejudice requirement is an arbitration-specific procedural rule that is not authorized by the Federal Arbitration Act.  Thus, an employer who wants to preserve its contractual right to arbitrate its dispute with an employee should make that request timely and avoid acting inconsistently with the right to arbitrate.

You can read the entire Supreme Court opinion in Morgan v. Sundance, Inc. here.

On March 3, 2022, the President signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (“Act”).  The new law amends the Federal Arbitration Act to prohibit the enforceability of mandatory, predispute arbitration agreements and class action waivers of sexual assault and sexual harassment disputes.  The passage of the law comes as a major victory for the #MeToo movement.  The amendment provides as follows:

  • Makes voidable, at the election of the plaintiff, any predispute mandatory, arbitration agreement or joint-action waiver of conduct constituting sexual assault or sexual harassment;
  • Requires courts, not arbitrators, to determine the validity and enforceability of an agreement to arbitrate regardless of any delegation clause contained in the arbitration agreement;
  • Defines Sexual Assault Dispute to include a dispute involving a nonconsensual sexual act or sexual contact, as such terms are defined in section
    2246 of title 18 or similar applicable Tribal or State law, including when the victim lacks capacity to consent.
  • Defines Sexual Harassment Dispute to mean a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.
  • The law takes effect immediately and applies to any claims made after the effective date.
  • The law does not affect predispute arbitration and class action waivers outside the sexual assault/discrimination context, nor does it address waivers of jury trial that are enforceable in many states including Texas.

The new law raises questions that will have to be answered by the Courts such as what about disputes that include sexual assault/harassment claims along with other claims not covered by the Act?  Will courts sever out the sexual assault/harassment claims and retain jurisdiction while sending the other claims to arbitration?

Employers using mandatory arbitration or class action waivers with their workforce (or are considering doing so) should have their existing policies and arbitration agreements reviewed to determine whether they need to make any changes to account for the Act.

 

Enforcement of the Biden Administration’s three vaccine mandates (i.e., government contractor, CMS and large employer mandates) had been stayed or partially stayed by various federal courts.  The OSHA Emergency Temporary Standard (ETS) applicable to most employers having 100 or more employees was stayed by the Fifth Circuit Court of Appeals prohibiting enforcement of the rule.  However, on December 17, 2021, the Sixth Circuit Court of Appeals, the court chosen by lottery to hear the consolidated appeals challenging the ETS, dissolved the stay that the Fifth Circuit put in place.  Thus, employers with 100 or more employees that are not specifically exempted from the standard must now take steps to comply with the emergency rule.

With the stay dissolved, employers are now required to comply with the non-testing requirements by January 10, 2022 and the testing requirements by February 9, 2022.  For a more detailed review of the requirements, you can read more here.

Here is a copy of the Sixth Circuit’s lengthy opinion lifting the stay.