On January 5, 2023, the Federal Trade Commission (FTC) issued Notice of Proposed Rulemaking announcing that it was proposing an administrative rule that would end the use of all noncompetition agreements in employment relationships outside the context of the sale of a business. The proposed rule, among other things, labels the following as unfair methods of competition: “an employer to enter[ing] into or attempt[ing] to enter into a non-compete clause with a worker; maintain[ing] with a worker a non-compete clause; or represent[ing] to a worker that the worker is subject to a non-compete clause where the employer has no good faith basis to believe that the worker is subject to an enforceable non-compete clause.”

In addition to preventing noncompetition agreements from being entered into in the future, all noncompetition agreements in effect at the time of promulgation of the proposed rule would have to be rescinded following a notice period and prior to the compliance date¬—180 days after publishing of a Final Rule. The only instance where a noncompetition agreement would remain effective and enforceable is in the sale of a business. It is noteworthy that the proposed rule states that the rule will supersede all state laws that encompass noncompetition agreements, so regardless of where you conduct business, this rule will impact you. The proposed rule, if passed, would effectively eliminate the enforceability of covenants not to compete nationwide.

Apparently unaffected by the proposed rule are restrictive covenants that prevent post-employment solicitation of customers, employees or vendors as well as confidentiality and nondisclosure provisions so long as they are not so broad as to effectively act as a noncompete precluding an employee from working in a particular industry.

What should employers do now?  First, don’t panic.  It is unlikely that any final rule published by the FTC will be in the same form as the proposed rule.  Any final rule actually published by the FTC will likely be different than the proposed rule and may have carveouts and exceptions (e.g., high level executives, employees of tech or financial services firms  and highly compensated employees)

Moreover, it is unlikely that a final rule will be published for months, years or if at all and whether a final rule will survive inevitable court challenges.  There is substantial question about whether the FTC has the authority to impose such a marketplace-wide rule.

Second, employers should review their existing noncompetes to ensure that they contain post-employment customer and employee nonsolicitation provisions where appropriate (e.g., sales employees, managers and supervisors of sales employees and executives).

Third, make sure the agreements with employees adequately protect against the disclosure of confidential, proprietary and/or trade secret information.  Most well-drafted noncompetition agreements will already contain these protections but its a good exercise to check and confirm.

Finally, if an employer is not currently using noncompetition agreements but believes it has legitimate business reasons for doing so, the employer should consult with its employment counsel to determine if it is prudent to implement the noncompetition obligations prior to publication of any FTC final rule.  There is a possibility that any final rule could be limited to noncompetition agreements entered after the effective date of a Final Rule and that existing noncompetes could be grandfathered or exempt from the rule.

A copy of the Proposed Rule published on the FTC’s website is accessible here.

Despite the modern trend and convenience of using online onboarding of employees with click-through or e-signed acknowledgments and agreements with employees, I still think it is a better practice to have important agreements that an employer may try to enforce in court (e.g., arbitration and noncompetion agreements) physically signed by employees and the originals documents retained. But even where an employer obtains “wet signatures” from employees and maintains those originals, what happens when the employer fails to countersign the arbitration agreements; is the arbitration agreement still enforceable?

In a case from the Fourteenth Court of Appeals in Houston, the Court held that where the employer can show that is accepted the arbitration agreement by its conduct and the agreement does not foreclose acceptance of its terms by conduct, the arbitration agreement can still be binding even where the employer never countersigned the arbitration agreement. In GSC Wholesale, LLC v. Young, the employer had an Occupational Injury Benefit Plan and a Mutual Agreement to Arbitrate Occupational Injury and Disease claims. The employee, Young, signed the Mutual Agreement to Arbitrate Occupational Injury and Disease claims, but the employer never countersigned the agreement when it was returned to it.

Young later suffered a work-related injury arising from a forklift accident. The Occupational Injury Benefit Plan paid substantial medical and disability benefits related to the injury. Young later sued in court over his injuries and the employer moved to compel the case to arbitration pursuant to the arbitration agreement. The trial court denied the motion to compel arbitration finding that the employer’s countersignature on the agreement was a condition precedent to its enforceability and therefore the arbitration agreement was unenforceable.

On appeal, a majority of the court held that while the employer never showed its assent to the arbitration agreement by signing it, there were other ways in which the employer showed it intended to be bound by the terms of the arbitration agreement through its conduct including: hiring and continuing to employ the employee after the employee agreed to the terms of agreement (which stated that agreeing to arbitration was a condition of employment). Because the employer agreed to the terms of the arbitration agreement through its conduct, the majority held that a valid arbitration agreement existed and reversed the trial court with instructions to compel the case the arbitration. Thus, while it is better to have the employer countersign the mutual arbitration agreement signed by employees, the failure to do so will not be fatal to the agreement’s enforcement in all case.

You can access the majority and dissenting opinions here.  A petition for review was filed with the Texas Supreme Court on December 20, 2022.

Also included in the omnibus spending bill are expanded accommodations for women that need to express breast milk in the workplace.  The Providing Urgent Maternal Protections for Nursing Mothers Act or the PUMP for Nursing Mothers Act expands the federal workplace protections for women with a need to express breast milk passed in 2010.  The new law expands the requirement that employers provide certain accommodations to cover salaried employees and other types of workers not covered under existing law.

The law also requires time spent expressing breast milk must be considered hours worked if the employee is also working.  It also extends the requirement to provide reasonable break time from one year to two years after birth.

Additionally, the new law requires employee notice to the employer that it is not in compliance and a ten-calendar day cure period before the employee can make a claim.

The new law also provides certain limitations and exemptions from these requirements for air carriers.

Several provisions of the $1.7 trillion, 4,400-page Omnibus spending bill passed by Congress and expected to be signed by the President, are additional employment protections for pregnant women.  Today we cover the Pregnant Workers Fairness Act (“PWFA” or “Act”) that requires covered employers to provide reasonable accommodations to women with limitations caused by pregnancy, childbirth, or related medical conditions.  Next week we will cover a second change provided for in the bill, the PUMP for Nursing Mother’s Act.

PREGNANT WORKERS FAIRNESS ACT

The PWFA requires employers with 15 or more employees to provide reasonable accommodation to qualified employees for the known limitations related to pregnancy, childbirth or related medical conditions.  The Act also creates five new unlawful employment practices.

Unlawful Employment Practices

The Act identifies five new unlawful employment practices including:

  1. Failing to make reasonable accommodation to the known limitations related to pregnancy, childbirth and related medical conditions of a qualified employee, unless the employer can demonstrate that the accommodation would impose an undue hardship on the operation of the business;
  2. Requiring a qualified employee affected by pregnancy, childbirth, or related medical conditions to accept an accommodation other than any reasonable accommodation arrived at through an interactive process;
  3. Denying employment opportunities to a qualified employee if the denial is based on the need to make reasonable accommodations to the known limitations related to pregnancy, childbirth, or related medical conditions of the employee;
  4. Requiring a qualified employee to take leave, whether paid or unpaid, if another reasonable accommodation can be provided to the known limitations related to pregnancy, childbirth, or related medical conditions of the qualified employee; and
  5. Taking adverse action in terms, conditions, or privileges of employment against a qualified employee on account of the employee requesting or using a reasonable accommodation to the known limitations related to pregnancy, childbirth, or related medical conditions.

Definitions

The law defines several terms new to Title VII.  For example, a “qualified employee” is an employee or applicant who, with or without reasonable accommodation, can perform the essential functions of the position.  An individual is considered qualified even if the inability to perform the essential functions is for a temporary period, can be performed in the near future and the inability to perform the essential function can be reasonably accommodated.  The terms “reasonable accommodation” and “undue hardship” have the same meaning as used in the Americans with Disabilities Act (ADA).

“Known limitations” mean the physical or mental conditions related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions that the employee, or her representative, has communicated to the employer and the condition need not meet the definition of a disability under the ADA.

Employer’s Defense

Like the ADA, the Act affords a defense to a claim of unlawful discrimination where the employer demonstrates good faith efforts, in consultation with the employee with known pregnancy related limitations, to identify and make reasonable accommodation that provides the employee with an equally effective opportunity and does not cause undue hardship on the operation of the employer.

Remedies

The remedies of the Act are the same available to a plaintiff under Title VII which include recovery of damages, attorney’s fees and costs and injunctive relief.

The Takeaway

The PWFA will require employers to treat temporary restrictions caused by pregnancy, childbirth and related medical conditions like disabilities under the ADA.  This will require employers to engage in an interactive process that designed to identify and provide reasonable accommodation to those restrictions and only treat involuntary leave of absence as an accommodation of last resort.  Documenting those efforts, just like with the ADA, will be key in the employer being able to establish its defense that it engaged in good faith efforts to identify and make reasonable accommodations.

You can access the Act here.

 

Yesterday, I was on a flight for a business trip and was writing a post about a few Artificial Intelligence applications I’ve been playing around with.  But before I could publish my post, I was reminded that you have to get up pretty early in the morning to beat Daniel Schwartz on a blog topic (and I was on Mountain time, so Dan already had a two-hour head start).  Yesterday, Dan was also thinking about AI and employment law when he wrote about the development of artificial intelligence tools in the employment law context and asked ChatGPT to write an employment law poem.

I didn’t ask ChatGPT to write an employment law poem, but I did ask it to “Write an article that compares and contrasts employee versus independent contractor status using the economic realities test as applied by the Fifth Circuit Court of Appeals and lists the advantages and disadvantages to workers of the classification.”

Here is what the AI provided:

One common question that arises in the world of work is the difference between employee and independent contractor status. In the United States, the Fifth Circuit Court of Appeals uses the economic realities test to determine whether a worker should be classified as an employee or independent contractor.

The economic realities test considers several factors to determine a worker’s status, including the degree of control the employer has over the worker, the worker’s opportunity for profit or loss, the degree of skill required for the work, and the permanency of the working relationship. Based on these factors, a worker may be classified as an employee if they are subject to the control and direction of the employer, while an independent contractor is typically in business for themselves and has more control over how they perform their work.

There are advantages and disadvantages to both employee and independent contractor status. For employees, the main advantage is the protection provided by employment laws, such as minimum wage and overtime laws, as well as the ability to access employee benefits such as health insurance and retirement plans. Independent contractors, on the other hand, have more flexibility and control over their work, but may not have access to the same protections and benefits as employees.

In conclusion, the economic realities test, as applied by the Fifth Circuit Court of Appeals, is used to determine whether a worker should be classified as an employee or independent contractor. Both employee and independent contractor status have their own advantages and disadvantages, and the right choice for a worker will depend on their individual circumstances and goals.

If you know anything about employee/contractor misclassification, that’s not a bad, high-level overview albeit without any legal citations.  And I started to wonder, how is a teacher, a court or a client supposed to know whether the work product turned in was written by the student or attorney or was merely drafted using AI assistance?  And, who owns the work product of the AI generated material (although that is probably answered in the Terms of Service we all review so carefully).

Next, I asked a different AI application to draw me a picture of an owl dressed like a trial lawyer with a briefcase.  DALL-E, an app that uses artificial intelligence to render an image based only on a textual description, drew me several variations to choose from.  Here is one of those variations which were all very good.


It is amazing what humans have trained computers to do. And while I probably won’t see AI displacing all aspects of legal services, there will certainly be opportunities to make some parts of legal services more efficient.  I’ve long been suspicious of legal tools that use artificial learning to review large data sets for litigation document production despite their speed and economic advantages over traditional human document review.  However, experiments with these AI tools cause me to be more open-minded in the future.  Lawyers beware, the robots are coming.

President Biden recently signed the Speak Out Act, the latest in a set of bills focusing on workplace sexual harassment and sexual assault. According to the legislative findings of the Act, 81% of women and 43% of men have experienced some form of sexual harassment or sexual assault throughout their lifetime, one in three women has faced sexual harassment in the workplace during her career but an estimated 87–94% of those who experience sexual harassment never file a formal complaint. Sexual harassment in the workplace has been identified as forcing many women to leave their occupation or industry or pass up opportunities for advancement.

A key to combating this issue is ensuring that victims, and anyone in the workforce that may become one, have a voice and are not prevented from using it. Congress identified nondisclosure and nondisparagement agreements as tools that have been used to silence victims of sexual assault and sexual harassment and targeted those agreements with the Speak Out Act. Under the Act, no nondisclosure clause or nondisparagement clause agreed to before a sexual harassment or sexual assault dispute arises shall be judicially enforceable in instances in which conduct is alleged to have violated the law. While most nondisclosure agreements signed at the outset of employment focus on proprietary information and trade secrets, some agreements reach legal disputes, misconduct, and other aspects of the employer-employee relationship. Upon passage, the Speak Out Act will nullify these agreements that are signed prior to a sexual harassment or sexual assault dispute.

So, what are the implications for employers? Employers should revisit their employment agreements and handbooks to ensure that they comply with the Speak Out Act when it is passed into law. Any nondisclosure or nondisparagement agreements surrounding sexual harassment or sexual assault disputes will be unenforceable if entered before disputes arise, so their inclusion in employment paperwork would be ineffectual. The scope of the Speak Out Act is limited, so there should be a limited impact on an employer’s conduct, but it is better to address this new law ahead of time than to operate believing you are more protected than the law allows. Another thing to be mindful of is that the Speak Out Act does not impact the applicability of any state law governing these agreements so long as the state law is at least as restrictive as the Speak Out Act, so check your state laws to ensure you are compliant with them as well.  Texas has neither adopted nor otherwise enacted any laws regarding predispute nondisclosure or nondisparagement agreements in the workplace sexual harassment or sexual assault space.

This legislation follows numerous changes to the law governing workplace sexual harassment and assault cases. For more discussion surrounding the 2017 tax law limiting the deductibility of sexual harassment and abuse settlements containing nondisclosure provisions, click here. For more discussion of the 2022 amendment to the Federal Arbitration Act precluding mandatory, predispute arbitration agreements of sexual assault and harassment disputes, click here.

Today, the Supreme Court of Texas established the limits for discovery of cell phone data like text messages, e-mails and other data in a tort case arising from a specific incident.  Because cell phone data is often sought in employment cases, the case is significant for employment cases arising over single incidents.

In In re Kuraray America, Inc., the plaintiffs in a mass-tort chemical release and fire case sought, and the trial court ordered production of, the cell phone records for the Kuraray employees working in the control room and the supervisors supervising those employees for a period of six weeks and four months prior to the incident.  The plaintiffs’ basis for seeking the records was an attempt to show that at the time of the incident, employees were distracted by cell phone activity or that they had a history or pattern of using cell phones in the control room when they should be monitoring the plant’s systems.

In conditionally granting the mandamus relief, the Supreme Court established the standard for the discovery of cell phone records in a case tied to a specific event (i.e., the plant fire).  The Court held that:

The party seeking it must allege or provide some evidence of cell-phone use by the person whose data is sought at a time when it could have been a contributing cause of the incident on which the claim is based. If the party seeking the discovery satisfies this initial burden, the trial court may order production of cell-phone data, provided its temporal scope is tailored to encompass only the period in which cell-phone use could have contributed to the incident.  In other words, a trial court may not, at this stage, order production of a person’s cell-phone data for a time at which his use of a cell phone could not have been a contributing cause of the incident. Only if this initial production indicates that cell-phone use could have contributed to the incident may a trial court consider whether additional discovery regarding cell-phone use beyond that timeframe may be relevant.

Because the trial court ordered production of cell phone data in the weeks and months leading up to the event without a showing that the employee’s use of his cell phone on the date of the incident could have been a contributing cause of the chemical release, it abused its discretion.

The Court noted that examination of the data for the date of the incident showed that three of the five employees had no cell phone usage on the date of the incident and therefore no additional discovery of those employees’ data was relevant.  For the two employees that had limited cell phone usage, before the granting broader temporal discovery on the data, the plaintiffs “bore the burden to show, and the trial court had an obligation to consider, whether the use –its nature, duration and frequency in the given context –could support a finding that cell-phone use contributed to the release.”  The Court went on to hold that, “in the absence of such a showing, it was an abuse of discretion to order production of the employees’ earlier cell-phone data.”

The Court’s per curiam opinion is here.

The U.S. Supreme Court is considering the future viability of affirmative action plans in the academic sphere and could make significant changes to the legality of race-based admissions policies in colleges and universities.  Like academia, over the last twenty years, many companies have adopted diversity and affirmative action programs (even where not required by law) to increase the representation of traditionally underrepresented employees in certain positions.

The prevalence of these business practices, coupled with the scrutiny federal courts implore onto programs that discriminate against some employees (even if that discrimination is in an effort to either equalize racial or gender imbalance or to remedy the effects of past discrimination), will likely lead to an increase in race-based and gender-based challenges to employer diversity programs—as demonstrated by a recent case out of the U.S. District Court for the Southern District of Texas. Thus, while the goals of these actions may be laudable, they may also result in discrimination claims filed by non-minority employees.

In Burak Powers v. Broken Hill Proprietary (USA), Inc., Houston-based federal judge Lee Rosenthal aptly framed the issue:

This lawsuit raises a question that many companies are struggling to answer: What steps can a company take to encourage the promotion of women and unrepresented minorities to managerial positions without discriminating against men or individuals outside the protected class seeking the same opportunities?

As it turns out, there is good reason why companies are struggling to answer this question—because there is no clear answer.

Burak Powers was hired by BHP, an Australian-based company, in 2013. By most accounts, he was an outstanding employee. He was promoted to managerial positions having multiple direct reports. He was nominated as a BHP Future Emerging Leader, and HR named him a high potential talent.

In 2016, the company launched its Inclusion and Diversity Initiative. The goals of the initiative included both increasing the presentation of women in the global workplace by 3% and reaching an overall gender-balanced global workforce by 2025. The company furthered the initiative by creating Key Performance Indicators, that tied manager performance reviews and bonuses to the targets in the Inclusion and Diversity Initiative and the representation of women in the workforce.

Despite being a high performer, Powers’ position was eliminated during the company’s global restructuring effort. When he attempted to apply for other positions within the company, he was routinely passed over for women (despite his contention that he was more qualified and a better candidate for the role). Moreover, the company converted an Australia-based role similar to the one Powers held into a global opportunity, which a woman from Houston, Texas ultimately filled. As a result of his termination and other subsequent actions taken by BHP, Powers brought a sex discrimination, post-termination retaliation and breach of contract suit against BHP.

Judge Rosenthal denied BHP’s motion for summary judgment on Powers’ claims, noting that Powers had direct proof of sex discrimination (i.e., the Inclusion and Diversity Initiative) and that he had substantial circumstantial proof of sex discrimination. Judge Rosenthal also determined that a fact issue existed on Powers’ post-termination retaliation and breach of contract claims.

Power’s spotlights several features of diversity initiatives that could prove problematic and give rise to a discrimination claim by an employee that is not the intended beneficiary of the initiates. These include: (1) tying bonuses (either the amount or eligibility to receive) to achievements of gender or minority-based targets; (2) measuring manager performance or setting KPIs to the achievement of gender or minority-based targets; (3) pre-determining that a position will be filled by a candidate of a particular gender or race without regard to the qualifications of the applicants; (4) altering a position to accommodate for one gender or minority-based candidate while not altering the position for other applicants of different genders or races; (5) instructing leadership to utilize the company’s restructuring as a tool to accelerate its progress towards gender or minority-based targets and (6) exiting employees based, in whole or in part, on their gender or minority status and not upon the employee qualifications.

Inclusiveness and diversity in the workforce can be important goals of a business.  However, when implementing and utilizing these programs, companies must be mindful of the anti-discrimination laws and ensure that remedying underrepresentation of certain racial, gender or ethnic does not result in discriminating against other employees.

A full copy of Judge Rosenthal’s opinion is available here.

On November 16, 2022, the Department of Labor announced that it had recovered $1.2 million in back wages from four different home health care agencies on behalf of 599 home healthcare workers.  One of the responsible employers, Guardian Angels Care Services, Inc., owed $160,477 in overtime back wages for misclassifying its employees as independent contractors.  Earlier in 2022, a federal court in Virginia ordered a medical staffing agency to pay $7.2 million in back wages to over one thousand aides and nurses it misclassified as contractors rather than employees.

There is a growing trend with health care practices and staffing agencies serving the health care field to classify their workers like certified nurse assistants, licensed vocational nurses and registered nurses as independent contractors rather than as employees. Some of the entities are employing Gig-economy practices to allow health care workers to select their shifts on mobile phone-based applications.

It’s easy to see why companies are engaging in this practice.  According to Businessweek magazine, companies save an average of 30 percent on hiring an independent contractor versus an employee because of the tax, overtime, insurance and benefits savings.   If a worker is properly classified as a contractor rather than an employee, the company does not 1) pay overtime to the employee; 2) provide health insurance and benefits; 3) not providing workers’ compensation insurance coverage; 4) provide retirement or other savings benefits; 5) withhold the worker’s federal and state tax obligation nor pay the company’s portion of those federal and state tax obligations which are now borne 100% by the worker; and 6) pay unemployment taxes so the worker is eligible for unemployment.  Moreover, the company working with the contractor cannot be sued by the contractor for discrimination, harassment or retaliation, and the company may not even provide liability insurance for the health care worker.  However, a worker misclassified as an independent contractor (rather than an employee) is likely not receiving overtime compensation, is not getting the benefit of the employer paying 1/2 of the employee’s tax obligations on the employee’s behalf, is not being provided health or retirement benefits and is not contributing to their social security fund to fund the employee’s social security benefits.  The contractor also cannot receive workers’ compensation benefits for injuries sustained in the course and scope of employment, they are not eligible for unemployment benefits and are not afforded the protections of the civil rights laws that protect employees from unlawful discrimination, harassment and retaliation.  And because many African American women are more widely represented in healthcare than other groups, the misclassification disproportionately affects persons of color.

The cost savings of using properly classified independent contractors versus employees is significant, and there are substantial risks and liabilities to the company that misclassifies those workers.  The consequences of misclassification are significant as evidenced by the DOL’s enforcement actions mentioned above.  The consequences are also significant to the government’s collection of tax revenue.  The Government Accountability Office has estimated that the government loses $2.72B annually in unpaid social security, unemployment insurance and income taxes as a result misclassification of contractors by companies.

The test for determining whether the worker is properly classified as a contractor versus an employee is the economic reality test.  The economic realities test asks whether the entity functions as the individual’s employer or if the worker is really in business for herself. The following nonexclusive factors are often examined by the Courts in this analysis (1) the employer’s right to control the work; (2) the worker’s opportunity to influence his profit or loss depending on his managerial skill; (3) the worker’s investment in equipment and materials; (4) whether the service requires special skills; and (5) the degree of permanence of the working relationship.  Because it is a fact intensive rather than a bright line test, it is difficult for an entity to have much certainty in the classification of its workers; particularly where the workers are involved in core business operations like health care service.   Mistakes can be very costly for employers found to have engaged in misclassification.

If you have any questions about how to properly classify workers, you should contact legal counsel.

 

 

 

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.