Last week I had an opportunity to speak to 55 executives and HR professionals about the Dallas Paid Sick Leave Ordinance.  Thank you Gus Bates Insurance and Investments for putting on a great Lunch and Learn event.

Effective August 1, 2019, and being enforced beginning April 1, 2020, employers with employees performing at least 80 hours of work in a twelve month period in the City of Dallas need to start getting ready for the City to begin enforcing the ordinance.  You can read a summary of the new ordinance’s high points here.

If you want a copy of my slide presentation, shoot me an e-mail at Russell.Cawyer@KellyHart.com

In a compromise between the City of San Antonio and a coalition of local San Antonio employers that sued to block the implementation of the new paid sick leave ordinance, the City agreed to postpone the effective date of the ordinance from August 1, 2019 until December 1, 2019.  The state district judge hearing the case entered an order staying implementation of the ordinance through December 1, 2019.  The additional time may allow the appeal of a similar law passed by the the City of Austin, and struck down by a state district judge, to reach a conclusion.  The outcome of the Austin the case will have a profound effect on whether San Antonio’s ordinance is lawful as the two statutes are nearly identical.

Meanwhile, a similar paid sick leave law passed by Dallas, Texas is still scheduled to take effect on August 1, 2019. Litigation is imminent and it remains unclear if Dallas’ law will take effect August 1, 2019.

Barring legal action and an injunction, employers that have an employee performing at least 80 hours per year in San Antonio should be prepared to comply with City’s new paid sick leave ordinance beginning on August 1, 2019.  Here are the highlights of the law:

  • Requires employers with 15 or more employees to provide 1 hour of paid sick leave accrual for every 30 hours worked up to 64 hours. Employers with less than 15 employees must provide accrual for up to 48 hours of paid sick leave per year.  Employers with no more than five employees have until August 1, 2021 to comply with the law.
  • Accruals start on commencement of employment but employers can preclude use until employee has worked at least 60 days if the employer establishes that the employee’s term of employment is at least one year.
  • Employees can use the paid leave for the employee’s physical or mental illness, physical injury, preventative or health care or health condition; the employee’s need to care for their family member’s physical or mental illness, physical injury, preventative medical or health care or health condition; or the family members need to seek medical attention, seek relocation, obtain services of a victim services organization, or participate in legal or court ordered action related to an incident of victimization from domestic abuse, sexual assault, or stalking involving the employee or the employee’s family member.
  • Covered leave is paid out at what employee would have earned if employee had worked scheduled work time, exclusive of any overtime, premium, tips or commission, but no less than the state minimum wage.
  • Employers may adopt reasonable verification procedures to confirm the employee’s request for earned sick time meets the requirements of this section if the employee request to use earned paid sick time for more than three consecutive work days. Employers may not adopt verification procedures that would require an employee to explain the nature of the domestic abuse, sexual assault, stalking, illness, injury, health condition or other health need when making the request for earned paid sick time.
  • Accrued but unused paid sick leave rolls over to the following calendar year unless the employer provides employees with 64 or more hours at the beginning of each calendar year.
  • Employers must provide employees at least monthly with written or electronic statement showing employees’ available, earned paid sick time.
  • Employer handbooks must include a notice of employee rights and remedies under the statute in the handbook.
  • If the Director makes signage available on its website, Employers must post signs describing the requirements of the chapter in conspicuous places in English and other languages determined by the Director.
  • Employers using something other than a calendar year for sick pay accrual must notify employees in writing of the policy at the commencement of employment or its effective date –whichever is later.
  • Records must be kept for same period of times as payroll records under the FLSA regulations –(i.e., three years)
  • Employers may not require employees to find replacements to work the employee’s shift but the ordinance does not prohibit an employer from allowing an employee to voluntarily exchange hours or voluntarily trade shifts with another employee or prohibit an employer from establishing incentives for employees to voluntarily exchange hours or voluntarily trade shifts. The law also does not prohibit employee donation programs to donate available earned paid sick time to another employee.
  • The law prohibits retaliation against employees for requesting of using earned paid sick time.
  • Complaints are investigated by the Director who is required to commence a prompt and full investigation to determine if there is sufficient cause to believe a violation has occurred. Complaints must be filed within two years of the date of the violation. The Director has the authority to issue subpoenas in the course of the investigation.
  • Violations may result in a civil fine up to $500. No penalties will be assessed until after April 1, 2020 except for retaliation. Employer may appeal any civil penalty assessed under the chapter.
  • The law does not create a private right of action nor establish a criminal offense.
  • There is no requirement accrued but unused sick pay be paid on termination of employment. However, if an employee is rehired in 6 months or less, the employer must grant the employee’s prior sick leave balance.

Employers that have employees who perform 80 hours of work in the City of San Antonio should begin to make preparations for the effective date of the ordinance.

Employers with 100 or more employees and certain federal contractors have been required to submit EEO-1 reports, identifying the number of employees working in each job category by race, sex and ethnicity, since 1996. In 2016, under the Obama administration, the EEOC proposed revisions to the information required to be reported each year on the EEO-1 form to include pay and hours data, known as Component 2 data.

Then, in 2017, the Trump administration’s Office of Management and Budget issued a memorandum staying the new rules from going into effect. This stay was vacated by a U.S. District Court for the District of Columbia on March 4, 2019, The Court ruled that covered employers must submit Component 2 data for both 2017 and 2018 calendar years by September 30, 2019.

EEO-1 Component 1 Overview

To recap, for Component 1 reporting, covered employers must report the number of employees employed in each of 9 job categories by race, sex and ethnicity. There are 9 job categories:

1.1. Executive/Senior Level Officials and Managers
1. First/Mid Level Official and Managers
2. Professionals
3. Technicians
4. Sales Workers
5. Administrative Support Workers
6. Craft Workers
7. Operatives
8. Laborers and Helpers
9. Service Workers

Employers must pull required data from one pay period in either October, November or December of the survey year. Employers choose which month to use from those three. Employers must report both full and part time employee data.

Covered employers that have multiple establishments (or locations) need to file separate reports for: (a) the headquarter location; (b) each business site (or establishment) that has 50 or more employees; (c) all business sites with fewer than 50 employees on one consolidated report with all of those locations’ data; and (d) a consolidated report that includes data for all employees of the company.

Employers must give employees the opportunity to self-identify their race/ethnicity for the EEO-1 report. Only if employees choose not to self-identify can employers use other employment records or observations to provide the required information.

New EEO-1 Component 2

The new EEO-1 Component 2 requires employers to additionally report hours worked and pay data, broken down by race, sex, and ethnicity and by EEO-1 job category (the same 9 job categories use for Component 1) for 2017 and 2018 payrolls by September 30, 2019.

Hours Data

Hours data should be reported by the employer in the aggregate for all employees in each pay band and job category by race, ethnicity and sex.  For non-exempt employees, employers must report hours worked as recorded for FLSA purposes during the reporting year, including overtime. For exempt employees, employers may choose to report actual hours worked, if the employer maintains accurate records of hours worked OR may report proxy hours. If the employer chooses to use proxy hours for exempt employees, they should report 40 hours per week x the number of weeks worked in the year for full time employees and 20 hours per week x the number of weeks worked in a year for part-time employees. Weeks worked for exempt workers = the number of weeks paid in a year.

Obviously, once hours data is determined for both exempt and non-exempt employees within each job category, pay band, ethnicity and sex, these numbers are aggregated together for reporting.

Wage Data

Employers must report pay data for employees within the following 12 pay bands, and broken down by job category, race, ethnicity and sex:

1. $19,239 and under
2. $19,240-$24,439
3. $24,440-$30,679
4. $30,680-$38,999
5. $39,000-$49,919
6. $49,920-$62,919
7. $62,920-$80,079
8. $80,080-$101,919
9. $101,920-$128,959
10. $128,960-$163,799
11. $163,800-$207,999
12. $208,000 and over

The reporting for each EEO-1 job category will look similar to the chart below. Once employers determine pay data, they should report the number of employees within each pay band and category:

For determining which wages to report, employers should report the wages found in Box 1 on each employee’s W-2 form. This includes wages, tips, overtime, bonuses, fringe benefits, employer contributions to HSA’s or other compensation. It does not include elective deferrals such as employee contributions to a 401(k) plan.

The City of Dallas passed a paid sick leave ordinance requiring private employers to provide up to 64 hours of paid sick leave to employees working in the City. Barring court intervention, the law will take effect August 1, 2019.  Here are the highlights of the ordinance:

  • Requires employers with 15 or more employees to provide 1 hour of paid sick leave accrual for every 30 hours worked up to 64 hours. Employers with less than 15 employees must provide accrual for up to 48 hours of paid sick leave per year.
  • Accruals start on commencement of employment but employer can preclude use until employee has worked at least 60 days.
  • Employees can use the paid leave for the employee’s physical or mental illness, physical injury, preventative or health care or health condition; the employee’s need to care for their family member’s physical or mental illness, physical injury, preventative medical or health care or health condition; or the family members need to seek medical attention, seek relocation, obtain services of a victim services organization, or participate in legal or court ordered action related to an incident of victimization from domestic abuse, sexual assault, or stalking involving the employee or the employee’s family member.
  • Covered leave is paid out at what employee would have earned if employee had worked scheduled work time, exclusive of any overtime, premium, tips or commission, but no less than the state minimum wage.
  • Employers may adopt reasonable verification procedures to confirm the employee’s request for earned sick time meets the requirements of this section if the employee request to use earned paid sick time for more than three consecutive work days. Employers may not adopt verification procedures that would require an employee to explain the nature of the domestic abuse, sexual assault, stalking, illness, injury, health condition or other health need when making the request for earned paid sick time.
  • Accrued but unused paid sick leave rolls over to the following calendar year unless the employer provides employees with 64 or more hours at the beginning of each calendar year.
  • Employers must provide employees at least monthly with written or electronic statement showing employees’ available, earned paid sick time.
  • Employer handbooks must include a notice of employee rights and remedies under the statute in the handbook.
  • Employers must post signs describing the requirements of the chapter in conspicuous places in English and other languages determined by the Director.
  • Employers using something other than a calendar year for sick pay accrual must notify employees in writing of the policy at the commencement of employment or its effective date –whichever is later.
  • Records must be kept for same period of times as payroll records under the FLSA regulations –(i.e., three years)
  • Employers may not require employees to find replacements to work the employee’s shift but the ordinance does not prohibit an employer from allowing an employee to voluntarily exchange hours or voluntarily trade shifts with another employee or prohibit an employer from establishing incentives for employees to voluntarily exchange hours or voluntarily trade shifts. The law also does not prohibit employee donation programs to donate available earned paid sick time to another employee.
  • The law prohibits retaliation against employees for requesting of using earned paid sick time.
  • Complaints are investigated by the Director who is required to commence a prompt and full investigation to determine if there is sufficient cause to believe a violation has occurred. Complaints must be filed within two years of the date of the violation. The Director has the authority to issue subpoenas in the course of the investigation.
  • Violations may result in a civil fine up to $500. No penalties will be assessed until after April 1, 2020 except for retaliation. Employer may appeal any civil penalty assessed under the chapter.
  • The law does not create a private right of action nor establish a criminal offense.
  • There is no requirement accrued but unused sick pay be paid on termination of employment. However, if an employee is rehired in 6 months or less, the employer must grant the employee’s prior sick leave balance.

Employers with employees performing services in the City of Dallas should begin to make preparations now for the effective date of the ordinance.

The Texas Legislature ended its session last week without passing a bill that preempts municipalities from passing laws requiring private employers to provide paid sick leave to employees. Consequently, employers in Dallas and San Antonio must prepare for the implementation of the local paid sick leave laws that take effect August 1, 2019.

Dallas, San Antonio and Austin each passed local ordinances requiring private employers in the cities to provide paid sick leave for employees. The Austin ordinance is currently enjoined by court order and is on appeal to the Texas Supreme Court. It was anticipated that the Texas legislature would pass a law prohibiting municipalities from passing these kinds of laws.  However, the bills to do so never made it out of the House committees.

Barring court action in Dallas or Bexar County, or an order of the Texas Supreme Court striking down the Austin ordinance (The Dallas and San Antonio laws are modeled after the Austin ordinance), the Dallas and San Antonio’s laws take effect August 1, 2019. In the coming days I will summarize the requirements of the Dallas and San Antonio laws here.

In a Texas unemployment benefit proceeding, the employee usually bears the burden of establishing an entitlement to benefits when the employee resigns.  The employer bears the burden to show disqualification for benefits when the employer initiates the termination.  However, when an employee offers more than two weeks’ notice of intent to resign and the employer accepts the notice of resignation immediately, the employer then shoulders the burden to show that when it accepts the resignation, the employer had reasons to terminate the employee at that time that disqualified the employee from unemployment benefits (i.e., misconduct connected with the work).

Consequently, if an employee offers a company more than two weeks’ notice of intent to resign and the employer desires to avoid being charged for the employee’s unemployment benefits, the employer has three options to avoid having the resignation treated as a termination.  First, the employer can accept the resignation immediately and pay wages in lieu of notice (i.e., paying wages for the entire notice period), thereby rendering the action a resignation.  Second, the employer can wait until only two weeks remain in the notice period and then accept the resignation.  Most unemployment hearing examiners will treat this as a resignation placing the burden on the departing employee to show eligibility for unemployment.  Finally, the employer could allow the employee to work out the full  notice period.  In each of these cases, a notice of resignation greater than two weeks is likely to still be treated as a resignation rather than a discharge.

Texas courts routinely look to and take guidance from federal law when evaluating claims under the Texas Commission on Human Rights Act. The TCHRA is the Texas state law that prohibits employment discrimination on the basis of disability (and other status) and requires employers to provide reasonable accommodation to qualified individuals with disabilities.

Continue Reading Texas Court Holds Request for Reasonable Accommodation is not Protected Activity

Earlier this year, the U.S. Supreme Court invalidated the arbitration agreements that an interstate trucking company had with its independent contractor drivers. That case arose in the context of a class action wage and hour lawsuit brought by a group of independent contractor interstate truck drivers alleging that they were not properly paid.  The company attempted the force the claim into arbitration based on the arbitration agreements it had with its contractors.  The Court held that the Federal Arbitration Act’s (FAA) provision excluding “contracts of employment with seaman, railroad employees or any other class of workers engaged in foreign or interstate commerce” precluded enforcement of the arbitration agreement thereby subjecting the carrier to the wage and hour collective action in court.

The New Prime decision is a good reminder for transportation companies utilizing arbitration agreements that their arbitration programs should consider whether to implement and apply state law rather than the FAA so as to avoid a similar result as in New Prime or to have state law act as a substitute in the event the FAA is inapplicable.

A copy of New Prime v. Oliveira is available here.

With the passage of the 2018 Farm Bill, Congress legalized much, but not all, hemp products containing less than .3 percent THC concentration.  Cannabidiol, or CBD oil, is a hemp product that is touted as having many positive medical and health benefits.  CBD oil may or may not contain THC.  The media reports surrounding the legalization in the Farm Bill and intense marketing efforts of CBD oil distributors has caused some Texas employees to believe that CBD oil and other hemp products are now legal in Texas.  That belief may cause employees to suffer adverse employment consequences and even potential criminal prosecution.

Continue Reading Texas Employees Beware: CBD Oil Remains Illegal in Texas