Both federal and Texas law prohibit discrimination against employees for participating in various types of jury service. Imagine an employer defending itself from the accusation that it terminated an employee because of her jury service and then looking across the courtroom to see the individuals who will most likely decide the merits of its case –a jury of citizens who, if employed, are away from their jobs due to jury service. An employer based in the Fifth Circuit was almost in this situation.

In a case of first impression in the Fifth Circuit, the Court of Appeals held that a “But-for” causation standard applied to claims arising under the federal Jury System Improvement Act –the federal law that prohibits discrimination against employees for participating in the jury service for any U.S. court. Texas has a similar provision that prohibits discrimination against employees for participating in state court jury service.

In Rogers v. Bromac Title Services, LLC, Wanda Rogers was a closing officer for Bromac. She was summoned and eventually selected to serve as a grand juror. Her grand jury service ran from to August 19, 2011, through February 19, 2012. That service was ultimately extended to August 19, 2012.

Rogers was terminated on April 20, 2012. The stated reason for Roger’s termination was two comments she made to a group of co-workers deemed inappropriate by the employer –the second of which was made two days before the termination. Rogers sued and the employer moved for summary judgment. The trial court, utilizing the McDonnell-Douglas burden shifting analysis applied a but-for causation standard and dismissed Rogers’ claims because she could not create a fact issue on whether she would have been terminated but-for her jury service and also concluded that she created no factual issue on the veracity of Bromac’s legitimate non-discriminatory reason for its decision.

On appeal, the Fifth Circuit Court of Appeals affirmed the trial court’s ruling. The appellate court held that in evaluating claims arising under the JSIA, the plaintiff must prove that she would not have been subjected to the adverse employment action but-for her federal jury service. The Court also agreed with the trial court that Rogers’ evidence was insufficient to create a genuine issue of material fact that Bromac’s stated reasons were false or pretextual.

You can download a copy of Rogers v. Bromac Title Services, LLC here.

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There have been two employment cases decided by the Texas Supreme Court in the last several months. However, because I expect them to have little impact on Texas jurisprudence, I have not been compelled to write about them before today. However, in the interest of keeping the blog up-to-date with each of the employment cases from the Supreme Court of Texas, I will briefly cover them.

In City of Houston v. Proler, the Court held that a firefighter who had the inability to overcome his fear of running into a burning building was not disabled. Because of the unique set of facts and that the case involved the pre-2007 version of the Texas Commission on Human Rights Act and pre-amendment Americans with Disabilities Act, I do not think this case will get much use in Texas employment law disputes.

Similarly, in Sawyer v. E. I. du Pont de Nemours & Co., the Court held that a plaintiff-employee cannot make out a fraud claim when the misrepresentation on which the fraud claim was based was the promise of continued at-will employment. The Court reasoned that since no employee has any right to continued at-will employment, no employee could justifiably rely on a representation or promise of continued at-will employment and therefore could have no viable fraud claim arising from such misrepresentation. The Court also held that employees covered by a collective bargaining agreement that contains exclusive remedies for wrongful termination were limited to those exclusive remedies and could not bring common law claims for fraud. Most Texas employees are not covered by collective bargaining agreement and of those that are, I doubt most of their CBA contain exclusive remedies for wrongful termination claims. For that reason, I expect this case to have little impact on Texas law.

You can access each of these opinions here:

City of Houston v. Proler

Sawyer v. E. I. du Pont de Nemours & Co.

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One thing often overlooked in conducting workplace investigations is reporting back to the complaining party at the end of the investigation. I have seen many cases where the employer conducted a thorough investigation and took prompt remediation action but never communicated to the employee that it had done so.  From the employee’s perspective, he or she may believe that the employer took no action.

While detailed findings and conclusions do not necessarily need to be communicated, it is important to report back on the general conclusions of the investigation. This is important particularly where the allegations are not corroborated or the remedial action taken by the employer may not be readily apparent to the complaining party. Getting back to the reporting party at the end of the investigation lets the complainant know that the complaint was acknowledged and investigated thereby preventing the party from later complaining that the employer ignored the complaint or took no action to investigate the allegations. It also allows the employer the opportunity to remind the employee about the employer’s policies against retaliation and reminding the employee to bring any future complaints or concerns to the employer’s attention.

So, remember to send an investigation closure letter or some other communication to the reporting party of the general conclusions of the investigation at the end of employer’s prompt and thorough investigation.

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In an opinion likely effecting many Texas employers, the Fifth Circuit Court of Appeals held that an employer’s confidentiality policy that prohibited employees from disclosing all company financial and personnel information without a carve-out for employee wage information violated the National Labor Relations Act.

Flex Frac, a non-union employer, required all of its employees to sign the following confidentiality policy:

Confidential Information

 

Employees deal with and have access to information that must stay within the Organization. Confidential Information includes, but is not limited to, information that is related to: our customers, suppliers, distributors; Silver Eagle Logistics LLC organization management and marketing processes, plans and ideas, processes and plans, our financial information, including costs, prices; current and future business plans, our computer and software systems and processes; personnel information and documents, and our logos, and art work. No employee is permitted to share this Confidential Information outside the organization, or to remove or make copies of any Silver Eagle Logistics LLC records, reports or documents in any form, without prior management approval. Disclosure of Confidential Information could lead to termination, as well as other possible legal action.

 

Following her termination, a former employee filed a charge with the NLRB and the Acting General Counsel for the Board issued a complaint charging the employer with maintaining a rule prohibiting employees from discussing employee wages.  The ALJ found that while there was no specific prohibition against employees discussing their wages with one another, the policy might be reasonably interpreted as restricting employees’ right to discuss their wages with one another and therefore violated Section 7 of the NLRA.

On appeal to the federal court of appeals, the court restated the long-standing, well-established rule that "a workforce rule that forbids the discussion of confidential wage information between employees" violates the NLRA.  In analyzing the confidentiality provision at issue, the court concluded that it could be reasonably construed to prohibit employee discussion of wages both inside and outside the company and ordered that the NLRB’s order prohibiting Flex Frac from promulgating and maintaining its confidentiality policy be enforced. 

There are likely many Texas employers that have confidentiality policies that cover and protect company financial and personnel information but do not explicitly carve out employee wage information from the definition of that protected information.  Employers with simiar confidentiality provisions may want to consider revising those policies to explicitly exclude employee wages from coming within the scope of their policies so they are not subject to a charge that they have committed an unfair labor practice.

You can download the full copy of Flex Frac v. NLRB here.

I first wrote about the NLRB’s decision that pre-dispute arbitration agreements waiving the right to assert claims as part of a class action violated federal labor law in January 2012 (post).  Back then, I thought it was prudent for employers to wait for the result of the the inevitable appeal that would follow before revising or throwing out their arbitration agreements containing class action waivers. 

The Fifth Circuit Court of Appeals held recently that D.R. Horton’s pre-dispute arbitration agreement requiring the builder and its employees to arbitrate disputes on an individual, non-class action basis did not violate the NLRA.  The Court affirmed, however, the Board decision to the extent it required D.R. Horton to clarify to its employees that the arbitration agreements did not waive their right to file unfair labor practice charges with the National Labor Relations Board.

The takeaway from the Court’s decision is that arbitration agreements with class action waivers are enforceable under the Federal Arbitration Act and employers may still consider these kinds of agreements as part of their alternative dispute resolution programs.  However, employers should clarify in those agreement that they do not eliminate the employee’s right to file or pursue unfair labor practice charges with the National Labor Relations Board. 

You can access a complete copy of the opinion here. 

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In settlement negotiations and trial of FLSA overtime misclassification cases, there is usually a disagreement between the parties as to how the unpaid overtime should be calculated. Attorneys representing employees typically want overtime calculated using a 1.5 times the regular rate of pay for each overtime hour that was worked. Attorneys representing companies typically want to utilize the “fluctuating workweek” method of calculating overtime. A recent case from the Fifth Circuit Court of Appeals confirms that the proper method of calculating unpaid overtime in a misclassification case if the use of the fluctuating workweek method.

In Ransom v. M. Patel Enterprises, Inc., fifteen executive managers of an Austin-based party retail store secured a jury verdict that they had been misclassified as exempt employees and where therefore entitled to unpaid overtime. After the issue of liability was resolved, the presiding judge assumed responsibility for calculating the damages. The judge determined that the fixed-salary paid to the employees was for a set 55 hour workweek. The judge then divided the number of total hours in the workweek by the employees’ salary to determine a regular rate of pay. Concluding that the hours worked in excess of forty per workweek were uncompensated, rather than compensated at straight time, the judge then multiple one and a half times the regular rate of pay times all hours worked in excess of forty per workweek. The Court of Appeals held that that this improperly inflated the amount of overtime the trial judge awarded.

Rather, the court of appeals held that the trial judge should have divided the employee’s weekly salary by the number of total hours worked in a the workweek to determine the regular rate of pay. Having determined the regular rate of pay, and applying the fluctuating workweek method of calculation, the Court explained that the trial judge should have then applied ½ of the regular rate of pay to only the overtime hours (i.e., the hours in excess of forty per week) to arrive at the unpaid overtime premium the misclassified employees were entitled to receive.

The takeaway from this case is that when a misclassified employee works fluctuating hours during the workweek, the amount of unpaid overtime should be calculated using the fluctuating workweek method of calculation. This decision has the effect of reversing the published opinion in In re EZ Pawn LP Fair Labor Standards Act Litig., 633 F.Supp. 2d 395 (W.D. Tex. 2008) that plaintiff lawyers frequently cite to support a more generous overtime calculation. You can review download the full opinion in Ransom v. M. Patel Enterprises, Inc. here.

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I have written several posts outlining the unique requirements that employers must include to create a valid noncompeteition agreement with a physician. (posts here and here). A recent case from the Beaumont Court of Appeals holds that even when a physician noncompetition agreement contains a reasonable buy-out clause, the employer may still have to arbitrate the reasonableness of that buy-out amount at the time the physician seeks to be released from the noncompetition agreement.

In Sadler Clinic Association, P.A. v. Hart, the Clinic sued a former physician seeking to enforce a covenant not to compete precluding the physician from competing within a twenty-two mile radius of the Clinic for eighteen months. The noncompetition agreement contained a buy-out clause that allowed the physician to buy-out of the noncompete for a set amount, but did not provide for arbitration in the event a party believed the buy-out amount was unreasonable. The trial court declared the noncompetition agreement unenforceable stating that it lacked a reasonable buy-out amount. On appeal, however, the appellate court held that the agreement contained a buy-out clause and an amount the physician could pay to be released from the restrictive covenant. Moreover, the court of appeals further allowed that if either party believed the buy-out amount to be unreasonable, the party could elect to have the buy-out amount determined by an arbitrator (despite the absence of any contractual provision authorizing arbitration over a previously agreed to buy-out amount). In essence, the court substituted an arbitration mechanism for a party to revisit the reasonableness of the buy-out amount that the parties themselves had not negotiated and to which they never agreed.

The impact of the Sadler decision is that a physicians and their employers have little certainty that the contractually agreed buy-out clauses they negotiated and agreed to will be honored and not challenged through arbitration by the party who disagrees with the amount at the end of the relationship and at the time of competition. Moreover, parties are not incentivized to agree to a reasonable buy-out amount at the inception of the relationship in order to avoid the time and expense of an arbitration at the end of the relationship when either party can have the negotiated buy-out amount challenged through arbitration.

You can read the full opinion in Sadler Clinic Assoc., P.A. v. Hart here.

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In a recent opinion of the Fifth Circuit Court of Appeals, the federal appellate court held that a former employee terminated after making internal complaints to his employer about possible securities violations, but who never made complaints to the S.E.C., was not a whistleblower under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ("Dodd Frank"). 

Khaled Asadi was hired by G.E. Energy ("G.E.") in 2006 as its Iraq Country Executive.  In 2010, Iraqi officials reported to Asadi a concern that a new female G.E. employee had been hired to gain favor with an Iraqi official in negotiating a joint venture agreement.  Believing that this conduct could potentially violate the Foreign Corrupt Practices Act, Asadi reported this information to his supervisor and other G.E. officials.  Thereafter, Asadi received a negative performance review and was terminated within one year following the report.

Asadi sued claiming that his termination violated the Dodd Frank whistleblower-protection provisions.  G.E. moved to dismiss on the grounds that because his complaint was made internally to G.E., Asadi did not qualify as a Dodd Frank Whistleblower and arguing that the Dodd Frank Act did not apply extraterritoriality.  The trial court concluded that the Dodd Frank Act did not apply to whistle-blowing activity outside the U.S. and dismissed the complaint without addressing whether Asadi was a whistleblower.

On appeal, the Fifth Circuit examined the provisions of the Dodd Frank Act to determine whether Asadi was entitled to whistleblower protections.  First, the court analyzed the statute’s definition of the term "whistleblower" and concluded that the statute mandates a report to the SEC to be included within the term’s definition.  Second, the court rejected an SEC regulatory definition of "whistleblower" concluding that the Commission’s definition improperly expanded the Congressional definition of a whistleblower and was therefore entitled to no deference.  Because Asadi had made no report of securities violations to the SEC, he was not a Dodd Frank whistleblower.  Stated another way, the court held that the "whistleblower-protection provision creates a private right of action only for individuals who provide information relating to a violation of the securities laws to the SEC."

The takeaway from Asadi is that an employee in Texas, Louisiana and Mississippi seeking the whistleblower protections of the Dodd Frank Act (and the incentive programs) must make a report of alleged securities violations directly to the SEC.

You download a complete copy of Asadi v. G.E. Energy (U.S.A), LLC  here.

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Employers conduct variety of background checks on employees and applicants depending on the level of hire and the duties performed. Of the background checks that employers conduct, which category of employees should receive the most rigorous background checks –the CEO, Comptroller, Treasurer? All worthy choices. 

As the Edward Snowden NSA leak teaches, those who have broad access to a company’s computer systems can do significant damage. Consequently, the most rigorous background check should be conducted on the IT Director. The IT Director has virtually unfettered, unchecked access to your company files, data, e-mails and electronic information. The IT Director can access computer passwords, create back door access to computer systems that may be active even after the IT Director leaves the firm and can review all of the company’s confidential, proprietary and trade secret information. Most employers are not even equipped to monitor and oversee the activities of the IT Director because that is what the IT Director is hired to do.

For these reasons, I believe the IT director should receive the most in-depth, rigorous background check prior to being hired for employment. Who do you think should receive the most rigorous background check?

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Google is shutting down Google Reader on July 1, 2013.  If you subscribe to this blog (and others) by way of Google Reader’s RSS feed, you need to take steps to preserve your subscriptions prior to next week.  At a minimum, you must export your subscriptions to your computer before July 1, 2013, so they will be available to you after Google Reader’s last gasp.  LifeHacker tells you how to export those subscriptions here.

I’ve converted to The Old Reader (TOR).  TOR is a free RSS reader that has the look and feel of Google Reader.  TOR also allows you to import your existing RSS subscriptions from Google Reader and upload them to its platform by following the instructions after registering for the free service (so long as you do so before July 1st).

Kevin O’Keefe, at Lexblog has identified a few other RSS reader that you might want to experiment with:

If you’re looking for a direct replacement to Google Reader—another RSS reader, plain and simple—Feedly is a good fit. Feedly is available in a website interface; as a browser application for Chrome, Safari and Firefox; and for mobile apps on both the iOS and Android platforms.

If you’re open to trying something a bit different, mobile-only magazine-style apps Flipboard and Zite are excellent for discovering new content. Both are available for iOS and Android, for your smartphone and tablet.

Flipboard and Zite each offer a personalized magazine based on your RSS feeds and social networks. I’ve described Zite as a Pandora for content because it gets smarter regarding your content preferences over time.

Finally, if finding a new RSS reader and exporting your subscriptions sounds too intimidating, you can continue to receive new posts from the Texas Employment Law Update by registering for an e-mail subscription.  Just go to the site and subscribe to the feed by e-mail.  If you have any questions about subscribing by e-mail or want me to add you to the e-mail subscription list, send me a note in the comments.

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