Last month Washington and Colorado voters passed state laws authorizing the legalization of recreational marijuana use. Given that there are pockets of the United States where the medical or recreational use of marijuana is legal or tolerated under state law, some Texas employers have asked whether it has any effect on their drug testing or substance abuse policies.

For example, an employee testing positive for marijuana may attempt to justify the positive test explaining that he used marijuana while on a weekend trip to a state that has decriminalized marijuana.   The short answer is that these laws have little, if any, effect on employers drug testing and substance abuse policies for their Texas operations and employees. First, Marijuana possession is still unlawful under Texas and federal law. Federal law still criminalizes the possession if this controlled substance even in states that have legalized it. Second, some states have laws that prohibit employers from taking adverse action against employees who engage in lawful off-duty conduct. Texas has no such law.

 

Consequently, if an Texas employer would take disciplinary action against an employee testing positive for past marijuana usage, recent legislation in other states place no limits on the employer continued ability to discipline employees for that usage even if it was legal where the employee used the substance. 

 

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In a per curiam opinion, the U.S. Supreme Court held that under the Federal Arbitration Act arbitrators, not courts,must determine the enforceability of covenants not to compete when the parties are subject to agreements that call for the mandatory arbitration of disputes.

In Nitro-Lift Technologies v. Howard, two employees left their employment with Nitro-Lift and began working for a competitor. During their employment with Nitro-Lift, the employees parties to employment agreements containing covenants not to compete and provisions requiring the mandatory arbitration of all disputes between the parties. Nitro-Lift served a demand for arbitration on the employees and they responding by commencing a declaratory judgment action in state court seeking to declare the noncompetition provisions unenforceable under state law.

The trial court dismissed the complaint based on the existence of a valid arbitration provision. The Oklahoma Supreme Court, however, issued a show cause order requesting briefing on why the restrictive statutory provisions of Oklahoma state law on the enforcement of noncompete agreements did not dispose of the issues. The Oklahoma high court determined that it had adequate and independent state law grounds to consider the enforceability of the agreement notwithstanding the arbitration provision, and held the agreement unenforceable under Oklahoma law.

On appeal to the U.S. Supreme Court, the Court reversed the Oklahoma Supreme Court. The Court explained that when an arbitration provision is governed by the Federal Arbitration Act, the court has jurisdiction to consider challenges to the arbitration provision, but it is the arbitrator’s jurisdiction to consider all other challenges to the validity of the contract (if the arbitration provision is valid). Because the Oklahoma court assumed the role of the arbitrator in determining that the noncompetition agreements at issue violated state law, the U.S. Supreme Court vacated the decision and remanded the case for further proceedings consistent with its opinion.

You can download a complete copy of Nitro-Lift Technologies v. Howard here.

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Now that the election is over and most of the Affordable Care Act (aka Obamacare) is likely to take effect, some employer will want to revisit the new obligations and requirements of the Act.  On November 30, 2012, our firm is presenting a complimentary webinar titled "Health Care Reform:  What Lays Ahead with the Affordable Care Act?"  My partner, Henry Robinson, will cover the following topics likely to be of interest to any employer that will be covered by the Act:

  • Can my company avoid the employer mandate, and if so, how?
  • What will and will not actually subject my company to employer mandate penalties and how can they be minimized?
  • Can my company expect to avoid all penalties or should we learn to accept them as a cost of doing business?
  • Why will the individual mandate impact employers?
  • Does my company have any discretion that might help minimize health care costs?
  • Will there be any advantage my company can derive from an Exchange?
  • Are Tax Credits worth the effort?
  • How can my company turn Health Care Reform into a positive?
  • Should my company ignore the Cadillac tax until 2018?

You can register for this complimentary webinar here.

Follow me on Twitter @RussellCawyer.

Last term the U.S. Supreme Court confirmed the existence of the ministerial exception to many of the federal employment discrimination laws. This week, the Fifth Circuit took up the application of the ministerial exception for the first time since the Supreme Court’s opinion in Hosanna-Tabor and applied the exception broadly.

Philip Cannata was the Music Director at St. John Nuemann Catholic Church in Austin, Texas. He oversaw the Music Department’s budget and expenditures, managed and maintained the sound systems at the church, music room and sanctuary and rehearsed with the choir and accompanied them on the piano during Mass while running the soundboard. After eleven years of service, his employment was terminated. He filed a lawsuit asserting age and disability discrimination claims under federal law. The church moved to dismiss the case and eventually moved for summary judgment arguing that the ministerial exception and the First Amendment’s establishment clause barred Cannata’s suit. The district court agreed with the church and dismissed the claims.  

The Fifth Circuit Court of Appeals affirmed the trial court’s judgment for the church. Of particular importance to the Court’s conclusion was the evidence demonstrating the importance and integral part that music plays in a Catholic Mass. The uncontroverted evidence established that “the person who leads the must during [a Catholic] Mass is an integral part of Mass and a lay liturgical minister actively participating in the sacrament of the Eucharist’”. Based on this evidence, the Court held that there was no genuine issue of fact that “Cannata played an integral role in the celebration of Mass and that by playing the piano during services, Cannata further the mission of the church and helped convey its message to congregants.” As such, Cannata’s claims fell within the ministerial exception and were barred.

This case is significant in demonstrating the potential breadth of the ministerial exception. Cannata was not ordained, did not conduct Mass, deliver a sermon or write the music or lyrics for the ceremony. He had no religious education, training or experience to be considered a minister and had no direct interaction with the parishioners. He worked only in the evenings and on weekends and all of the liturgical responsibilities belonging to his predecessor were reassigned to another individual precisely because he lacked the requisite education, training and experience. Cannata contended that he did nothing more than sit at the piano facing away from the congregation and play music.

You can download a complete copy of Cannata v. Catholic Diocese of Austin here.

Follow me on Twitter @RussellCawyer.

National elections are approaching and some Texas employees may be entitled to paid time off to vote in that election.  The Texas Election Code makes it a Class C misdemeanor for an employer to refuse to allow an employee to be absent from work on election day for purpose of attending the polls to vote.

An employer is not, however, required to allow time off to vote if the polls are open on election day for voting for two consecutive hours outside of the employee’s working hours. For example, if you have an employee that regularly works 8:30 a.m. to 5:30 p.m. with a one-hour lunch break, an employer may have to give that employee time off from work on election day to attend to the polls and vote. In Texas, the election polls are generally open from 7:00 a.m. until 7:00 p.m.  

Because the term "penalty" means a loss or reduction in wages, an employer should provide paid time off for the employee to attend the polls to vote if the polls are not open on election day for at least two consecutive hours outside the employee’s working hours.

Employers who employee employees that might otherwise be entitled to time off to vote can take a several steps to avoid work interruptions and payment obligation for otherwise nonworking time on election day.

First, encourage employees to vote early. In Texas, all registered voters can vote during early voting and do not have to meet any special circumstances or eligibility requirements to vote early. Second, employers can rearrange work schedules on election day so that employees have two consecutive hours off while the polls are open (e.g., reschedule the employee to work 8:00 a.m. to 5:00 p.m. on election day).  Ideally, this should be done and communicated in advance so that employees have adequate time to arrange their schedule on election day to vote.

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My colleague, Alison Rowe, is what I affectionately call a horse lawyer.  Actually, Alison practices Equine Law (which broadly includes a diverse area of transactional and litigation issues involving farm, ranch, agricultural and real and personal property issues) and is recognized as a "go to"  authority on this subject area in Texas.  She also happens to publish the award winning Equine Law Blog.  This week Alison agreed to guest post an article on a legal subject she and I have been debating for weeks and that is the breadth of the immunity that may be afforded certain farm and ranch employers in the state of Texas.  Without further introduction, here is Alison’s take on thescope of employer immunity under the Texas Farm Animal Limitation of Liability Act.

By Alison Rowe

If you have been sued by a worker whose injuries resulted from inherent risks associated with farm animals, you may be able to successfully assert the defense of immunity from liability under Chapter 87 of the Texas Civil Practice & Remedies Code (“Chapter 87”). 

Passed in 1995, Chapter 87 (formerly entitled, “Texas Equine Limitation of Liability Act”) originally only afforded immunity in suits arising from equine activities. Chapter 87 (now entitled “Texas Farm Animal Limitation of Liability Act”) was amended in 2011 to, among other things, expand its applicability to suits involving all farm animals. 

The Supreme Court of Texas interpreted the pre-amendment version of Chapter 87 for the first time in Loftin v. Lee (Tex. 2011). The Court construed Chapter 87 broadly, stating,

The Equine Act is a comprehensive limitation of liability for equine activities of all kinds…The Equine Act applies to all ‘participants’”. [Emphasis supplied].

Though the Supreme Court has never directly addressed the issue of whether Chapter 87 applies to suits brought by employees or independent contractors, two courts of appeals have weighed in in favor of employers, at least where the injured plaintiff was found to be an independent contractor. Here is a summary of the three appellate cases that have addressed the issue:

1) Johnson v. Smith, 88 S.W.3d 729 (Tex. App. – Corpus Christi 2002, no pet.)– The Corpus Christi court of appeals acknowledged that an independent contractor in charge of breeding and handling stallions was a participant under Chapter 87. As such, the employer in that case was found to have appropriately raised the defense of immunity under Chapter 87. Johnson was not appealed to the Supreme Court of Texas. For more information, see this post and this post.

2) Dodge v. Durdin, 187 S.W.3d 523 (Tex. App. – Houston [1st] 2005, no pet.)– The 1st Court of Appeals held that Chapter 87 does not apply to an employer – employee relationship. Citing its review of legislative intent, together with the duties assigned to Texas employers under the Texas Workers’ Compensation Act, the 1st Court of Appeals held that, “the Equine Act applies to consumers and not to employees and that Dodge is therefore not a ‘participant’ under the Equine Act.” Dodge was not appealed to the Supreme Court of Texas. For more information, see this post and this post.

3) Young v. McKim, No. 14-11-00376-CV, 2012 WL 1951099 (Tex. App.—Houston [14th] May 31, 2012, pet. denied)–The Fourteenth Court of Appeals determined that Young was an independent contractor, not an employee, and affirmed the employer’s summary judgment under Chapter 87. The court did not reach the issue of whether Chapter 87 would have applied had Young been an employee. Citing the Supreme Court’s broad interpretation of Chapter 87 in Loftin, the Fourteenth Court disagreed with the discussion in Dodge suggesting that Chapter 87 only applied to “tourists and other consumers of equine activities.” Young was appealed to the Supreme Court of Texas, but the petition for review was recently denied. More information can be found here and here.

Until the Supreme Court or another appellate court takes up a case specifically involving an employer-employee relationship, plaintiff’s lawyers continue to argue that a nonsubscriber employer should not be afforded the benefits of Chapter 87, or any other defense not specifically enumerated in the Workers’ Compensation Act. In other words, plaintiff’s lawyers will continue to cite Dodge in cases involving employees, in an effort to get around Chapter 87. 

I personally disagree with the reasoning in Dodge, and so might the Supreme Court. In a recent tort case involving a hospital employee, the Supreme Court was willing to allow a tort-reform statute to override Workers’ Compensation Act’s limitations on non-subscriber defenses. For more information, see this post. 

The Legislature has also expressly exempted certain farm or ranch workers from the provisions of Workers’ Compensation Act altogether, as long as the employer has a payroll of less than $25,000 or fewer than three employees. See Section 406.091 of the Texas Labor Code. This issue seems to have been completely ignored in Dodge.

Texas farm and ranch employers should be sure to raise Chapter 87 as a defense in farm animal-related injury cases. However, until the Supreme Court takes up this issue, employers should not rely completely upon Chapter 87 to provide immunity from suits brought by employees or independent contractors.

Farms and ranches can take several steps to minimize liability risk in this area, including 1) procuring insurance to cover employee or independent contractor injuries; 2) having workers sign liability releases; 3) posting the applicable warning signs referenced in Chapter 87; and 4) including the applicable Chapter 87 warning language in all written agreements with workers.

Follow Alison @alisonmrowe

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I wrote back in April 2010 that I thought the Houston Court of Appeals decision in Prarie View A&M v. Chatha applying the federal Lilly Ledbetter Fair Pay Act (“Ledbetter Act”) to claims arising under the Texas Commission on Human Rights Act (TCHRA) was wrongly decided. Last month the Supreme Court of Texas agreed with me and reversed the decision.

In Prarie View A&M v. Chatha, Dr. Chatha began her employment with the University in 1987 as an associate professor. In 2003, she applied for a promotion to full professor. Initially denied the promotion, Dr. Chatha was eventually promoted to in 2004. At that time, she complained that her salary was inequitable but was told that there were no funds available for a salary adjustment. Two years later, Dr. Chatha filed a charge of discrimination with the EEOC and Texas Workforce Commission alleging race and nationality-based pay discrimination. Under state law, a charge of discrimination must be filed within 180 days of the discriminatory act’s occurrence. At issue was when Dr. Chatha’s pay discrimination claim “occurred”. Did the claim occur when she was initially advised of the decision in which case her claim was untimely or was each subsequent paycheck she received a separate, new act of discrimination rendering her charge of discrimination timely? 

The Houston Court of Appeals held that Dr. Chatha’s claim was timely reasoning that the federal Ledbetter Act applied to pay discrimination claims filed under state law because one of the general provisions of the TCHRA was to execute the policies of Title VII including its amendments and two federal district courts opinions had applied the Ledbetter Act to state law claims.

The Supreme Court of Texas reversed the court of appeals. The Court noted that while the federal and state laws are largely analogous and have historically be interpreted consistently, nothing required it to interpret state law identically with federal law. Additionally, the Court found no support in the plain language of the statute or its legislative history that the Texas Legislature intended amendments to Title VII be automatically incorporated into the TCHRA. Consequently, the Supreme Court held that the that Ledbetter Act did not apply to TCHRA claims and that pay discrimination claims brought under state law must generally be brought within 180 days of the date the claimant is advised of the compensation decision.

This is a more pyric victory for Texas employers than it is a meaningful one. Texas plaintiffs who desire to bring a pay discrimination claim over a decision that is older than 180 days still have a recourse. They can file those claims under federal law and avail themselves of the Ledbetter Act’s more forgiving definition of when a claim “occurs”. 

A full copy of Prarie View A&M v. Chatha is available here.

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With union organization and membership at all time lows in the United States, the National Labor Relations Board is making a effort to stay relevant by pushing an agenda targeted on non-unionized workplaces.  Unfortunately, the Board’s positions, some of which are completely out of touch, may push it into irrelevance.

From its difficult to synthesize interpretation employer social media policies;its position that employer dispute resolution provisions requiring the individual resolution of employee complaints (rather than through collective or class actions) is illegal;  its contention that an employer’s "at-will" employment disclaimer contained in a handbook may be unlawful; and its recent pronouncement that employers requiring employees participating in an internal investigation maintain confidentiality may violate the National Labor Relations Act, the Board is taking controversial and irrational positions on longstanding employer practices (and legal practices in my opinion) to remain relevant.

In my opinion, the NLRB’s positions are becoming so extreme they they begin to test credibility of its analysis and decisions.  Like the boy who cried wolf, if the Board does not become more practical and sensible in its approach to the interpretation of the"protected concerted activity" sections of the Act, federal court’s reviewing those decisions may be unwilling to provide the Board any deference to is opinions thereby pushing the Board further into irrelevance.

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Some of you may be surprised to learn that conventional wisdom was that claims arising under the Fair Labor Standards Act (the federal law requiring the payment of minimum wage and overtime to most employees) cannot be released or waived without court or Department of Labor supervision. I certainly thought that until several years ago when I had to some in-depth research to enforce a settlement agreement releasing FLSA claims an employer entered with an employee. I learned then that the law was nearly as clearly developed nor black and white as I had initially thought.

Because of the uncertainty about the enforceability of the release of FLSA claims, employers wanting to settle threatened or pending FLSA claims have had to consider whether they wanted to seek DOL or court approval of the settlement. I have been told that some local offices of the DOL will not review or supervisor private settlement agreements between litigants and I have seen at least one court that likewise refused to do so. While Texas employers have had some limited judicial authority supporting enforcement of these private settlement agreements when bona fide disputes over wages existed (i.e,. one reported case), it was risky to seek the release of significant FLSA claims without seeking out and obtaining court approval of those settlements. 

A recent case from the Fifth Circuit provides the parties some comfort in recognizing that where there is a bona fide dispute over the hours worked or compensation due, private settlements of FLSA claims do not required DOL or court supervision. 

In Martin, union employees involved in the production of movie filmed in Louisiana filed a grievance with the union claiming that they had not been paid all contracted wages by the employer for the work they performed. The union investigated the employees’ grievance and concluded that it was impossible to determine whether the workers had worked on the days they claimed to work. The company and union negotiated a settlement of the disputed hours and the union entered the agreement on behalf of its members releasing the company for claims related to the disputed hours. The beneficiaries of the settlement received the contracted payments and cashed the checks for the disputed wages. Thereafter, some of the union members sued for additional wages they claimed they were owed. The Fifth Circuit, in a case of first impression, held that where there is a bona fide dispute over the hours worked or compensation owed, private settlement agreements releasing FLSA claims are enforceable and the parties need not seek DOL or court supervision for those releases to be valid.

You can download a copy of the opinion here.

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In another same-sex harassment opinion, the Fifth Circuit reversed a substantial jury verdict in favor of a steel worker who claimed he was subjected to unlawful sexual harassment by his same-sex supervisor.

Woods was employed as an ironworker for the company in 2005. In 2006 he was assigned to work on a crew responsible for repairing a bridge damaged during Hurricane Katrina. Woods’ crew superintendent (Wolfe) subjected him to a number of “raw homophobic epithets and lewd gestures.” For example, the supervisor referred to Woods by name like “faggot” and princess”; approached him from behind while Woods was bent over and simulated sex acts; and exposed himself on more than one occasion. 

While Woods was being investigated for an unrelated work rule violation, he reported the supervisor’s conduct to the supervisor’s boss. During the pendency of the resulting investigation, Woods was sent home without pay for three days (whether as punishment for the work rule violation or to allow the company to find Woods a new job assignment was undetermined). The complaint was investigated, and while the supervisor’s conduct was deemed to be unprofessional, it was not concluded to be unlawful sexual harassment.

When Woods was removed from the bridge maintenance crew and later laid off, he filed a charge with the EEOC. The EEOC ultimately brought suit on Woods’ behalf. The jury awarded Woods $200,000 in compensatory damages and $250,000 in punitive damages which were reduced to the Title VII damage caps.

On appeal, the Court evaluated the circumstances where a plaintiff can make out a same-sex sexual harassment claim based on the theory of sex stereotyping.  Acknowledging the unprofessional, crass and boorish behavior, the Fifth Circuit noted that there was an abundance of evidence that “Wolfe [was] a world-class trash talker and the master of vulgarity in an environment where these characteristics abound.”  Notwithstanding Wolfe’s inappropriate behavior, the Court’s analysis in a same-sex stereotyping harassment case mandates that the plaintiff act in a manner inconsistent with his gender. Of apparent importance to the Court’s decision was the supervisor’s testimony that he did not view the plaintiff as feminine. Moreover, except for the evidence that the plaintiff used Wet Ones in the restroom, there was no evidence that Woods acted in an overtly feminine manner. In contrast, there was evidence that the harasser was an equal opportunity harasser and the workplace was generally and rough and wild environment. As the court observed: 

The record further shows that, although Woods may have been Wolfe’s primary target, he was by no means his only target. Nor was Wolfe the sole offender. To the contrary, misogynistic and homophobic epithets were bandied about routinely among crew members, and the recipients, Woods not excepted, reciprocated with like vulgarity.

While expressly reserving the issue of whether a sex stereotyping theory of same-sex harassment is cognizable in the Fifth Circuit, the Court held that a “plaintiff may not recover based on nonconformance to gender stereotypes unless the plaintiff conforms to nonconformance gender stereotypes.” Because the only evidence that Woods’ failed to conform to masculine stereotypes was his use of Wet Ones, the Fifth Circuit reversed the judgment in favor of the employee.

You can download a full copy of EEOC v. BOH Brothers Construction Company LLC here.

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