Last week the U.S. Supreme Court ended its 2011-12 Term.  Here are summaries of the labor and employment cases decided this term.

Hosanna-Taylor Evangelical Lutheran Church and School v. EEOC, (No. 10-553) (holding that teacher at religious school qualified as a "minister" within the meaning of the ministerial exception to Title VII and therefore First Amendment barred her employment discrimination claim against her religious employer).

Christopher v. SmithKiline Beecham Corp., (No. 11-204) (holding that pharmaceutical representatives who visit physician offices to encourage physicians to prescribe employer’s products qualify as outside sales representatives rejecting DOL interpretation of its own regulation).

Coleman v. Court of Appeals for Maryland (No. 10-1016) (holding that the self-care provisions of the FMLA are inapplicable to state governmental employers under the 11th Amendment and sovereign immunity).

Knox v. Service Employees International Union, Local 100, (No. 10-1121) (holding that First Amendment does not allow public-sector union to impose special assessment on members without Hudson notice and affirmative consent of union members being assessed). 

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When is an employee’s claim for injuries against its nonsubscriber employer occurring in the course and scope of employment a health care liability claim?  According to the Supreme Court of Texas, when the employer is a health care provider. 

In Texas West Oaks Hosp. v. Williams, Williams was employed by a nonsubscriber psychiatric hospital.  Williams was injured by a patient of the facility.  Williams sued his employer for the injuries sustained in course and scope of his employment under theories of negligent training, supervision, risk-mitigation, and safety.  The employer moved to dismiss arguing that Williams’ claims were health care liability claims under the Texas Medical Liability Act.  The TMLA requires a plaintiff filing a health care liability claim to submit an expert report within 120 days of filing suit to maintain the action.  Williams did not file an expert report and the trial court dismissed the claim. The Supreme Court of Texas granted review to determine whether the claims of an employee against his employer, both of whom are health care providers, alleging injuries from the negligence of the employer, constitute health care liability claims subject to the procedures of the TMLA. 

In holding that the employee’s claims for injuries against his nonsubcriber employer were health care claims rather than claims for on-the-job injuries, the court was more persuaded by the character of the plaintiff’s claims (i.e., lack of safety) than the relationship between the parties (i.e., employer/employee).  Because the lawsuit alleged that the hospital defendant deviated from accepted standards of safety, the court concluded that the TMLA reached Williams’ claims even though he was not receiving any treatment nor was he a patient when the injuries occurred. Because the TMLA governed the employee’s claims against the hospital, the employee had to satisfy all of the procedural requirements of the TMLA in bringing his claim.  Because he failed to timely file an expert report, his claim was barred.  Three justices joined in a dissent that argued the majority went to far in transforming an employee’s personal injury claims against its nonsubscriber employer into health care liability claims.  Full copies of the majority and dissenting opinions can be linked to below.  

Majority opinion here.

Dissenting opinion here. 

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The Texas Supreme Court held that an age discrimination plaintiff is never entitled to an inference of age discrimination at the prima facie case where the employee’s replacement is older than plaintiff-employee. In that situation, the plaintiff must establish a prima facie case through direct evidence of age discrimination.

Gloria Garcia (age 48) was terminated from her school district employment after twenty-seven years.  She was replaced by a female employee of the same national origin and who was three years older than Garcia.  She sued alleging that she was retaliated against for participating in protected activities and discriminated against based on her race, national origin, age and gender. The trial court dismissed Garcia’s claims because she could not prove she was replaced by an employee outside her protected categories.  

The Texas Supreme Court granted review in the case to determine whether a plaintiff can establish a prima facie case of age discrimination when undisputed evidence shows that the plaintiff was replaced by someone older.   The answer, according to the court, was plainly, no.

The reasoning for the Supreme Court’s holding is best summarized in considering the following passage referring the U.S. Supreme Court’s opinion in O’Conner v. Consol. Coin Caterers Corp., (which held that an age discrimination plaintiff needs to show replacement by someone not insubstantially younger than the plaintiff:

If an inference of discrimination cannot be draw from replacement by an ‘insignificantly younger’ worker, then one certainly cannot be draw from replacement by an older worker.  That is the situation confronting us today, and that is the reason we hold that a plaintiff in Garcia’s situation cannot make out a prima facie case of age discrimination.

The holding may have limited applicability in non-replacement cases (i.e., reduction in force cases where the plaintiff is not replaced); cases where the employee alleges that work rules were applied more harshly to older workers than younger workers; or cases where the plaintiff has direct evidence of age discrimination.  Notwithstanding the opinion’s limitations, in age discrimination cases where the replacement employee is older than the plaintiff, and in the absence of direct evidence, Garcia strongly supports the dismissal of the age discrimination claim.

The result of this holding is that plaintiffs wanting to assert age discrimination claims in cases where the plaintiff was replaced by an older worker will likely elect to pursue those claims in federal court under the Age Discrimination in Employment Act rather than under state law.  Moreover, Garcia gives support to the argument that other TCHRA discrimination claims should be dismissed where the plaintiff is replaced by someone in the the same protected category.  The trial court dismissed Garcia’s race, sex and national origin claims on that basis and Garcia did not appeal those conclusions.  The logic of the Court’s opinion that an absence of discrimination exists when the plaintiff’s replacement is older than the plaintiff seems to apply equally to other kinds of discrimination claims where the replacement employee is also a member of the plaintiff’s protected category. Time will tell if the courts of appeals will apply this argument outside the age discrimination context.

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Majority opinion in Mission Consol. Indep. Sch. Dist.

Dissenting opinion in Mission Consol. Indep. Sch. Dist.

Prevailing plaintiffs in employment discrimination, harassment and retaliation cases can recover attorney’s fees their attorney’s incur in prosecuting those claims.  In many instances the attorney’s fees sought can exceed the monetary relief the plaintiff obtains and can act as a serious impediment to prompt settlement. 

Since most of these cases are done on a contingency fee basis (i.e., the employee’s attorney only gets paid if the plaintiff recovers either through settlement or trial), there is wide disparity of the type of records plaintiff employment lawyers keep.  The Supreme Court of Texas recently clarified that in order for an attorney to recover fees under the lodestar method, at a minimum, the attorney must present documentation showing: 1) the services performed; 2) the identity of the person performing the services; 3) the amount of time spent by the person; 4) the hourly rate of the person; 5) when the services were performed; and 6) how much time was spent performing the services.

This result will not seem shocking or surprising practitioners used to federal court practice where lodestar fees and contemporaneous time records are the norm; however, it is good to see the Texas Supreme Court formally adopt this practice for proceedings under state law in state court.

A copy of the Court’s opinion can be downloaded here.

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Yesterday, I had the privilege of speaking to the Texas Society of CPAs, Tarrant County Chapter, Nonprofit Study Group on current employment law issues affecting nonprofit organizations. Some of the topics we covered included the use of volunteers and unpaid interns by nonprofit organizations, proper classification of independent contractors and employees, and employment policies that are useful for nonprofits to adopt.  

 

If you were unable to attend the luncheon, but are interested in reviewing the materials, they are available to download here.  

 

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Last week I had the privilege of volunteering at my firm’s pro bono legal clinic at the U.S. Department of Veterans Affairs.  The clinic provides pro bono legal services and advice to our country’s veterans.  The veterans who served have a wide variety of need for legal advice –primarily in the area of family law, estate and probate, employment and criminal law.  It was my privilege to be able to assist five different veterans and their families who collectively served in every conflict since the Korean war.

While most employers cannot provide pro bono legal services to our veterans, one of their biggest needs is employment opportunities.  The U.S. Department of Veterans Affairs provides a variety of services that will assist employers in hiring and retaining veterans such vocational rehabilitation and Vetsuccess programs.  Similarly, the 501(c)(3) Hire Heros USA assists in creating job opportunities for US military transitioning service members, veterans, and their spouses through personalized employment training and corporate engagement.

When you have hiring needs, consider whether you can make that opportunity available to a military veteran.  Those men and women served our country and each of us should do what we can to thank them for their service. 

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A federal judge in the Northern District of Texas has enjoined the National Mediation Board from conducting a union representation election involving the passenger-service employees of a major air carrier and the Communication Workers of America. You can read the TRO here.

 

 

I like to emphasize the importance that an employee’s personnel file accurately reflect the employee’s performance in reality.   When an employer’s defense of a personnel action is based on an employee’s poor performance, fact finders expect that the poor performance to be documented in the employee’s file.  Fact finders do not expect, without plausible explanation, to see satisfactory performance reviews and absence of written discipline or corrective action.

This brings me to today’s topic –accurately describing an employee’s increase in pay.  I frequently see increases in employee pay described in the personnel file as "merit increases" when they are not, in fact, merit increases.  When all employees receive a pay raise (e.g., 2.5 percent) and the increase is not based on an individual’s performance, it is my opinion that the increase should be characterized as a cost of living increase; longevity increase or something other than a "merit increase".   Merit increases suggest that the individual employee is performing at least satisfactorily.  If that is the case and wage rate increases are based on satisfactory (or even good to outstanding) performance then there is nothing inconsistent with characterizing the increase as being based on merit. 

It is difficult to explain to a jury or judge that an employee’s performance was poor when the employer has characterized the employee’s annual increases in pay as "merit increases".  It further undermines the employer’s position, potentially creating factual issues for the jury to resolve, when the employee lacks any written discipline, has satisfactory performance reviews, and shares in annual increases in pay (along with all other employees) that are characterized as merit increases.  Remember, the personnel file should reflect reality.  If an employee’s performance needs improvement, perhaps his or her wage increase should not suggest that it was earned based on merit.

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In an election year, immigration issues remain front page news.  With continuing scrutiny on immigration and employment, prudent employers should periodically conduct internal I-9 self-audits to ensure that its I-9 paperwork is complete and accurate.  In this morning’s guest post, Chris Taylor, immigration lawyer and publisher of the Texas Immigration Law Blog, gives us his tips for conducting effective I-9 self-audits.

Tips For Conducting An Internal Audit Of Form I-9s

From my experience, an employer can never be fully prepared for an I-9 audit; however, a prudent employer can have a firm grasp on what the government will likely find by conducting an internal audit.  A trained eye can spot deficiencies very quickly but having a process can make things much easier for the untrained eye.  I have outlined three basic steps and identified common mistakes for the prudent employer to consider when conducting an internal audit.

FIRST: GATHER THE I-9s AND DISPOSE OF ANY YOU DO NOT NEED

The most common mistake that could lead an agent to raise an unnecessary eyebrow is finding a mistake on an I-9 that was not needed in the first place.  The golden rule is that "less is more" meaning that an employer should not keep I-9s that it does not absolutely have to.  While the employer may mean well and want to show that it has nothing to hide, an unnecessary I-9 has no upside but can cause tremendous harm by making agents overly suspicious.

The employer’s first mistake is retaining an I-9 for an employee who is exempt from the I-9 requirement.  This usually occurs when the employer has long-term employees.  Employees hired on or before November 6, 1986, are exempt from the I-9 requirement, unless that employee left the company and was rehired after November 6, 1986.

Another common mistake is keeping an I-9 past the mandatory time.  If an employee is terminated, an employer must keep the I-9 for three years after the employee was hired or one year after termination, whichever is later.  An employer should not retain the I-9 of a terminated employee when it can lawfully dispose of it.  Why unnecessarily raise eyebrows?  An employer also does not need I-9s for independent contractors.

SECOND: VERIFY THAT EACH I-9 IS COMPLIANT

This means looking at each I-9 to ensure that it complies with immigration regulations.  Begin with Section 1 and ensure that everything is filled in correctly and legibly.  The most common mistake that I have seen is a missing employee signature.  Make sure that the employee has signed Section 1.  Another common mistake is that the employee forgets to check his or her status, e.g. U.S. citizen or legal permanent resident. 

The only caveat for Section 1 is that there is technically no requirement that an employee fill in his social security number.  That part is optional, unless the employer participates in the E-verify program.  Requiring an employee to give their social security number could be deemed unlawful discrimination.  If the employer is not using E-verify, it can disregard the social security number portion.  If an employee does provide his social security number, the employer should check for any blatant errors.

A common mistake in Section 2 is that the employer fails to put all the necessary information in the verification section, such as expiration dates.  An employer should make sure that the employee lists the expiration date for drivers’ licenses and other identification.  Another common mistake is when the employer’s representative fails to sign Section 2.  Employers should sign the form and put the employer’s entire address.  It takes time, but better safe then sorry.

Another tip for Section 2, employers are not required to make photocopies of the documents presented unless it is using E-verify.  If the employer is not using E-verify, then it should not keep copies of the documents.  If an employer retains copies the supporting documents it must then do so for all of its employees.  Plus, the employer’s only requirement is to  see if the documents are fraudulent on their face.  Why keep a copy of these documents so that a highly trained agent can second guess your work?  Don’t keep copies. 

THIRD: KEEP THE I-9s STORED IN A SAFE PLACE

ICE takes storage very seriously.  Improper storage of I-9’s can result in fines.  For instance, Abercrombie & Fitch paid a fine of over $1 million due to technology problems related to its electronic storage system.  A&F didn’t have any undocumented aliens or problems with the actual documents themselves; merely problems with the technology related to the storage of those documents.  Thus, if you want to use an electronic system make sure you have a reputable program.  If you use the old-fashioned paper system, make sure that the I-9s are stored separate from the other employee files and that you know who has access to them.  The name of the game is "limited access."

A self audit can be a time-consuming process, and I truly suggest speaking to an attorney that is familiar with the immigration regulations.  However, if you choose to conduct your own internal audit, these tips should help you get started.

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Common law employment claims have certain advantages for plaintiffs over statutory discrimination, harassment or retaliation claims.  For starters, there are no administrative prerequisites to exhaust and the kinds of damages one can seek for common law claims can sometimes be be more "creative" than the straight forward, capped damages recoverable under statutory claims.  In my nonscientific, anecdotal study, I’ve seen an uptick in the number of common law claims for fraud filed by "at-will" employees filed recently.  

The Fifth Circuit recently published a new case that will be useful in defending all fraud claims filed by at-will employees.  In Sawyer v. EI DuPont de Nemours & Co., the Court held that under Texas law, at-will employees cannot maintain a claim for fraud based on a loss of employment.  The holding in Sawyer is not necessarily breaking new law; however, it summarizes its holding succinctly in a single paragraph making it easy to present to a trial court considering special exceptions or a summary judgment motion on an at-will employee’s fraud claim.

You can access the complete opinion here.

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