Texas is the only state that allows employers to opt-out of the workers’ compensation system.  Nonsubscriber status comes with benefits and disadvantages.  Wal-Mart Stores’ recent announcement that it would opt-out of the Texas workers’ compensation system is significant given that Wal-Mart is one of the largest private employers in the state.  

I invited Steve Bent, the Executive Director of the Texas Association for Responsible Nonsubscribers, to author a guest post on the ramifications of Wal-Mart’s decision.  Here are Steve’s thoughts.  

As one might expect Walmart’s recent decision to operate as a nonsubscriber to workers’ compensation in Texas is drawing a lot of attention. Walmart represents its new program will give the company “an opportunity to provide better care for our associates while also better managing our costs.”  I think Walmart will ultimately determine its own fate in the court of public opinion. 

As we all know the key to nonsubscription is balance. It is no secret that a well designed, well governed nonsubscriber program can reduce workplace injuries and therefore significantly reduce related injury costs. But only those programs that utilize a proactive safety culture focused on injury prevention and quality benefits balance the desire for cost-savings without cost to employee welfare.

As the largest nonsubscriber in Texas and the largest employer in the nation, Walmart’s plan and plan governance will undoubtedly face intense scrutiny. I am hopeful Walmart will choose responsible leadership by building a nonsubscriber program to not only reduce workplace injuries but also offer quality benefits in a manner that its own employees agree is superior to options previously available.

I am hopeful Walmart will choose responsible governance and

  • Measure its success through injury prevention and the quality of care available to injured associates rather than mere cost savings.   

  • Provide quality benefits in a straightforward manner rather than implementing an overly complex plan that provides avenues to escape responsibility.

  • Provide impartial options to address employee disputes rather than requiring employees to enter into agreements that limit options.

  • Work with independent professionals that support the needs of Walmart and its associates rather than those willing to only side with Walmart.

The importance of Walmart’s decision to become a Texas nonsubscriber is that Walmart’s actions will not only reflect on the entire nonsubscriber community but also the nonsubscriber option and the unique nature of Texas’ workers’ compensation system, which allows most private sector employers to choose nonsubscription. 

If the nation’s largest employer can demonstrate an ability to operate as a responsible nonsubscriber; freedom, choice and innovation will hopefully prevail.  If not, Walmart could prove to be a tipping point in the battle to maintain the freedom to provide quality benefits outside of workers’ compensation. 

If you are interested in learning more about nonsubscription status or keeping apprised of the most recent developments in this area, I would encourage you to contact Steve and join his organization.

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Texas is an at-will employment state where employees and employers are free to end the employment relationship at any time and almost for any reason.  The Texas Supreme Court has created a single public policy exception to the at-will employment rule –the Sabine Pilot wrongful discharge claim.  Under that judicially created claim, an employee has a cause of action against an employer if the employee is terminated solely for refusing to perform an illegal act. 

In a recent Texas Supreme Court opinion, the Court considered whether punitive damages were available in a public policy termination case, and if so, what was the proper standard for such an award.  The case arose after a former employee, Martinez, sued his employer after he was terminated for allegedly refusing to drive a company truck that was not in compliance with all Department of Transportation regulations.  After a jury trial, he was awarded $250,000 in punitive damages (as well as other modest damages) against his former employer –Safeshred.

On appeal, Safeshred argued that punitive damages were not recoverable in a Sabine Pilot claim.  Safeshred’s theory was that the judicially created cause of action sounded more in contract law than tort law and therefore punitive damages should not be recoverable.  Safeshred also argued that even if punitive damages were recoverable, Martinez’s facts were insufficient to establish the requisite culpability for the recovery of such damages.

The Supreme Court of Texas concluded that a Sabine Pilot claims is more akin to a tort claim than a contract claim and therefore punitive damages were recoverable.  In evaluating the standard necessary to recover punitive damages, the Court announced that a Sabine Pilot plaintiff may recover punitive damages where there is evidence that the employer: 1) circulates false or malicious rumors about the employee before or after the discharge; 2) actively interferes with the employee’s ability to find other employment; 3) harasses the employee in connection with a wrongful firing; or 4) knows the retaliatory firing is unlawful and does it anyway.  The illegal directive alone, however, is insufficient to warrant a punitive damage award.  Similarly, negative remarks about the employee in internal personnel records of the defendant employer are insufficient without a showing that such information was publicly communicated to other companies in the industry.

In evaluating Martinez’s evidence against this new standard, the Court held that there was insufficient evidence to support the punitive damage award and reversed that portion of the award.

You can download a complete copy of Safeshred, Inc. v. Martinez here.

This morning I heard about a new service offered by a Lubbock, Texas company that raised my eyebrows–nude maid service.  I’ve heard of a lot of bad employment relations ideas in my career, but on my drive to work this morning, I was hard pressed to think of one that was worse than this one.   Legal pitfalls apart and having gone to law school in this very conservative West Texas community, I cannot imagine this business succeeds.  I mean, when I was in law school, Lubbock was so conservative that it was a "dry" town and you had to leave the city limits above 89th Street to buy beer (although I understand that since has changed).  I also tried to image all of the impediments this "business" will face.  For example, how will the company obtain essential and necessary insurance?  Who would write even general liability coverage let alone EPLI insurance.  Certainly law enforcement will provide the company with close scrutiny to ensure the "maid service" is not a front for other nefarious activity.  Finally, can you say "potential for sexual harassment" of the employees/independent contracts?  

By the time I arrived a work I had yet to think of a worse employment relations idea for a business that I remembered actually being implemented.  If you can think of a employment relations idea worse than nude maid service, leave it in the comments.

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I like to try cases to judges and juries but my enjoyment almost always comes at great out-of-pocket expense to my employer-clients in terms of cost of defense.  The reality of any civil practice is that most cases will settle or be disposed of short of trial  When it comes to settling employment disputes, the earlier settlement are reached, the earlier the employer has certainty over the outcome and can focus its attention operating its business. 

Jon Hyman is an employment lawyer in Ohio who recently opined that while an employer’s motion for summary judgment is pending (and before can be an ideal time to leverage a settlement because the Plaintiff runs the risk of having the case disposed before trial and the employer risks increased settlement demands or an eventual trial if the motion for summary judgment is denied.  I can’t disagree with Jon’s assessment and he makes a good point.  However, in my experience I frequently encountered situations where the parties are so enamored by their summary judgment briefing (the employer just "knows" (read believes) the motion will be granted and the employee is equally convinced it will be denied) that that parties appear to be evaluating different cases making settlement more difficult (i.e., the employer believes the case is frivolous and the employee expects to try the case to a jury of his or her peers).

I once heard a plaintiff’s lawyer I respect tell a defense lawyer that he would not agree to a mediation date until the employer’s motion for summary judgment was heard by the court.  The plaintiff’s lawyer told me later than so long as the employer has a motion for summary judgment pending the employer wouldn’t see the "value" in his client’s case.  Therefore, the plaintiff’s lawyer wanted, even insisted, that the employer’s motion for summary judgment heard and ruled on before going to mediation.  Eliminating the uncertainty in whether a dispositive motion will be granted or not certainly ensures the parties are evaluating the "same" case and increases the likelihood that the case will be settled.

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The Texas Supreme Court issued an opinion this morning holding that advising an at-will employee that his employment will be terminated if he does not sign a mutual waiver to resolve disputes without a jury is not unlawful coercion sufficient to sset aside the agreement.  If you read this blog frequently, you know I am a big proponent of using agreements to waive jury trials instead of arbitration agreements.  You can read my reasoning in the posts assembled here.

In In re Frank Kent Motor Company, the high-end luxury car dealer required its at-will employees to agree, as a condition of employment and continued employment, to enter mutual agreements to waive the right to jury trial and instead resolve claims before a judge sitting without a jury.  Steven Valdez, a 28-year employees of Frank Kent, was presented with the agreement and originally failed to sign it.  When approached about his failure to sign the Agreement, Valdez expressed his desire not to sign the Agreement.  According to the opinion, Valdez’s manager told him he would no longer have a job if he didn’t sign the Agreement.  Valdez then signed the Agreement.  A year later, Valdez’s employment ended.  He sued in court for age discrimination and demanded a jury trial.  Frank Kent filed a motion to strike the jury demand.  The trial court refused to strike the jury demand.  The court of appeals denied Frank Kent’s request for mandamus relief.  However, the Supreme Court conditionally granted the mandamus relief meaning that Valdez will not get a jury trial.

The Supreme Court of Texas reasoned that because Valdez was an at-will employee and could resign or be terminated at any time and for any reason, it was not coercion for an employer to require the at-will employee to agree to waive resolution of disputes by jury trial as a condition of employment or continued employment.  Stated another way, Justice Lehrmann succinctly stated that "an employer’s threat to exercise its legal right cannot amount to coercion that invalidates a contract."  Because the Court upheld the jury waiver, the case will be remanded to the trial court for further proceedings including the possibility of a trial before a judge.

You can download a full copy of the Court’s opinion here.

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By now we know that one of two federal district courts considering the issue has upheld the NLRB’s power to mandate most employers post Notice of Employee’s NLRB rights to form and join unions. While the NLRB is making employers educate employees about some rights under the NLRA, the required posting doesn’t go far enough in educating employees about their rights.  Employers can (and perhaps should) advise employees, through postings of the employer’s own, that employees have the right NOT to form unions and NOT to join unions.  These employer-crafted posters can explain to employees, through posting, the reasons why union formation is not in their interest.  (In fairness, the posting does say that employees have the right not to engage in any of the detailed activities, but its a mere passing reference and is not detailed like the rights in support of unionization).

Rather than relying on the NLRB’s one-sided posting in favor of unionization, which most employers will now be forced to post in April 2012, employers should consider preparing their own posters to provide the other side of the notice equation and educate employees that they are under no obligation to create or form unions; remind employees of the wages, privileges and benefits they already possess without the necessity of paying a portion of their wages to the union in the form of union dues; and educating employees about the disadvantages and consequences that union membership offers.

Before an employer posts an employer-generated notice, however, it should be carefully reviewed by the employer’s legal counsel because what can and cannot be said to employees about unions are subject to rules that are sometime counter intuitive.  If the NLRB would publish a rule requiring employers to give this kind of full and fair notice, I would call it the "Goose and Gander" rule.

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I wrote before about several challenges to the NLRB’s controversial rule requiring employers to post notice of employee rights to form and join a union.  Today, a court has rule on one of those challenges.  In essence, the Court upheld the NLRB’s ability to require employers to post the notice of employee rights.  However, the Court struck the consequences the NLRB proposed for the failure to post the required notice (i.e., failing to post was an unfair labor practice in itself and tolled the statute of limitations for bringing other ULP claims).

You can download a copy of the Court’s opinion in National Association of Manufacturers v. NLRB here.

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Some employers have experimented using debit card payroll systems to decrease their payroll processing and administration costs.  Frequently, Texas employers ask whether they can pay their Texas employees using debit cards.  The answer is "yes" but only with the employee consent.

Texas law provides that employees must be paid in one of four forms:

  1. In U.S. currency;
  2. By written instrument issued by the employer and negotiable on demand at full face value in U.S. currency;
  3. By electronic funds transfer; or
  4. In any other kind or form agreed to in writing by the employee.

According to the Texas Workforce Commission advises that Texas employers can pay their employees using debit cards so long as the employees agree in writing and the use of the debit card does not result in any fee charged to the employee.  Consequently, employer may be able to reduce their payroll processing expenses via debit card payments but they need to ensure that those means don’t cost the employee anything and the employee agrees in writing to the form of payment.

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Yesterday I hosted a webinar on Investigating Employee Complaints in the 21st Century:  Comprehensive Investigations of Complaints of Discrimination, Harassment and Misconduct.  There was a great turnout and many good questions posed from the participants.  If you missed the presentation, you can watch the archive here.

I am actively seeking suggestions for interesting human resource or employment law topics for the next in our series of webinars scheduled for early this summer.  Please leave your suggestions in the comments.

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Daniel Schwartz at the Connecticut Employment Law Blog has an interesting post today about the effect the American Psychiatric Association’s proposed changes the Diagnostic & Statistical Manual could have to the Connecticut body of disability discrimination law.  While Connecticut is unique, according to Schwartz, in its definition of disability and expressly includes mental conditions listed in the current DSM as disabilities, I wrote (facetiously) last year that under the ADA’s new, expanded (and inclusive) definition of disability, having a disorder that compelled excessive masturbation (i.e., hypersexual disorder) could qualify as a disability under the American with Disabilities Act entitling an employee to all manner of reasonable accommodation in the workplace.

In determining whether a mental impairment qualifies as a disability under the ADA, plaintiffs sometimes argue that because the mental impairment is a recognized disorder under the DSM, it qualifies as a mental impairment under the ADA.  While the identification of a mental disorder in the DSM is not alone sufficient to satisfactorily show that an individual with that disorder is disabled, given the lower standard necessary to show that an impairment substantially limits a major life activity, it is not a stretch to believe that a trial court would find a genuine issue of material fact as to whether a mental disorder like hypersexuality, qualified as a disability.   I predict that eventually, Congress’ massive expansion of the ADA will compel a trial court to recognize an individual as disabled under circumstances that were never contemplated by Congress and will be viewed as outrageous to much of the general public.  Until that occurs, and the media uncovers and widely reports it, there is little likelihood that Congress will revisit (or rein in) its extension of ADA rights.  

Related Links:

Could the EEOC Sue on Behalf of an Employee Who Wanted the Right to Masturbate at Work?

Proposed DSM-5

Follow me on Twitter @RussellCawyer.