Texas Employment Law Update

Texas Employment Law Update

A Resource for Texas Employers

Two Day Unpaid Suspension Not a Materially Adverse Action in Title VII Retaliation Case

Posted in Case Summaries, Retaliation

Retaliation cases can be more difficult for employers to defend because “revenge” is a motive easily understood and identified with.  From a purely legal standpoint, retaliation cases are also more problematic to defend because of the wider variety of employment actions that are actionable under a retaliation theory.  In discrimination claims, only ultimate employment actions (i.e., failure to hire, promote, terminate) are actionable.  In the retaliation context, any materially adverse action may lead to a retaliation claim.  A materially adverse action is one that might dissuade a reasonable worker from making or participating a discrimination complaint.

A recent case from the Fifth Circuit is one for employment lawyers defending employers in retaliation cases should keep close at hand when analyzing whether the act complained of by the plaintiff-employee constitutes a materially adverse action.  In Cabral v. Brennan, U.S. Postal Service employee Cabral brought a retaliation claim against his employer following a two day suspension.  Cabral have previously filed three charges of discrimination with his employer.  When Cabral returned from a suspension following an incident where he struck a supervisor with a postal vehicle, he claimed that his supervisor began harassing him with questions.  He was ultimately suspended for two days without pay after his supervisor asked him to produce a valid driver’s license and Cabral refused.  When he finally produced an occupational driver’s license (Cabral had a DWI conviction and a suspended driver’s license), he was reinstated.  Several weeks later, he was reimbursed for the two day suspension.

The Fifth Circuit considered whether Cabral’s two day suspension constituted a materially adverse action sufficient to state a claim for retaliation.  The Court contrasted Cabral’s two day suspension with that of the Plaintiff in Burlington N. & Santa Fe Ry. Co. v. White, where the U.S. Supreme Court found that a 37 day paid suspension (later reimbursed by the railroad) of a single mother during the holiday season and that caused her to fall into deep depression and the resulting physical, emotional, and economic burdens she sustained was sufficient to create a fact issue on whether a materially adverse action occurred.   Given that Cabral produced only conclusory evidence (and no documentation) that he suffered emotional and psychological harm because of the two-day suspension, the Court affirmed the trial court’s summary judgment that the two day suspension did not constitute a materially adverse action.

The takeaway for employers is that even in a retaliation case, not every adverse action the employee suffers will be sufficient to get the case to trial and careful consideration should be given to whether the challenged action is sufficient to constitute a materially adverse action.  For plaintiffs, Cabral teaches that strong, detailed evidence of the physical, emotional and economic impact to the plaintiff of the challenged action is the key to getting the case through summary judgment and on to trial.

A copy of the opinion can be downloaded here.



Employers Using On-line Acknowledgments to Enter Arbitration Agreements May Face Problems of Proof

Posted in Arbitration, Case Summaries

Texas law favors the resolution of disputes using alternative dispute resolution mechanisms such as arbitration.  To compel an employee’s claim to arbitration, the employer need only show that a valid agreement to arbitrate exists and the claims asserted by the employee fall within the scope of the agreement.  Many companies utilize technology such as online applications and electronic new hire paperwork to make the process of hiring and onboarding employees faster and easier.  A recent case from the Fort Worth Court of Appeals exemplifies the challenges an employer may face when it uses on-line or electronic acknowledgments to show that an employee entered an important agreement like an arbitration agreement.

In Doe v. Columbia North Hills Hospital, following an unfavorable arbitration award, an employee of hospital (Doe) sought to vacate the arbitration award on the grounds that no valid arbitration agreement existed because she was never aware of and never accepted the agreement.  Columbia hired Doe in 2012.  She participated in the new employee orientation where she was informed about the hospital’s intranet site and instructed her that she was responsible for reviewing and familiarizing herself with the policies applicable to her employment that were posted on that site.  She signed an Acknowledgement of Receipt of Policies that advised her that the hospital policies could be found and printed from the intranet site and that she would read and familiarize herself with the policies.  One of the policies Doe agreed to read and familiarize herself with was the “Problem solving/Grievance Procedures”.  That policies contained an agreement to arbitrate all disputes.  Later, Doe was sexually assaulted by an employee of a hospital affiliate and she brought claims against the hospital for the assault.  The hospital moved to compel arbitration which was granted by the trial court.  After an arbitration award that was unfavorable to Doe, she sought to vacate the award on the grounds that she never signed or entered an enforceable arbitration agreement.

On appeal, Doe argued that there was no evidence that she entered the arbitration agreement.  She argued that she had no notice of the Arbitration Policy; she never signed the policy; the policy was never discussed during her orientation and her written, signed acknowledgments did not evidence her notice of the arbitration policy.  Conversely, the Columbia argued that its posting on the policy on the intranet site; informing Doe of the intranet site; her acknowledgment that she could access the policies on the intranet site and her awareness that she was responsible for reviewing and familiarizing herself with the policies and that she received orientation on Problem solving/Grievance procedures was sufficient to place Doe on notice of the arbitration policies.  The Court rejected Columbia’s contentions and concluded that all of those circumstances failed to show that Doe was expressly notified of the Arbitration Policy.  Moreover, the Court further found that there was no implied notice of the policy.  Because the Court found no arbitration agreement existed, it remanded the case to the trial court for a proceeding in Court.

Employers utilizing electronic agreements, intranet sites for publication of policies and click through agreements to show employee acceptance of terms and conditions should review this opinion carefully and analyze their practices to ensure that employees have clear notice of any important terms and conditions of employment.  A key takeaway from the Columbia case is that there is often times no substitute for an employee’s actual signature on important documents like arbitration agreements and noncompetition agreements.  There is usually little difficulty in providing that the employee signed the agreement that bears the employee’s actual signature.  Problems of proof can arise when the employer uses online acknowledgements or click through agreements to show an employee entered a particular agreement or accepted certain terms.

H/t to Matt Stayton for forwarding me this case.

You can download Doe v. Columbia North Hills Hosphere.

Everyday is Take Your Dog to Work Day: EEOC Sues Employer Alleging Ban on Service Dog at Workplace

Posted in Disability, Discrimination, News & Commentary

One of the consequences of the Americans with Disabilities Amendment Act’s expanded definition of disability is that employers are facing a much larger number of accommodation requests and therefore a greater number of potential accommodations. Anecdotally, I have seen a sharp uptick in the number of employees asking employers to bring animals to the workplace claiming that the animals are not pets, but are service animals that assist the employee with conditions that qualify as disabilities.

In my experience, most frequent is the claim that the service animals assists the employee in coping with a variety of mental disorders (e.g., PTSD, depression, anxiety) by alerting the employee to the onset of an psychological incident or by providing a calming influence during an incident. However, according to the Department of Justice, service animals may also assist individuals who are blind or have low vision with navigation and other tasks, alerting individuals who are deaf or hard of hearing to the presence of people or sounds, providing non-violent protection or rescue work, pulling a wheelchair, assisting an individual during a seizure, alerting individuals to the presence of allergens, retrieving items such as medicine or the telephone, providing physical support and assistance with balance and stability to individuals with mobility disabilities, and helping persons with psychiatric and neurological disabilities by preventing or interrupting impulsive or destructive behaviors.

Last week the EEOC brought suit against a national trucking company over its failure to hire an applicant who needed the use of service dog for his job. The service dog, according to the EEOC, was trained to assist the applicant in controlling his anxiety and to wake him up when he suffered nightmares caused by his PTSD.  Because the job he applied for required overnight stays, the applicant claimed he needed the service animal to accompany him on the road.  Again, according to the EEOC, CSRT failed to hire the employee or advance him into training because it maintained a “no pets” policy and further violated retaliated against him by failing to engage in the interactive process

A key takeaway from the new lawsuit is that an employer should not take an employee’s request to bring a service animal to work lightly. Absent circumstances where legal or regulatory limitations prohibit animals in the workplace (e.g., healthcare and restaurants) or other instances where the presence of an animal might pose a direct threat to the health and safety of the employee or others, an employer might be required to allow some service animal use for applicants and employees with disabilities.  Employers receiving these requests should partner closely with their human resources or employment lawyers to evaluate these requests and engage in a good faith interactive process.

A copy of the EEOC’s complaint can be accessed here.

Other helpful information:

Most of the guidance on service animal access deals with public accommodation access under the ADA (Title III) and not with employment.  Employers may have greater rights to request and obtain access to information relevant to determine a reasonable accommodation under the Title I of the ADA governing employment.  Nonetheless, some of the public accommodation guidance may be useful and can found below.

Job Accommodation Network’s Guidance on Service Animals in the Workplace is here.

DOJ Civil Rights 2010 Guidance on Service Animals is here.

DOJ Civil Rights 2015 Supplemental Guidance and FAQ’s on Service Animals here.


Fifth Circuit Holds Nonemployee Lacks Claim but Employee Can Recover Emotional Distress Damages in FLSA Retaliation Suit

Posted in Case Summaries, Retaliation, Wage & Hour

The Fifth Circuit recently held that a plaintiff-employee in an FLSA retaliation claim can recover damages for emotional distress but that the statute does not provide a retaliation cause of action for a nonemployee spouse. In Pineda v. JTCH Apartments, LLC, an employee of the apartment complex who did maintenance work around the property and his spouse lived at the complex where the employee worked.  The employee was provided reduced rent as part of his compensation.

Pineda, the employee, initiated a lawsuit against his employer (and landlord) for unpaid overtime. Three days after being served with the lawsuit, the employer served the employee and his wife with notice to vacate their apartment for nonpayment of rent.  The overdue rent demanded by the employer equaled the amount of rent reductions the employee received over the term of his employment.

The couple vacated the apartment and then amended their lawsuit to add claims for retaliation. During the trial, the district court refused to charge the jury on the recovery of emotional distress damages for the employee.  The trial court also dismissed the spouse’s retaliation claim because the court concluded that only employees could bring a retaliation claim.  Following a jury trial in favor of the employee the district court entered judgment for the employee but not the wife ($1,426.50 overtime; $3,775.50 for retaliation; $1,476 liquidated damages and $76,732.88 in attorney’s fees).

Plaintiff appealed the dismissal of the spouse’s retaliation claim and the failure to charge the jury on the plaintiff-employee’s recovery of emotional distress damages. Acknowledging that it was an issue of first impression in the Fifth Circuit, the Court first addressed with the FLSA’s anti-retaliation provision provided for emotional distress damages as a remedy for retaliation.  The Court first observed that Congress created an FLSA retaliation cause of action by its 1977 amendments to the FLSA allowing employees to recover wages, liquidated damages and “such legal and equitable relief as may be appropriate.”  This broad form of relief for retaliation plaintiffs encompassed emotional distress damages, the Court explained, because retaliation claims always result from intentional conduct.  In contrast, violations for failure to pay overtime or minimum wage can sometimes result from unintentional conduct and thereby justify more limited relief that excludes recovery for emotional distress.  Consequently, the Court concluded that damages for emotional distress are recoverable to a prevailing plaintiff in an FLSA retaliation claim.

The Court affirmed the trial court’s dismissal of the nonemployee spouse’s claim holding that nonemployees do not have the ability to bring an FLSA retaliation claim. Looking no further than the statutory language creating the cause of action that states that it is unlawful to “discharge or . . .discriminate against any employee . . .”, the Court easily concluded that nonemployees lack the ability to bring such claims.

You can download the full opinion in Pineda v. JTCH Apartments, LLC here.

Texas Court Holds Employees on FMLA Leave Not Qualified to Receive Unemployment Benefits

Posted in Case Summaries, Unemployment

In a Texas case of first impression, Fort Worth Court of Appeals held that an employee on FMLA leave of absence is not entitled to receipt of state unemployment benefits reversing the Texas Workforce Commission’s administrative decision.  In Texas Workforce Commission v. Wichita County, Texas, a county employee applied for state unemployment benefits when she started FMLA leave.  The unemployment hearing officer and Texas Workforce Commission both held that the employee was eligible for state unemployment benefits because she was effectively separated from her last employment when she went on FMLA leave after the employer could not make any accommodations based on her restrictions.

In rejecting the Commission’s interpretation, the Court explained that:

[T]he federal and state statutes generally apply to distinct groups of people: those who cannot perform existing jobs on a temporary basis, desire to return to those jobs, and need protection for the jobs until the reason for leave resolves (FMLA) as opposed to those who desire new jobs and are ready and willing to perform them and need temporary income benefits in the meantime (unemployment under the labor code). We cannot fathom that either Congress or our state legislature intended for a person to be able to proceed down both paths and receive both benefits at the same time.

Thus, although White did not perform services and did not receive wages during her FMLA leave . . . we conclude that she was not qualified to receive unemployment benefits. We hold that the opposite conclusion would be absurd for the reasons stated above and because such a conclusion would thwart the employment-stability purposes of federal and state law by encouraging an individual with protected employment to seek new employment as a condition of obtaining unemployment benefits.  We also agree with the County’s position that the opposite conclusion would amount to a judicial mandate of paid FMLA leave; we are reluctant to reach such a decision in the face of express authorization that such leave may be unpaid under federal law and without clear guidance to the contrary from our state legislature.

Consequently, employees on FMLA leaves of absence (and perhaps other leaves where the employee is still employed by the employer) are not qualified to receive state unemployment benefits.

You can download Texas Workforce Commission v. Wichita County, Texas here.

Court Rejects EEOC Argument that Employer Must Provide Disabled Employee Competition-Free Reassignment to Vacant Position as Reasonable Accommodation

Posted in Uncategorized

Since Congress amended the Americans with Disabilities Act revising the definition of “disability” and greatly expanding the number of individuals who are “disabled” and therefore entitled to reasonable accommodation, employers spend large amounts of time engaging in the interactive process to determine whether there are reasonable accommodations that will enable otherwise qualified individuals to perform the essential functions of the job.

In a decision earlier this week, the U.S. Court of Appeals for the Eleventh Circuit, held that when an employee is unable be accommodated in her present position and the employer allows the employee to seek out reassignment or transfer to another position within the employer’s operations, the employer is not required, as a matter of law, to make that search for another position competition free. The Court further held that the employer’s allowance of thirty days to the employee to search for other internal employment was also reasonable as a matter of law where the employer also agreed to consider extending the time period for any position for which the employee was being considered.

This case is significant in that the EEOC has historically taken the position that not only is reassignment to a vacant position a reasonable accommodation, the employer must also provide the disabled employee with a preference in being reassigned (or a competition-free reassignment) to the vacant position. The Eleventh Circuit has squarely rejected the EEOC’s position that disabled employees seeking reassignment to a vacant position are entitled to a superpriority over other qualified applicants for the position.  The Eleventh Circuit joins the Eighth and Fifth Circuits that have likewise rejected the concept that disabled employees are entitled to affirmative action or preferential treatment in reassignment to a vacant position as a reasonable accommodation.

You read all the facts from EEOC v. St. Joseph’s Hospital, Inc. here.


BREAKING NEWS: Federal Judge Blocks DOL Final Rule on White Collar Exemptions

Posted in Uncategorized

Today, a Texas federal judge issued a nationwide preliminary injunction blocking the implementation of the U.S. Department of Labor’s final rule imposing an increased salary level to qualify for the administrative, professional, executive and highly-compensated exemptions to overtime.  Short of an order staying the district judge’s injunction, the DOL’s rule will be on hold, nationwide, indefinitely.

A copy of the Judge’s order is here.

Follow me on Twitter @RussellCawyer.

DOJ to Criminally Prosecute Employers and Individuals that Reach Hiring and Wage Agreements under Federal Antitrust Law

Posted in News & Commentary, Noncompetes and Restrictive Covenants

At the end of October, the U.S. Department of Justice Antitrust Division (DOJ) and Federal Trade Commission (FTC) communicated a significant shift in their enforcement guidance regarding competition among employers to limit or fix terms of employment for potential hires.  In a new publication, Antitrust Guidance for Human Resource Professionals, the DOJ announced its intent to investigate, and criminally prosecute, wage fixing and no-poaching agreements.  Wage fixing agreements include agreements where individuals at different companies (or members of trade associations) agree to fix employee salaries or other terms of compensation at a specific level or within a range.  No poaching agreements include agreements between companies not to solicit or hire each other employees.

In its announcement, the DOJ announced that:

Going forward the DOJ intends to proceed criminally against naked wage-fixing or no-poaching agreements.  These types of agreements eliminate competition in the same irredeemable way as agreements to fix produce prices or allocate customers, which have traditionally been criminally investigated and prosecuted as hardcore cartel conduct.

That announcement that the DOJ intends to investigate and prosecute criminally these kinds of violations should make managers, supervisors and HR professionals take note and refresh their knowledge on the employment practices that could make the employee a target of a federal criminal investigation.  Some of the potential issues are not readily apparent such as a company’s (including non-profit’s) participation in or use of wage survey information or informal sharing of compensation information with other companies.  The DOJ published a short summary of the potential red flags employers should be mindful of in Antitrust Red Flags for Employment Practices.  The enforcement guidance also provide a number of hypothetical situations and its interpretation about whether each would result in a potential antitrust violation.

Since the government intends to criminally prosecute employers and individuals entering into no-poaching and wage fixing agreements, this is something that should be taken seriously.

New Developments in Employee Hiring and Noncompetition

Posted in News & Commentary, Noncompetes and Restrictive Covenants

Last week brought several interesting developments on the issue of restrictive covenants and hiring of employees among competitors including 1) the White House’s call to action (CTA) for the States to restrict use of covenants not to compete; 2) the Department of Justice’s announcement that it intends to criminally prosecute employers and executives entering into wage-fixing and no-poaching agreements; and 3) a new case from a Texas court discussing the enforceability of noncompetition agreements based on the promise to provide specialized training and does not include confidential information.  This week, I intend to address each of these developments.

First, the White House issued its CTA to state legislatures and policy makers calling on those bodies to enact reform designed to reduce or eliminate the use of non-compete agreements in employment.  The CTA builds on a report issued by the White House and U.S. Treasury Department report that found that non-compete agreements constituted an institutional factor that had the potential to hold back wages and entrepreneurship by banning workers from starting a company or going to work for a competitor for a period of time after leaving employment.  According to the CTA, 30 million Americans (1 in 5 workers) are impacted by non-compete agreements.  It is the position of the present administration that “most workers should not be covered by a non-compete agreement.”

The CTA called on the states to reduce the misuse of non-compete agreements to adopt what it terms are “best-practice policy objectives” that include:

  • Banning non-competition agreements for large categories of workers including occupations that promote public health and safety; workers unlikely to possess trade secrets; and workers suffering undue adverse impact of non-competes like workers laid off or terminated without cause
  • Requiring, as an element of enforceability, that the non-compete be proposed before a job offer or promotion is accepted; providing consideration above and beyond continued employment and require employers to better inform workers about the law of the state and the existence of non-compete contracts and how they work
  • Incentivizing employers to draft enforceable contracts and encourage elimination of unenforceable non-competes by proposing use of “red pencil doctrine” that would void (rather than merely reforming) non-competes with unenforceable provisions
  • Add appropriate remedies or penalties for employers that do not comply with state non-compete statutes
  • Encourage use of alternative restrictive covenants like nondisclosure and nonsolicitation agreements rather than non-compete agreements

Other policy documents issued by the White House along with the CTA include:

White House State Call to Action on Non-Compete Agreements

Non-compete Reform: A Policymaker’s Guide to State Policies

While the CTA focuses attention on an issue that rarely get significant attention, I do not expect it to have a persuasive  effect on the Texas legislature for at least several legislative sessions and the use of narrowly tailored non-compete agreements will continue to be used by Texas employers.

Texas Employers May Be Required to Provide Employees Time Off to Vote

Posted in Human Resources

I voted early nearly a week ago and early voting ends today.  However, Texas employers may be required to allow employees time off to vote in the upcoming election.  To learn more about the Texas voting requirements, check out the post I wrote six years ago here.

Other posts on Texas voting are linked here:

Early Employer Planning Can Avoid Interruptions and Payment Obligations On Election Day

Mid-Term Elections Approach: Texas Employer’s Obligation to Provide Employees Time Off to Vote