Yesterday, the Congressional Education and the Workforce Subcommittee on Workforce Protections heard suggestions on how the FLSA can and should be modernized to better reflect the realities of the 21st Century Workforce.  The following summarizes the suggestions made by business and employer representatives on how the FLSA should be modernized:

  • Update the computer professional exemption by broadening the exempt computer-related duties such as securing, updating, maintaining and testing existing applications even if the duties do not include modifying the programming code.
  • Clarify the rule of what constitutes “de minimus” time that need not be compensated in the context of insignificant IT-related activities such as remotely checking e-mail, calendar and voice mails or checking a schedule change using PDA devices.
  • Expand the exemption for highly compensated commissioned inside sales people. Changes in technology and customer purchasing habits make a distinction between inside and outside sales representatives is artificial and outdated.
  • Remove disincentives for performance based bonuses by permitting employers to exclude performance-based bonuses from the regular rate of pay.
  • Allow for the preemption of state and local wage and hour laws or create a safe harbor for multistate employers operating in compliance with the FLSA.
  • Better define what constitutes “work” to account for the modern world where employees have 24 hour access to e-mail and their company’s computer systems through remote devices like PDA’s, laptops or remote computer access.
  • Provide more clarity, predictability and consistency in being able to determine whether a particular employee qualifies for the white collar exemption.

While these are all good, needed changes to the FLSA to update and modernize it, the proposed changes are unlikely to occur overnight and there are unlikely to be meaning changes proposed by the business community until there is a change in the administration. You can access a full webcast of yesterday’s hearing here and the printed remarks of the witnesses here.

Other Resources

Congressional Subcommittee to Examine the Effect of the FLSA and the Modern Workforce

Congressional Hearing Examines Problems with Fair Labor Standards Act

This morning the Education and the Workforce Committee Subcommittee on Workforce Protections will examine whether the FLSA is outdated in today’s modern workforce.  The hearing is entitled  “The Fair Labor Standards Act: Is It Meeting the Needs of the Twenty-First Century Workplace?”

According to the Subcommittee’s media advisory:

Despite the broad impact of the [FLSA] on the American workforce, it is largely outdated and does not accurately reflect the realities of modern technology or today’s economy. The law has also created an environment of uncertainty with employers facing a patchwork of conflicting interpretations of the law and employees facing difficulty understanding their rights under the law.

As the committee continues to review laws and regulations affecting American workers, Thursday’s hearing will give members an opportunity to examine the effects of the Fair Labor Standards Act on the American workforce.

Representatives from the business and legal communities as well as workers’ advocacy groups are expected to testify.  You can watch a webcast of the hearing beginning on July 14, 2011 at 9:00 a.m. CST here.

This morning the meteorologist advised that our high temperatures in Texas won’t dip below 100 for the foreseeable future.  I’m thankful I heeded my Kindergarten teacher’s (Wanda Kite) advice to avoid anything ending up on my permanent record and I don’t have to dig ditches for a living.  However, many Texans work outdoors everyday in these conditions and Texas employers need to take steps to ensure their employees have safe working conditions.

Secretary of Labor, Hilda Solis, has the following comments and recommendations:

Record heat is hitting the nation, putting outdoor workers at risk of heat-related illnesses, including heat exhaustion and heat stroke. Plan now so that you can take the precautions needed to protect outdoor workers during this heat wave:

  • Have a work site plan to prevent heat-related illnesses and make sure that medical services are available to respond to an emergency should one occur.

  • Provide plenty of water at the job site and remind workers to drink small amounts of water frequently — every 15 minutes.

  • Schedule rest breaks throughout the work shift and provide shaded or air conditioned rest areas near the work site.

  • Let new workers get used to the extreme heat, gradually increasing the work load over a week.

  • When possible, schedule heavy tasks for earlier in the day.

OSHA has a number of resources to educate employees and employers on precautions that should be taken during this time of extreme heat.  You can check out those resources here. In the meantime, stay hydrated and cool to the extent  you can until late October when this heat is finally expected to break.

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Related Link:

Austin Enacts Mandatory Rest Breaks for Construction Industry

In an issue of first impression in the Fifth Circuit, the U.S. Court of Appeals holds that Title VII’s damages cap apply on a "per party" basis rather than on "per claim."  In Black v. Pan American, the Plaintiff, Carleen Black, prevailed on her Title VII and TCHRA claims of sex discrimination and retaliation.  The jury awarded Black $3.45M in back pay and compensatory damages.  Prior to entry of judgment, the trial court reduced the jury’s award to $500,000 representing $300,000 in back pay and $200,000 in compensatory and punitive damages.

On appeal, plaintiff argued that the Title VII damage caps ($200,000 in this case based on the size of the employer) should be applied on a "per claim" rather than on a "per party" basis.  If the Plaintiff’s argument was accepted, her judgment would include $600,000 for capped compensatory and punitive damages rather than $200,000 because she prevailed on three capped claims.  In holding that Title VII’s damage caps apply "per party" rather than "per claim," the Court first noted that the Sixth, Seventh, Tenth and D.C. Courts of Appeals had held that caps apply per party.  The Court then examined the statute and concluded that "the plain language of Section 1981a(b)’s cap applies to each party in an action." Consequently, the Court affirmed the trial court’s judgment that capped Black’s compensatory and punitive damages at $200,000.

You can download a complete copy of the Court’s opinion in Black v. Pan American Laboratories, LLC here.

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In an issue of first impression, the El Paso Court of Appeals has held that the Assisted Living Facility Licensing Act creates a private right of action for an employee who has filed a complaint, grievance of providing information in good faith relating to personal care services of the assisted living facility.

In Emeritus Corp. v. Blanco, Blanco was Interim Executive Director for an Assisted Living Facility in El Paso.  During her employment, she complained about inadequate staffing and training to her superiors.  Ultimately, Blanco tendered her two week notice of resignation.  Shortly before her scheduled final day of employment, she sent  an email to seven Emeritus employees and supervisors further detailing her concerns that patient care and safety she attributed to the lack of staff and inadequate training.  Her resignation was accepted the following day.

She brought suit alleging that she had been retaliated against and constructively discharged because of her complaints about patient care and safety.  A jury returned a verdict in her favor for lost wages and mental anguish in the amount of $128,500.  Emeritus appealed, in part, arguing that the ALFLA provided no private cause of action for retaliation because the Act, while expressly prohibiting retaliation, provided not right to bring a lawsuit.

In reaching its decision, appellate court reviewed a variety of the statutes under the Health & Safety Code.  It noted that some of the provisions contain anti-retaliation provisions and create private rights of action; some have anti-retaliation provisions but only provide for administrative penalties; and one that prohibits retaliation but provides neither an administrative penalty or private right of action.  The Court reasoned that by interpreting the ALFLA to expressly prohibit retaliation but not provide a remedy for retaliation would lead to an absurd result and render the retaliation provisions meaningless.  Therefore, it recognized an implied private cause of action for an employee believing he or she has been retaliated against.

This opinion appears to be in contrast to the longstanding rule in Texas that it is for the Legislature to create new causes of action and not for judicial bodies to do so.  Given the lack of an express private right to file a lawsuit under the statute (when other provisions of the Health & Safety Code provide a remedy), I expect an appeal to the Texas Supreme Court with amicus briefs from the Assisted Living Facility interest and business groups that think a judicially created private cause of action in the absence of express statutory provision providing for such is unsupported by Texas jurisprudence.

You can download a complete copy of the Court’s opinion in Emeritus Corp. v. Blanco here.

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Most Texas employers handle claims for unemployment compensation in-house (i.e., they don’t use an outside lawyer).  A good resource to consult when handling these claims (and for answers to many Texas specific employment-related legal issues generally) is published by the Texas Workforce Commission titled "Especially for Texas Employers".  According to its introduction, 
 

Especially for Texas Employers has been written to explain the sometimes confusing "legalese" of federal and state employment law in easy to understand language that makes sense in the everyday business setting. This publication is an effort to bring you the kind of information and assistance that you can use on a daily basis, and which you as a taxpayer deserve. 

ETE contains sections on: Hiring: Basic legal Issues for Employers; Pay and Policy Issues; Work Separation Issues; Post-Employment Problems and a resouce page Employment Law-Related Web Sites.  Guidance related to handling unemployment benefit claims is found under Post-Employment Related Problems. 

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I keep reading reports that Wal-Mart v. Dukes, where the Court reversed a class certification including 1.5 million women (who worked all over the U.S. under different supervisors at different stores) that was based on the company giving supervisors too much discretion, 125 anecdotal stories and an expert report employing dubious social framework analysis, demonstrates that the Court has a pro-business slant.  (Examples here, here and here).  These articles are prompted largely by the Senate Judiciary hearing held June 29, 2011 entitled "Barriers to Justice and Accountability: How the Supreme Court’s Recent Rulings will Affect Corporate Behavior."  I disagree that the Court has a pro-business bias in employment discrimination, harassment and retaliation cases.

In the four employment cases heard this term, the Court found for the employee/plaintiff on three of those cases –all retaliation cases.  For example, in Kasten the Court held that employees can engage in FLSA-protected activity by making complaints orally rather than just in writing.  In Thompson, the Court held that an employee who has never engaged in Title VII protected activity can bring a retaliation claim if they are closely associated with another that has engaged in protected activity.  Finally, in Staub, the Court held that an employee can maintain a USERRA retaliation case even where the decision maker is unaware of the employee protected activity if the plaintiff can show that

Dukes is an example of a case that should have never been certified as a disparate treatment (i.e., intentional discrimination) case in the first place.  Nothing more; nothing less.  In fact, Dukes was more of a procedure case than it  ever was an employment discrimination case.  Certainly, it is not proof that the Supreme Court has a pro-business bias.

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Texas employees are ineligible for unemployment benefits if the are terminated from employment for "misconduct connected with the work."  Misconduct connected with the work includes "mismanagement of a position of employment by action or inaction, neglect that jeopardizes the life or property of another, intentional wrongdoing or malfeasance, intentional violation of a law, or violation of a policy or rule adopted to ensure the orderly work and the safety of employees."  

A frequently litigated issues is whether termination due to excessive absences or tardiness constitutes misconduct connected with the work.  In the recent opinion of Murray v. Texas Workforce Commission, the Dallas Court of Appeals confirms that termination due to violations of employer’s written attendance or tardiness policy constitutes misconduct connected with the work rendering the employee ineligible for unemployment benefits.

This is a useful case for employers to cite to hearing officers and examiners in unemployment compensation hearings when the employee has been terminated pursuant to a written time and attendance policy.  Timely and successful challengers to claims for unemployment compensation is one way an employer can keep its unemployment tax in check.  (See post, post).

 You can download the full opinion of Murray v. Texas Workforce Commission here.

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Governor Perry signed SB 1024 eliminating a loophole that previously existed for a criminal theft of service charge.  Under prior law, a party obtaining services from another under a promise to pay could avoid a criminal charge of theft of service so long as the party was making minimal payments.  According to the bill’s analysis:

Theft of wages occurs when employers fail to pay workers their promised wages. This is a frequent occurrence in Texas. In certain industries, such as construction, one in every five workers experiences wage theft. In addition, 50 percent of day laborers have experienced wage theft. The impact of this theft is widespread and has caused many workers to be unable to meet their family’s basic needs. 

S.B. 1024 addresses instances when workers receive periodic or partial payment of wages. The bill also amends current law to maintain that a person commits theft of service if, with intent to avoid payment, that person fails to make full payment after receiving notice demanding payment if the compensation was to be paid periodically. The intent to avoid payment for a service may be formed at any time during or before a pay period, and the partial payment of wages alone is not sufficient evidence to negate the actor’s intent to avoid payment for a service.

SB 1024 creates a criminal offense when the actor fails to make "full" payment after rendition of the services and further clarifies "that partial payment of wages alone is not sufficient evidence to negate the actor’s intent to avoid payment for service."

The law takes effect September 1, 2011.

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In Texas, at-will employees can prepare to compete against their current employers without violating the common law duty of loyalty.  Determining whether the line between lawful preparation to compete and unlawful competition begins is sometimes gray.  (See post).  A recent case from the Houston Court of Appeals provides a good summary of what an at-will employee can and cannot due within the bounds of a common law fiduciary duty of loyalty.  As the court summarized,

The Texas Supreme Court has recognized that fiduciary employees owe duties of loyalty to their employers and, if a fiduciary employee "takes any gift, gratuity, or benefit in violation of his duty, or acquires any interest adverse to his principal without a full disclosure, it is a betrayal of his trust and a breach of confidence, and he must account to his principal for all he has received." But an employer’s right to demand and receive loyalty from a fiduciary employee must be tempered by society’s interest in encouraging competition. Thus, in general, an at-will employee–even a fiduciary one–may plan to compete with his employer and take certain steps toward that goal without disclosing his plans to the employer, but he may not "appropriate his employer’s trade secrets," "solicit his employer’s customers while still working for his employer," "carry away certain information, such as lists of customers," or "act for his future interests at the expense of his employer by using the employer’s funds or employees for personal gain or by a course of conduct designed to hurt the employer."

Whether Engel had a fiduciary duty to disclose the creation of the competing business Caputech and his plans to associate with Matrikon depends on what his job responsibilities were at PAS. If the fact-finder determines that his job responsibilities were those of a fiduciary, in dealing with his principal on a matter involving his own self-interest that would limit his employer’s contractual rights, he owed a duty of full disclosure of all material facts.  If so, he could not legally put his interests above that of PAS "by a course of conduct designed to hurt [PAS]."

(Citations omitted).  If you are an employee considering leaving your current employer to start a venture that competes with your current employer, you should contact competent counsel to ensure that you do not cross the line from lawful preparations to compete to unlawful, unfair competition.

You can download a full copy of PAS, Inc. v. Engel here.

Follow me on Twitter @RussellCawyer.