I just returned from Tulane University Law School’s 27th Annual Multi-State Labor and Employment Law Seminar held at the La Cantera resort in San Antonio, Texas.  (See brochure here).  Attendees and presenters at this conference are some of the finest and most experienced labor and employment lawyers in the country.  During my three days at the conference, I did an unscientific, anecdotal survey of the practitioners I visited with.  Without exception, the practitioners I talked to disfavored the arbitration of employment disputes.  I’ve already written about the disadvantages of arbitration on this blog. (See post here). However, I was surprised that I did not find a single lawyer at this conference (and I don’t profess to have spoken to all or even a majority of them) that preferred trying a case in arbitration over a case tried to a judge of jury.  No one I spoke to had ever enjoyed the "benefits" of a faster or more inexpensive resolution of the dispute in arbitration than would have realized in court.  No attorney extolled the virtue of the the limited appeal rights or the "finality" arbitration promises over the appellate rights our Texas rules provide.  Therefore, I want to encourage Texas employers to abandon the use of mandatory arbitration programs with their employees in favor of adopting mutual waivers of jury trials.  To read about the advantages of jury waivers, click here.

 

Following Arlen Specter’s announcement that he was opposed to the Employee Free Choice Act in its current form and other senators expressing strong reservations about the bill (See Michael Fox’s post here), there has been much speculation about what the next step will be in organized labor’s attempts to obtain labor organization reform.  Will Labor seek to have a compromise bill passed this year?  Will it wait until the 2010 mid-term elections or until the economy improves to try and pick up a filibuster-proof majority in the Senate?  Only organized labor knows for sure what it will do next.

However at this weekend’s 27th Annual Multi-State Labor and Employment Law Seminar sponsored by the Tulane University Law School in San Antonio, Texas, Nancy Schiffer, Associate General Counsel for the AFL-CIO in Washington, D.C. presented a paper entitled "Change We Can Believe In –The Employee Free Choice Act."  In her remarks, Ms. Schiffer unequivocally stated that Congress will pass some form of labor organization reform this year –likely before September 2009.  The remarks, from the Associate General Counsel of one of the nation’s largest unions, makes clear that organized labor has not given up on its efforts to pass the EFCA in its current form. It appears that organized labor does not intend to wait until after the mid-term elections or an economic recovery to seek this reform.  I expect that organized labor will rejuvenate its efforts and lobbying campaign to pass the EFCA once Al Franken is seated in the U.S. Senate and the Democrats have  a 60 vote majority in the Senate.  Consequently, the stories of the EFCA demise may be greatly exaggerated and employers should not forgo their efforts to prepare for its potential passage. 

With only a few weeks left in the 2009 Texas legislative session, here is an update on the status of several bills to watch for Texas employers.   To see a bill’s current status, click on the links below that are updated by the Texas legislature.

  • HB 32  Prohibiting discrimination against employees of workers’ compensation nonsubscribers who sustain an injury in the course and scope of their employment.  (Update:  Left pending in subcomittee).
  • HB 183  A bill to link the Texas minimum wage to the federal minimum wage.  (Update:  No action taken in subcommittee).
  • HB 226 Prohibits an employer from discriminating against an employee that has refused to participate in an employer’s charitable deduction campaign.   (Update:  No action taken in subcommittee).
  • HB 978  To amend, and greatly expand, prohibited disability discrimination under the Texas Commission on Human Rights Act. (Update:  Passed in the House).
  • SB 730 prohibits an employer from implementing policies prohibiting employees from keeping legal firearms and ammunition in locked vehicles on the employer’s parking lot.  (Update:  Committee reports sent to calenders). 
  • SB 986 To extend the statute of limitations for discrimination claims alleging discrimination in the payment of compensation.  State law equivalent of the Lilly Ledbetter Fair Pay Act.  (Update:  Referred to Business and Commerce Committee). 
  • HB 615 Permitting employees with a child enrolled in a special education program and having at least one year tenure with the employer take 10 hours per year of unpaid leave to meet with certain school officials.  (Update:  Subcommittee members named).
  • HB 1005 Requiring employers to provide employees employed at least 90 days to take up to 40 hours per year unpaid leave to meet with teachers or attend to certain school events, ceremonies or meetings. The bill also contains anti-retaliation provisions.  (See also SB 649).  (Update:  Subcommittee members named).
  • HB 1057 Permitting employees with at least 6 months service to take not less than 2 weeks accrued paid leave for the birth or placement of adoption of a child.  Employees of employers that do not provide paid leave, who have insufficient paid leave or are ineligible for leave are entitled to between 2 and 6 unemployment benefits.  The bill does not mandate the creation of any leave programs but does provide a right to reinstatement for employees that utilize leave under this proposed law.  (See also SB 692).   (Update:  Subcommittee members named).
  • SB 60   Requires employers to provide for unpaid time off to employees who are the victims of certain violent crimes to attend court proceedings.  The bill also provides a civil cause of action, damages and anti-retaliation provisions for violations.  (Update:  Referred to Business and Commerce Committee). 
  • HB 538 Prohibits discrimination in employment on the basis of sexual orientation, gender identity or expression.  (Update:  Referred to State Affairs Committee).

 

With the increased number of layoffs and reductions in force, many Texas employers are paying out large amounts of severance payments and wages in lieu of notice. Employers making these payments must not forget to comply with any court orders they have received regarding the deductions or garnishments from employee wages on these payments. A Texas employer that has received a spousal or child support order from a court must be sure to deduct the amount set forth in the order from any severance payments or wages paid in lieu of notice.

For example, if a child support order requires the employer to deduct $150 per month from the employee’s wages and the employer promises to make a 6 month severance payment to the employee, the employer must deduct $900 from the severance payment to comply with the court order. Since this wage deduction is made pursuant to a court order, no written authorization from the employee is necessary.

 

For more information on compliance with spousal and child support orders in the context of severance payments, see the Texas Attorney General website.

On April 30, 2009, the Department of Homeland Security announced that it distributed new enforcement guidance to Immigration and Customs Enforcement.  The new enforcement guidance emphasizes the Department’s focus on targeting employers who knowingly hire illegal workers and thereby cultivate illegal workplaces.

According to Ginger Thompson of the New York Times, the guidelines state that "ICE must prioritize the criminal prosecution of actual employers who knowingly hire illegal workers because such employers are not sufficiently punished or deterred by the arrest of their illegal work force."  ICE will also be looking for evidence of worker mistreatment, identification document fraud, trafficking, smuggling, harboring and money laundering.  Susan Carroll of the Houston Chronicle reports that “The guidelines require that field agents have either an arrest, indictment, search warrant –or at least a commitment from the U.S. Attorney’s office to prosecute the employer –before arresting employees for civil violations at the work site.”

Given the heightened targeting of employers by the Department and the increased possibility of criminal prosecution, employers should train their hiring officials to ensure they understand the importance of hiring only workers legally authorized to work in the U.S.  Employers should also conduct periodic I-9 audits to ensure that all employees have proper documentation authorizing them to work in the United States.  Finally, employers may also consider whether voluntary enrollment in the E-verify program is appropriate for their operations.  By taking these proactive steps, employers may be able to avoid the imposition of harsh monetary penalties and criminal prosecution.

Reports of corporate espionage appear to be on the rise.  According to U.S.A Today, Starwood Hotels recently sued the Hilton Hotel chain accusing it of stealing trade secrets to help it launch a rival luxury chain quickly and cheaply.  The WSJ.com reports that the lawsuit accuses the Starwood executives "smuggled more than 100,000 documents and electronic files out of Starwood — and that Hilton used the information to create a new luxury hotel brand, called Denizen."

The NY Times reports that Hilton received a federal grand jury subpoena from the U.S. Attorney’s Office for the Southern District of New York asking for documents relating to the two former Starwood executives indicating a criminal investigation is underway.

While the allegations in Starwood/Hilton, if true, are extreme, there has been a dramatic increase in litigation between competitors over the theft of confidential, proprietary and trade secret information.  According to a recent survey conducted by Symantec and the Ponemon Institute, more than 59 percent of ex-employees admitted to stealing former employer’s confidential information such as employee records, customer information, and contact lists. The ease that employees can quickly and covertly appropriate large volumes of electronic data using portable storage devices or web-based personal e-mail accounts should cause all employers with confidential, proprietary or trade secret information and intellectual property great concern.

The large percentage of ex-employees that appear to be taking their employers information without permission can expose their next employer to expensive litigation and potential damages.  Whether the new employer will be liable will depend on a number of factors such as whether (and when) the new employer learns of the theft; how the new employer responds to that knowledge; and how the appropriated information was used. 

Employers that hire employees from competitors should take steps to ensure that they do not inadvertently end up in a civil suit or criminal investigation because of the hiring of those employees. Some measures employers can take in hiring employees from competitors include: ensuring that those employees are not under enforceable noncompetion agreements or restrictive covenants that prohibit the contemplated employment; ensure that employees are advised to and heed the warning not to bring any information (confidential or not) from their previous employer; and advising new hires not to use or disclose any their former employers confidential, proprietary or trade secret information.

Continue Reading Reports of Corporate Espionage Between Competitors on the Rise

With our close proximity to Mexico and the outbreak of reported swine flu infections in that country, Texas employers have a greater need to prepare their workforces for a swine flu pandemic.  There are now reported cases of swine flu in Fort Worth, Richardson, and Guadalupe County (near San Antonio).  Additionally, the World Health Organization’s recent increase in the pandemic alert level from phase 3 to phase 4 suggests that employer preparation of the workplace is prudent.

There is a great deal of public information available to employers that desire to prepare for and deal with an influenza pandemic. The U.S. Department of Health & Human Service has a full web page dedicated to workplace planning for a pandemic outbreak. OSHA also has guidance on preparing the workplace for an influenza pandemic.  The IFMA Foundation also has a Pandemic Preparedness Manual that contains specific steps for preparing a business continuity program designed to insure that business operations are not substantially disrupted during a disaster or crisis.

Suggestions for Employers.

  • Discourage nonessential business or recreational travel to Mexico and other high risk areas;
  • Make sure employees recognize the signs and symptoms of swine flu;
  • Instruct employees on influenza avoidance behaviors;
  • Discourage sick employees from coming to work;
  • Identify and designate "essential personnel" for the organization as key roles in the event nonessential personnel need to be told to stay home;
  • Prepare a Business Continuity Plan.

These simple suggestions may help employers minimize the effects of this potential pandemic and better weather the consequences if the pandemic becomes more widespread. 

As we approach local elections, it is good to remember that Texas law may require an employer to provide an employee with paid time off to vote.  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.

An employer can avoid this interruption and the payment for otherwise nonworking time by rescheduling 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). 

 

For several years the EEOC has enhanced its education and enforcement efforts using existing laws to protect employees with caregiving responsibilities (i.e., caring for children and ill family members).  This week the Commission issued guidance for employers it describes as "Best Practices" to assist employees in balancing work and family responsibilities.  Best Practices are proactive measures going beyond federal nondiscrimination requirements to help employees achieve a satisfactory work-life balance.

Acting EEOC Chairman Stuart J. Ishimari remarked that "Today we take another step forward, articulating not just the bare minimum required to avoid unlawful discrimination, but also thinking broadly about the ways in which family-friendly workplace policies can improve workers’ ability to balance caregiving responsibilities with work."

The new guidance supplements the EEOC’s 2007 guidance on Unlawful Treatment of Workers with Caregiving Responsibilities.  In addition to some common sense recommendations (e.g., train managers; develop, disseminate and enforce a strong EEO policy; investigate complaints), the most interesting suggestions to me are those related to flexible work arrangements. Some of the alternative work arrangements suggested include:

  • Flexible work hours (i.e., permit a varying starting and stopping time within a certain range);
  • Flexible week opportunities (e.g., work week consisting of four 10-hour days);
  • Allowing for voluntary rather than mandatory overtime and allowing overtime to be scheduled in advance;
  • Telecommuting, work-at-home or flexplace programs;
  • Reduced-time options (i.e., part time work or job sharing programs).

EEOC’s guidance provides a useful reference for any employer desiring to become more family-friendly and better assist its employees in achieving a balance between family and work. 

On April 17, 2009, the Supreme Court of Texas continued its trend of finding ways to enforce covenants not to compete in the employment context.   In Mann Frankfort Stein  & Lipp Advisors, Inc. v. Fielding, the Court considered "whether a covenant not to compete in an at-will employment agreement is enforceable when the employee expressly promises not to disclose confidential information, but the employer makes no express return promise to provide confidential information."

Fielding was hired by an accounting and consulting firm as a CPA and Senior Manager in the Tax Department.  When he accepted the at-will senior manager position he was required to sign the firm’s standard at-will employment agreement.  The agreement contained a client purchase provision.  The client purchase provision required that in the event Fielding performed work for Mann Frankfort’s clients in the year following his termination of employment, Fielding was required to purchase that portion of Mann Frankfort’s business the particular clients represented. 

The agreement lacked any affirmative promise from Mann Frankfort to provide confidential information to Fielding.  However, Fielding affirmatively promised not to use or disclose Mann Frankfort’s confidential information.  When Fielding left employment and began competing, the parties litigated over the validity and enforceability of the employment agreement and client purchase provisions. 

The evidence showed that after signing the employment agreement Fielding was provided with access to and use of confidential information of Mann Frankfort and its clients.  The information included "clients’ names, billing information and pertinent tax and financial information."  When Fielding was hired as a senior manager in the firm’s Tax Department, he would be required to have and use information confidential to the firm by the nature of his duties. 

The Court held that the lack of an affirmative promise to provide Fielding with confidential information in the agreement was not fatal to the enforceability of the agreement or the client purchase provisions in this case.  The Court explained that when the nature of the employment will reasonably require the employer to provide confidential information to the employee for him to accomplish his job duties, the employer has implicitly promised to provide the confidential information and the covenant is enforceable as long as the other requirements of the Texas Covenant Not to Compete Act are satisfied.

The effect of this holding will be to make it easier to enforce covenants not to compete in Texas.  Additionally, the Court has at least tacitly endorsed those intermediate court of appeals decisions that have concluded that restrictive covenants other than noncompete provisions (e.g., client purchase provisions or forfeiture clauses) should be analyzed like noncompetition provisions that strictly prohibit competition rather than merely providing a monetary penalty for such competition.