Dallas Employment Law & Business Litigation Blog

E-Verify & the Employer

September 8, 2009 saw the mandating of new rules that effect how employers verify the eligibility of their employees.  The burden to verify is on all employers, but certain employers must now use E-Verify.

This system operated by the United States Citizenship and Immigration Services, checks data against records from the Department of Homeland Security and the Social Security Administration. 

If you are an employer you should download the following presentation and make sure that you are complying with the law.

Download PowerPoint_Immigration_MW - pdf

Texas Business Entities - Which to Choose

Those of you forming a new business should peruse Steve Clark's article entitled "Choice of Entity Considerations in Forming a New Business and Avoiding Personal Liability in Business Entities."  Steve's article compares the pros and cons of the various business entities available to entrepreneurs in Texas. 

I.

Choice of Business Entities in

Texas

A.  What types of business are available in Texas?

Generally, businesses are created and operated in one of the following forms:

    •    Sole proprietorship
    •    General partnership
    •    Limited Partnership
    •    Registered Limited Liability Partnership
    •    Limited Liability Company, and
    •    Corporation.

    The focus of this paper will be on Texas law.  Applicable Texas statutes referenced include the:
    1.  Texas Revised Partnership Act (“TRPA”) ;
    2.  Texas Revised Limited Partnership Act (“TRLPA”) ;
    3.  Texas Limited Liability Company Act (“TLLA”) ;
    4.  Texas Registered Limited Liability Partnership Act (“TLLP); and
    5.  Texas Business Corporation Act (“TBCA”).

Read More...


Business Attorney  |  Dallas Law Firms  |  Non-Compete Attorney  |  Employment and Labor Lawyer

Collateral estoppel and unemployment hearings

Cox v. Desoto County, 2009 U.S. App. LEXIS 6933 (5th Cir. Miss. Apr. 3, 2009)

Cox was a secretary in the sheriff's office of DeSoto County, Louisiana.  She was transferred from her secretarial position to a position in the jail, allegedly due to her age and refusal to campaign actively for the sheriff's re-election.  Cox subsequently filed a lawsuit relating to the transfer.

While the lawsuit was pending, Cox filed a report about the abuse of a jailed inmate by several officers.  The DeSoto County District Attorney's office investigated, but found that no misconduct occurred and that Cox gave inconsistent statements about the events she allegedly witnessed. Cox was terminated for giving a false report. Cox amended her lawsuit, contending that she was terminated in retaliation for filing the wrongful transfer lawsuit and that the reason given for her firing was pretextual.

Cox filed for unemployment benefits, but was denied after a hearing by the Mississippi Employment Security Commission (MESC), which held that she was discharged for work-related misconduct.  Cox did not appeal the decision, prompting DeSoto County to move for summary judgment contending that the MESC's ruling barred her case due to collateral estoppel.

The district court granted the motion for summary judgment.  On appeal, the Fifth Circuit reversed on the claims relating to age discrimination. 

"Collateral estoppel does not apply to state administrative decisions where Congress has provided for a detailed administrative remedy such as that found in the Age Discrimination in Employment Act (ADEA)."

Crawford v. Metropolitan Gov’t of Nashville and Davidson Cty, Tenn.

Title VII’s Anti-Retaliation Opposition Clause Applies to Employee’s Information Provided in Company’s Internal Investigation

             In an unanimous decision announced on January 26, 2009, the U.S.Supreme Court held in Crawford v. Metropolitan Gov’t of Nashville and Davidson Cty, Tenn., 2009 U.S. LEXIS 870, that an employee’s responses in response to an internal investigation into sexual harassment of a manager was protected under the opposition clause of Title VII’s anti-retaliation clause.

            Prior case law had recognized the protection of Title VII where the employee initated an investigation by complaining of discriminatory conduct based on race or gender, and then was retaliated against by the employer for such conduct.

            In Crawford, the employer was investigating rumors of sexual harassment by the employee relations director.  A human resources officer asked Crawford and two others whether they had witnessed inappropriate behavior by the director.  After Crawford and the other two employees confirmed inappropriate conduct, the company took no action against the director, but terminated the three employees shortly after completing the investigation.  Crawford was terminated for embezzlement, and filed an EEOC charge and subsequent federal court litigation contending she had been retaliated against.

            The district court granted summary judgment for the employer, holding that because Crawford had not instigated or initiated any complaint, she was not protected by the anti-retaliation’s opposition clause.  The 6^th Circuit affirmed , holding that the opposition clause requires “active”consistent “opposing” activities to warrant protection, not simply answering questions about possible discrimination posed by a company investigator.

            The U.S.Supreme Court reversed and remanded the case for further proceedings, stating “Nothing in the statute requires a freakish rule protecting an employee who reports discrimination on her own initiative but not one who reports the same discrimination in the same words when asked a question.” Further, the Court stated “If an employee reporting discrimination in answer to an employer’s questions could be penalized with no remedy, prudent employees would have a good reason to keep quiet about Title VII offenses.”

            The significance of the holding in Crawford is that it recognizes that employees are protected from retaliation by cooperating in an internal investigation into discriminatory conduct, regardless whether they are the initiating party, or simply responding to an investigator’s questions.

            To hold otherwise would place the employee in a catch-22 situation where the employee could face retaliatory conduct by the employer for sharing requested information, or have their claim rejected based on being silent where the employer had procedures in place to investigate, prevent and correct discriminatory conduct.

            LESSON TO EMPLOYERS:  Take steps to insure that employees who participate in internal investigations are not retaliated against, and if disciplinary action is warranted for other reasons, make sure there is proper documentation to reflect such discipline as totally independent of the investigation process.

Madoff Hedge Fund Collapse

Wow.  Expect more of these types of stories as assets continue to depreciate and fraudulent activity becomes increasingly difficult to sustain.  This guy was unusual in that he was a former chairman of the NASDAQ Stock Exchange.  Apparently, he built a hedge fund that was nothing more than a giant Ponzi scheme.  You think he would have known better.

Snip from the BBC: 

According to the US Attorney's criminal complaint filed in court, Mr Madoff told at least three employees on Wednesday that the hedge fund business - which served up to 25 clients and had $17.1bn of money under management - was a fraud and had been insolvent for years, losing at least $50bn.

He said he was "finished", that he had "absolutely nothing" and that "it's all just one big lie", and that it was "basically, a giant Ponzi scheme", the complaint said.

Contesting a serious health condition under the FMLA

I frequently deal with employers who are accused of retaliating against employees for taking leave under the FMLA.  Most employers are good people who wouldn't think of firing someone for missing work due to an serious health problem.  Accordingly, they rarely take action when an employee suffers from something they can easily recognize as a serious injury or illness (like a car crash or cancer). 

What trips up some people, however, are those employees who seem to be healthy enough to work, but actually suffer from conditions that qualify them for the FMLA.  Examples could be an employee who needs to attend substance abuse counseling or one who has a psychological illness like depression. in these cases, the employers occasionally lose sight of the regulations and terminate the employee for something like "absenteeism."

The FMLA defines a serious health condition as “an illness, injury, impairment, or physical or mental condition that involves:

(A)  inpatient care in a hospital, hospice, or residential medical care facility; or
(B)   continuing treatment by a health care provider.”

What should an employer do if it believes a medical condition is not sufficiently "serious" to qualify for FMLA leave?

An employer may require that the need for leave for a serious health condition of an employee or an employee’s immediate family member be supported by a certification issued by a health care provider.  The final regulations provide that, with the employee’s permission, an employer’s health care provider may contact the employee’s health care provider “for purposed of clarification and authenticity,” but may not request additional information.

 At its own expense, an employer who has reason to doubt the validity of a medical certification may require an employee to obtain a second medical certification from a health care provider.  The employer may choose the health care provider for the second opinion, but may not regularly employ, contract with, or use the services of a particular health care provider. ). If the opinions of the employee’s and the employer’s designated health care providers differ, the employer may require the employee to obtain certification from a third health care provider, at the employer’s expense. This third opinion is final and binding. The third health care provider must be approved jointly by the employer and the employee.

Employee Free Choice Act (EFCA)

 What does an Obama presidency mean for employers?

One aspect of Barack Obama's presidency that has been unreported lately (what with all the talk about recession, bailouts, and war) is the potential for changing the laws that allow employees for enter into collective bargaining agreements (i.e. form a union).  Currently, the National Labor Relations Act (1935) protects most employees who engage in collective bargaining; however, the EFCA would significantly alter many of the mechanisms that govern this process.

Obama supported the Employee Free Choice Act prior to the election, but it was narrowly defeated in the Senate in 2007.  Many feel that it is just a matter of time before Pres. Obama revives the EFCA, which would make it much easier for employees to unionize.

One of the most significant changes posed by the EFCA involves the six week period before the "card check" and a secret ballot election to establish a union. 

According to Diane Stafford at the Kansas City Star:

Currently, if union organizers get 30 percent of employees in a work group to sign union-interest cards, the National Labor Relations Board orders an election. A secret ballot election is held about six weeks later, giving both union and employer time to campaign pro or con.

The Employee Free Choice Act would change the organizing rules. If a majority of employees in a work group sign a union card (that’s the “card check”), the union would become the official bargaining unit — no more six-week waiting period giving employers time to make a case against the union; no more subsequent election.

Pro-union activists argue that this six week period allows the employer to (illegally) threaten, intimidate, browbeat, and otherwise harass employees that are in favor of unionization.  By many accounts, pro-union employees are frequently terminated to serve as an example to others.  In addition to eliminating the six week waiting period, The Employee Free Choice Act would greatly increase the penalties for unlawful anti-union tactics.

I have always been kind of undecided on unions.  I see the need in some cases, but I also feel that they offer too much protection for poor performing employees, and can have the effect of making the targeted industry uncompetitive. 

One more thing -- My brother Adam is currently living in Los Angeles, trying to work as an electrician/grip in the movie industry, a job the basically requires him to join a local union.  Try as he might, however, it is virtually impossible for a new employee to get into the union.  Regardless of how you feel about unions, I don't think this kind of arrangement is fair or efficient.  If Obama does support legislation aimed at making it easier to form unions, I hope he also addresses these types of measures, which frustrate attempts by new employees to enter the job market.

Unions can be a fairly controversial topic, and I am interested in your opinion pro or con.  Let me know what you think in the comments.

FedEx Independent Contractor Lawsuit

FedEx has agreed to a $26.8 million settlement of a California lawsuit over whether approximately 200 drivers were independent contractors or employees.

Independent contractors are subject to less control than employees.  They are like independent business owners who can negotiate the terms of their contracts, set their own hours, develop their own routes, and can take on other customers.  Independent contractors are also responsible for their own maintenance and taxes, and by hiring them the employer is not subject to paying for their benefits, unemployment insurance, or social security insurance.  By some accounts, FedEx saved more than $400 million per year by classifying its workforce as independent contractors.

This case dealt solely with employees in California, so expect to see a flurry of similar lawsuits in other states, including Texas.  Here is a link to a recent article about the settlement.

Texas Employment Law

Congratulations to Steve Clark!  His chapter on the FMLA was included in the 2008 Edition of Laura Franze's book Texas Employment Law, which was updated this week from the 2007 Edition. 

Texas Employment Law includes over 40 chapters from experts in the field of Labor and Employment law, making it the best resource for keeping track of new developments in this area that you can find.  Steve is probably sick of me hogging it in my office, but I find myself having to refer to it on a weekly basis in response to client inquiries.

Here are some of the many topics in the 2008 edition:

Retaliation. How has the Supreme Court’s recent Burlington Northern decision changed the landscape of retaliation claims?

Reporting requirements. What changes has the EEOC made to reporting requirements?

Sarbanes-Oxley. What do HR professionals need to know about Sarbanes-Oxley?

Age discrimination. What is the impact of the Supreme Court’s Smith vs. City of Jackson decision on disparate impact and the ADEA?

Privacy.  Can an employer use an employee’s personnel information?

Military service. What are our obligations when one of our employees is called into active duty?

Investigations. Do employers have to allow employee representatives during investigations or disciplinary meetings if the workforce is nonunion? 

Doctrine of Emblements

The Doctrine of Emblements is a farming law doctrine that we used recently in a case that dealt with the ownership of a wheat crop our clients planted before the bank  foreclosed on the land -- potentially costing them millions of dollars in lost proceeds from the sale of the wheat.  We argued that our clients, as tenant farmers, were entitled to the proceeds from the wheat crop pursuant to the doctrine of emblements.

The fundamental purpose of the doctrine is to assure the tenant is compensated for his labor and to establish the desirability of encouraging husbandry as a matter of public policy.  To this end, the doctrine awards possession of growing crops to the tenant who plants them prior to foreclosure.

Relevant Texas Caselaw:
* Bateman v. Brown, 297 S.W. 773 (Tex. Civ. App. 1927);
* Crow v. Ball, 99 S.W. 583, 584 (Tex.Civ.App.1907, no writ).

Are transgendered employees protected against discrimination in the workplace?

 

Schroer v. Billington

This case caught my eye around the time we decided to start blogging about employment law. The U.S. Court for the District of Columbia recently decided Schroer v. Billington, a landmark case involving rights of transgendered employees.

The Court extended Title VII's protection against discrimination on the basis of sex to a man who applied for a position with the Library of Congress as a male, but subsequently informed them that he intended to start his new position as a woman after undergoing gender reassignment surgery. According to the court:

"[T]he Library’s refusal to hire Schroer after being advised that she planned to change her anatomical sex by undergoing sex reassignment surgery was literally discrimination “because of . . . sex.”