All posts by Vicki

Texas Legislature Strengthens Protections of Company Trade Secrets

Documentation, Personnel Policies, , , , , ,

The Texas Legislature in its most recent session adopted the Uniform Trade Secrets Act by passing Senate Bill 953. The new law, which will go into effect September 1, 2014, will help you keep your departing employees from competing against you using your own trade secrets, which are defined as “a formula, pattern, compilation, program, device, method technique, process, financial data, or list of actual or potential customers or suppliers.” Most employers ask me to protect their customer and/or supplier lists after the employee has left the company, which is about as effective as that old saying about closing the barn door after the horse has already bolted for greener pastures.

So the recently adopted statute is good news, but you as an employer have some responsibilities too. The trade secret will only be protected if it is (1) valuable; (2) not generally known to, and not readily ascertainable by proper means from others; and (3) subject to “efforts that are reasonable under the circumstances to maintain its secrecy”. In other words, you can’t blame a former employee for using your trade secrets if you made no efforts to keep them, you know, SECRET!

To prevail under this statute, which provides for an injunction and damages, you are going to have to show that you took proactive steps to protect your confidential property, such as:

  • Limiting employee access to the trade secret so that only those with a strong “need to know” gain access;
  • Labeling files or stamping the trade secret documents with “Confidential” or “Secret” stamps;
  • Password protecting the trade secrets if located on database;
  • Installing monitoring software to record who had access to the computerized trade secret;
  • Keeping the secret under lock and key;
  • Requiring numbering and shredding of all copies of the trade secret documents;
  • Requiring employees to sign non-disclosure and confidentiality agreements in addition to a written confidentiality policy in your employee handbook;
  • Conducting periodic inspections and reviews to beef up security of trade secrets; and/or
  • Having your employees sign a non-competition agreement that meets all of the quirky requirements for valid and enforceable non-competes in Texas.

If you can demonstrate that a former employee misappropriated valuable confidential information and you took some or all of these reasonable steps to protect your data before the employee left, this statute will allow your lawyers to more easily stop your employee and his new employer from profiting from your hard work and secrets.

New COBRA Notice Requirements

Benefits, Forms and Policies, ,

When an employee leaves your company (if you employ 20 or more people), he or she is entitled for at least 18 months to continue any group health insurance coverage that you provide to your employees. This continuation coverage requires that the employee pay the insurance premiums to remain on your group health plan. Therefore the employee must be notified when he leaves your employ of the rights he has to elect to continue that coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). The same election notice must be provided to the employee or his/her dependents if the employee dies, the employee divorces, the employee becomes entitled to Medicare, or a dependent child ceases to be considered a dependent under the health plan.

On May 8, 2013, the Department of Labor updated the election notice you must provide to your employees under COBRA when these events happen. The notice has to be provided to the employee within 14 days of when the plan administrator (you as the employer or an administrator you pay to take care of this function) receives notice that one of the these events has occurred. The new election notice and a redlined version showing what has been changed from the notice you are now using is available on the DOL’s website at: https://www.dol.gov/ebsa/COBRA.html. COBRA carries a stiff daily monetary penalty for employers or administrators who do not timely and properly provide these election notices, so you should start using the new notice immediately.

The DOL also publishes a guide to help you understand and administer COBRA: https://www.dol.gov/ebsa/pdf/cobraemployer.pdf. However, because COBRA can be tricky, I prefer that my employer clients pay the little extra fee per month to have your insurance company act as your COBRA administrator and take responsibility to assure that the deadline and notice requirements are met.

 

 

Employers Vulnerable to Overtime Claims

Compensation, , ,

As it routinely does, the United States Department of Labor recently released to the media a report of another Texas employer who had to pay back wages to current and former employees for overtime violations. This time the company was Porter Ready Mix Inc., in Porter, Texas and the amount was $173,863. But it could have been almost any employer because the overtime laws are very difficult to understand and follow. The DOL gets more than 26,000 complaints a year and collected $224 million in back wages in fiscal year 2011. Some of its favorite targets are restaurants, construction companies, agriculture, hotels, healthcare providers, landscapers, preschools and other industries that pay lower wages, but no employer is immune. Porter Ready Mix’s mistake? It paid gravel truck drivers by the trip instead of by the hour.

If you as an employer are paying any employee in any manner other than by the hour and paying time and one-half for all hours over 40 worked in one week, you too could be facing a Department of Labor investigation soon. Paying employees by the day, by the trip, by travel time, by commission, by tips, by bonus, by incentive, even by weekly salary can put you in the hot seat. Salaried employees must fall into one of four or five narrow categories to be exempt from overtime. Many employers put employees on salary or another pay scheme without doing any analysis of whether failing to pay overtime is legal based on that particular employee’s job duties.

Don’t rely on your instinct, your competitors, your experience, your employee’s desires or any other resource other than the Fair Labor Standards Act when you set compensation for a new employee or when you are reviewing your current staff compensation. Do your research before you pay any employee on any basis other than hourly plus overtime.

Preventing Guns in Your Texas Workplace

Forms and Policies, Personnel Policies, , ,

In 2012 in the state of Texas, 584,850 citizens were actively licensed to carry a concealed handgun. That amounts to approximately one legally armed citizen out of every 45 people in Texas. As a business owner or manager, if you do not want anyone carrying guns on your commercial premises because you are concerned about the potential violence that could occur, you have two options. First, you can prevent your employees from carrying a handgun by having a written policy prohibiting that in your employee policy manual. However, a recent amendment of the law does allow employees to have their gun locked in their vehicles, even if they are parked in a parking lot on your property.

Second, to prevent the public from carrying a concealed handgun on your property, you must have a “30.06 sign” posted in a conspicuous place clearly visible to the public (at every entrance is the best idea). The sign requirements are a single sign, both in English and Spanish, with 1” high letters, in contrasting colors, containing the exact language from the Texas Penal Code section 30.06. The language in English must read: “Pursuant to Section 30.06, Penal Code (trespass by holder of license to carry a concealed handgun), a person licensed under Subchapter H, Chapter 411, Government Code (concealed handgun law), may not enter this property with a concealed handgun.”

Other signs, such as a picture of a handgun with a red slash through it, are ineffective in Texas and concealed handgun license class instructors tell their students to walk right past those signs. There is a one other valid sign in Texas called the 51% sign, but that only applies to prohibiting the public from carrying handguns on a premises that receives more than half of its income from serving customers alcohol.

It is still illegal for licensees to carry a handgun in Texas at a federal building, at a school, at a public sporting event, in a courthouse, at an election polling place or in a jail or prison, even if those places do not post any kind of sign prohibiting the carrying of a concealed weapon.

New I-9 Form Required

Documentation, Hiring

On March 8, 2013, the United States Citizenship and Immigration Services released a new I-9 form that all employers must begin using by May 7, 2013, to document the employment eligibility of new hires. If you are reverifying the eligibility of a current employee because an eligibility document expired, or if you are rehiring a former employee, you must also use the new form for those purposes. Just as before, every new employee must provide you with documents that verify the employee’s identity and eligibility to work in the United States within the first 3 days of employment. Only the form on which that eligibility review is documented has changed.

Here is the link to the new form: https://www.uscis.gov/files/form/i-9.pdf. There is no reason to delay in beginning to use this form, so make sure whoever is in charge of your hiring is aware of the change to the form.

 

Employers Required to Post New FMLA Information

Employee Rights, Forms and Policies, , ,

If you employ 50 or more employees (counted by names on a payroll, whether full-time, part-time, owner, etc.), your business is subject to the requirements of the Family and Medical Leave Act, which generally gives employees up to 12 weeks (26 weeks for military family leave) of unpaid leave for pregnancy, the birth or adoption of a child, a serious health condition of the employee or a family member or for leave associated with the call to active duty or the injury of a member of the military. If your business is subject to the FMLA, you must place a poster on your workplace bulletin boards about your employees’ rights under FMLA. A few weeks ago, the Department of Labor changed a little of the language of that poster with regards to military families and airline flight crews. Even if these changes don’t specifically apply to your workplace, if you employ 50 or more employees, you must post the new FMLA poster in your workplace by March 8, 2013. You can find the new poster and print out a free copy of it at: https://www.dol.gov/whd/regs/compliance/posters/fmlaen.pdf.

TWC Creates Calculator to Estimate the Effect of Unemployment Claim

Benefits, Termination,

Whenever a Texas employer receives a Notice of Application for Unemployment Benefits, the first question that runs through the employer’s head is “How much is this going to cost me?” The answer to that question can influence whether the employer decides to protest the unemployment decision, how much time, effort and worry to invest in the protest and whether to hire a lawyer to protest the unemployment award. The cost estimate has been a difficult question for employment lawyers to answer. But now the TWC has provided all of us a calculator that will estimate how a particular employer’s tax rate will change if the former employee collects the maximum unemployment benefits.

When you receive the initial notice, go to this site and input your former employee’s salary for four of the last 6 quarters and the tax rate information off of your annual Tax Rate Notice from the TWC to get a tax rate estimate. With that estimated tax rate, you can compare it to your previous TWC reports and see the change that will occur in the Texas unemployment taxes that you will pay based on that one employee receiving unemployment benefits. Remember as you make that comparison that your tax rate increase will be effective for three years, not just one, after an employee files a successful unemployment claim.

New Requirements for Applicant Background Checks

Hiring

Companies routinely conduct background checks on applicants for employment or current employees being considered for promotion to assist them in selecting the best candidates. There are several types of background checks available to employers. The type of check utilized should depend upon the requirements and nature of the job position. Some checks may also be required by federal or state law. Employers are subject to the Fair Credit Reporting Act (“FCRA”) when they utilize third parties to perform background checks on job applicants or employees.

The FCRA requires employers to notify applicants/employees before ordering a background check or taking an adverse employment action based on the results of a background check. It also requires that prior to ordering a background check, an employer must obtain the application/employee’s consent. Failure to comply with these requirements can result in civil penalties, punitive damages, and even attorneys’ fees.

As of January 1, 2013, employers required to follow the FCRA must provide new and updated notices to applicants and employees. The recently created Consumer Financial Protection Bureau (“CFPB”) issued these new requirements and deadlines. The CFPB is now the enforcement authority over the FCRA. Prior to the creation of this new federal agency, the Federal Trade Commission enforced the FCRA. Under the FCRA, an employer must certify that it: (1) notified the applicant/ employee and obtained that individual’s permission to get a consumer report; (2) complied with all of the FCRA requirements; and (3) will not discriminate against the applicant or employee or otherwise misuse the information, as provided by any applicable federal or state equal opportunity laws or regulations.

Before an employer may reject a job application, reassign or terminate an employee, deny a promotion, or take any other adverse employment action based on information in a consumer report, the employer must give the applicant or employee: (1) a notice that includes a copy of the consumer report relied upon in making the decision; and (2) a copy of a summary of Rights Under the Fair Credit Reporting Act. The 2013 change includes modification to the mandatory “Summary of Rights” form. This form is a standard notice that must be provided to an applicant or employee subject to an investigative consumer report or when a “pre-adverse action” notice is sent to an applicant or employee. A copy of the new notices are available here.

Please note that employers have flexibility to avoid these strict FCRA requirements by conducting their own background checks. As an employer evaluating a potential hire, you may conduct your own due diligence search of the prospective employee by contacting past employers, checking with local law enforcement, searching public databases and another reasonable methods of assessing a person’s character, skills, and suitability for a particular position. Employers may use their own employees, such as a human resource professional, or their attorney to conduct background checks by verifying references or credentials without implicating the FCRA.

Employers Refuse to Recognize Rocky Mountain High

Attendence, Drug Testing, Personnel Policies, , , ,

Many of my Texas clients also have offices in Colorado. Since that state legalized the recreational use of marijuana in November, I’ve begun receiving questions from my clients with locations in Colorado about their workplace drug use and testing policies. They want to understand their rights in light of the legality of marijuana in that state.

Legalized marijuana should be no more difficult for employers to handle than alcohol. If an employee is drunk on the job, you as an employer have a right to test him and to fire him for reporting to work under the influence of alcohol. An employee who is high on marijuana at work presents the same issue. However, marijuana shows up on drug tests long after the body has processed and gotten rid of alcohol. In other words, an employer testing on Monday won’t know that the employee was drunk on Friday night.  But if the employee got stoned on Friday night, testing on Monday will reveal that fact. Employers are therefore concerned that they won’t be able to fire an employee who tests positive for marijuana use but can’t be proven to be high at work. This generates anxiety for safety-conscious businesses.

At this point in time in the Fall of 2012, marijuana is still illegal in the United States, and therefore in every state. Just because an employee isn’t in violation of Colorado state law by smoking weed, he is still in violation of federal law and can be in violation of the employer’s substance abuse policy if it is well-written. Therefore, as an employer, make sure your policy states that, along with being under the influence at work, the use, possession or sale of illegal drugs is prohibited, and illegal drugs should be defined as any drug that is illegal under municipal, state and/or federal laws.

The federal Department of Transportation announced in December 2012 that state legalization of recreational pot would not change the rules prohibiting marijuana use by employees in safety-sensitive positions such as truck drivers, pilots and school bus drivers. Therefore, explaining away a positive test for marijuana by saying it was used legally in Colorado will not be an acceptable excuse and will still subject truck drivers, for example, to suspension of driving duties. Employers can take the same approach by letting employees know that the employer’s safety requirements will not be affected by state laws legalizing marijuana and that employees will still be subject to discipline up to and including termination for any drug test that shows marijuana use.

Requiring Professionalism from Your Employees

Forms and Policies, Personnel Policies

Tiffany rolls her eyes when you give her a task to perform. Chris and Spencer can’t get along and constantly bicker in the workplace. Maggie complains about the unfairness of how work is assigned.

Each of these employees lacks professionalism. While professionalism is hard to define, we all know it when we see it. I call some of these workers “finger-pointers”, some “whiners”, and the rest “brats”, but all of their behavior is immature and difficult to bear in the workplace. Unfortunately, most supervisors will just say that the employee has a “bad attitude” and will be reluctant to coach or encourage better behavior from these employees. Then, when the bad attitude dude is fired, it is difficult for the company to win an unemployment compensation appeal or a discrimination suit because there is rarely a policy in the employee handbook that says, “Thou shalt keep a good attitude at work”.

But every handbook can include a professionalism policy. Your policy could read something like this: Continue reading Requiring Professionalism from Your Employees →