Tag Archives: Texas Employment Law

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.

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.

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.

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.

Follow Your Lawyer’s Advice

Litigation,

The case every lawyer has been waiting for was decided last month in the United States 10th Circuit Court of Appeals. A company trying to get out of an overtime violations case defended itself by saying it relied on the advice of its lawyer. But the court pointed out that the company had only selectively followed the attorney’s advice. The company ignored the second part of the legal advice it received and made no real changes in its compensation policy in response to the lawyer’s opinions. So the company’s defense failed. Mumby v. Pure Energy Services (USA), Inc., (10th Cir.)(Feb. 22, 2011).

Why is the case so meaningful to employment lawyers like me? Because too often, clients who pay me for my legal opinion decide to dismiss some or all of my advice if it means they will have to change the way they do business. So many companies are slow or unwilling to adapt and change, even when new employment laws or regulations require employers to rewrite their policies or update their procedures. They resist change even when it means they will be penalized or sued when they get caught. But they never believe they will get caught, despite statistics that show even small companies face an adverse claim by an employee or former employee at least once every five years.

Teenagers often use similar risky thinking when making bad decisions, such as “I won’t get caught if I drive home, even though I’ve been drinking beer all night. It was only a six-pack, after all!”  Continue reading Follow Your Lawyer’s Advice →

Employer’s Liability for New Employees

Attendence, Discrimination, Termination,

Bob Smith started working for you four weeks ago. He has already missed two days of work, been tardy, left early one day and when he is at work, his production is mediocre. You have a 90-day probationary period in your employment policies and it is becoming clear to you that Bob is not going to make it through that probation. Can you fire this four-week employee without any unemployment or discrimination liability?

Unfortunately, the answer in Texas is “no”. As soon as Bob became your employee, he became your problem. This is one reason that the hiring process ought to be very demanding, including checks of all of his past employers, criminal records, drug screening, etc. to discover at least the most obvious problems before you put him on the payroll. But many past employers won’t tell you anything about Bob’s dependability, so it is not surprising that he got through the hiring hurdles.

So if you decide to fire him today, what kind of liability can you face as an employer? In Texas, you will probably be charged back for his unemployment benefits by seeing an increase in your unemployment tax rate on all of your employees for the next three years. That is a stiff price to pay. There is a chance you will get lucky and not get the charge back if Bob falls into a narrow category based on how much he worked before you hired him. The explanation for that can be found on the Texas Workforce Commission website (click here).

Assuming that you don’t get that lucky or you don’t want to count on luck, you can document Bob’s problems, give him a written warning and then fire him for misconduct as you would any longer-term employee so that you have a way to fight the unemployment claim. This will go better for you if your policy manual makes it clear that absenteeism during the probationary period is not allowed. There is nothing wrong with requiring your new employees to show up every day for the first three months. You would think that most new employees would want to do that just to prove themselves, but I am constantly amazed by the slackness that many new employees bring to the workplace.

What about discrimination? Surely you can’t be held liable for something that happens to a new employee in the first few weeks? Think again. The United States Sixth Circuit Court last year upheld a $1.2 million sexual harassment claim for an employee who had only worked for five weeks at the company. In her third week of employment, she complained to her trainer and supervisor about the comments, touching, whistles and lewd gestures she was receiving. The supervisor moved her, but unwisely said, “That’s just how they treat their women over there,” and requested that she not tell the human resources department.

After another two weeks without improvement, the new employee told the human resources manager about the problem. He promised to investigate, but didn’t, so she filed a charge with the EEOC and later, a lawsuit. The trial court and the appellate court found that the employer’s response to the employee’s sexual harassment complaints showed reckless indifference to the new employee’s federally protected rights, supporting not only a judgment against the employer, but also an award of punitive damages.

There are all kinds of problems with the supervisor and the human resources manager’s responses to the sexual harassment complaint that have been discussed in other entries on this blog, but suffice it to say here, the fact that the employee only worked five weeks did not insulate the employer from any liability in this case. Your responsibility as an employer to protect your employees from discrimination kicks in on their first day of work and continue throughout their employment.

Employer’s Guide to Social Media

Personnel Policies,

Sally Sassy, one of your best customer service representatives, posts pictures on her Facebook page that show her drunk, in a skimpy bikini and kissing many different men, even though she is married. Several of your customers are her “friends” on Facebook.

Derek Downer, likes to post negative comments on My Space about everything, including his job with your company as a bookkeeper. He often talks about how he hates his boss, disapproves of his coworkers, and thinks your company’s latest project is doomed.

Gail Gossip has a personal blog where she chronicles all of her feelings about work, including stories about her coworkers’ professional and personal struggles. Her blog is open to anyone who wants to read it.

Hayden the Human Resources director at your business uses Linked In to network with others in your industry, including finding well-qualified candidates for openings at your company.

All of these employees are using social media on the internet, in some ways that benefit your company but in other ways that can damage your business’ reputation or even your profits.

As the employer, you can adopt a policy to instruct your employees as to which posts on the internet are appropriate and professional and which are not. The only legal restriction comes from the National Labor Relations Board, which prohibits employers from adopting policies that restrain employees from engaging in concerted activity or from forming unions. The NLRB says that you cannot impose blanket restrictions, such as “employees cannot post any negative comments about this company.” Employees are free to discuss salaries, working conditions or terms of employment in person or on the internet.

However, you can expect your employees to use good judgment on the internet. You can direct your employees to protect your company’s trade secrets and confidential business information. You can prohibit the use of your logo. You can also require them to be professional and respectful towards your customers and your other employees. You can require them to get the permission of others before mentioning them on the internet as a way of protecting the privacy of your other employees, vendors and customers who might be appalled to find their personal business posted without their permission.

You can also remind employees that your other policies should not be violated on the internet. For example, an employee who posts sexual comments on a coworker’s blog or Facebook page may be violating your company sexual harassment policy and can be disciplined for that. Your company ethics and values policies may also prohibit certain inappropriate actions.

You can also limit the use of company computers, networks and company time for social media activity. You do not have to allow your employees to spend hours per day on your business computer updating their personal blogs.

As with any employee activity that could turn ugly, the best advice is that you as an employer adopt a written policy now, publish it to all of your employees, and prevent the problems before they happen.

Attempting to Prevent Workplace Violence

Hiring

Amy Bishop, a 42-year-old biology professor at the University of Alabama-Huntsville (UAH), walked into a biology faculty meeting on Friday, February 12, and according to eyewitnesses, opened fire on her colleagues, killing three and wounding three others. She is charged with capital murder and the death penalty may be sought. Obviously this a nightmare for the victims’ families and friends, the university and the community of Huntsville.

As the shock of this gruesome event settled in to my brain, the questions about workplace violence prevention arose. Could this horrific mass shooting have been prevented by policies, background checks, or alert coworkers? The question is unanswerable, of course, but trying to answer it is the only way we can learn something from this tragedy.

One method that an employer can use to prevent workplace violence is to thoroughly check the criminal and employment background of any prospective employee. There is speculation about Amy Bishop’s background, including suspicion that she was involved in the killing of her own brother and in sending of a mail bomb to a former boss. However, no criminal convictions were recorded in these incidents so they would have been of no help to a human resources professional trying to check Bishop’s background.

A much clearer sign of a potential problem was her guilty plea to misdemeanor assault and disorderly conduct in 2002 for punching a woman in the head at an IHOP after the victim took the last booster seat just as Bishop arrived with her children. The victim told officers that Bishop started a profanity-filled argument and at one point shouted, “I am Dr. Amy Bishop”. Some of the news stories now say that Bishop was put on probation and ordered to take anger management classes. If so, a criminal record would exist. Any employer who finds violent crimes on a prospective employee’s criminal record, even if they are misdemeanors, should think carefully about whether that applicant’s abilities are worth the risk to others in the workplace.

A thorough reference check with Bishop’s past employers might have revealed some personality issues that could have raised red flags. Granted, many past employers will only give out dates of employment, rate of pay and job titles. But if a prospective employer will fax to the former employer a release signed by the applicant absolving the former employer of any liability for giving out real information during the reference check, the conversation will usually be much more revealing.

In Bishop’s case, UAH might have discovered that Bishop, as one FBI profiler said, was “wired in a way that any rejection, either real or imaginary, is seen as an insult against her very existence and self-esteem. Her narcissistic ego was impugned and threatened.” People like Bishop, who have a tendency to blame others whenever things go wrong in their lives, who show anger often and who retaliate aggressively, may have left an indelible impression on past employers. The trick is to get them to relate those personality problems to you as a prospective employer so you can reject that applicant before he or she becomes an irritant, or worse, an aggressor, in your workplace.

Of course, as an employment attorney, I would be remiss if I didn’t point out that the Americans with Disabilities Act protects those with mental illnesses from discrimination in hiring if the applicant is qualified and can perform the job with or without reasonable accommodation. However, you will not know that the applicant has a mental illness from just a  reference check. You simply will have identified some negative behaviors that are unacceptable in your workplace. This is always a good reason to pass over that applicant in favor of someone equally well qualified who doesn’t have poor reports from past employers.

Finally, after you have hired an employee, your best protection from violence occurring in your workplace is a policy that makes it very clear that even threats of violence are prohibited and may cost an employee her job. Training of all employees, but particularly supervisors, to recognize and identify certain suspicious behavior can be helpful. Granted, in academia as in other work environments, the line between eccentricity and madness may be a very thin one. But no one should be allowed to make specific threats, carry a weapon (even in a car in the company parking lot), or physically fight with a coworker without the employer taking serious disciplinary action, including possible termination.

The truth is that no employer can make a workplace 100% safe from someone as irrational and violent as Amy Bishop appears to be. However, that doesn’t give you license as an employer to fail to do everything you can to prevent such an occurrence in your workplace.

Protect Your Business From Embezzlement

Hiring, Personnel Policies

There was an insignificant story in the Amarillo newspaper last week about a former credit union employee who was sentenced to 30 months in federal prison for stealing $221,000 from her employer over a seven-year period. At least it seemed insignificant, based on the placement in the paper. But to her employer, I know it was very significant.

I’ve advised many employers in the Panhandle of Texas who have lost money to thieving employees. It has happened to large companies, small businesses, non-profits and for profits. I’ve dealt with embezzlement at banks, car dealerships, doctor’s offices, law offices, construction companies and charities. Each employer feels embarrassed to have been deceived, angry over the missing money (often which will not be recovered) and mistrustful of all employees from that point forward. Those reactions are understandable, since most embezzlement could have been prevented with some careful policies and practices.

Of the three factors leading to embezzlement, motivation (financial pressures), opportunity (access to company cash or accounts and a lack of corporate controls in place) and rationalization (its just a loan or my rich boss won’t miss it), opportunity is the only part of the equation that the business can control. Here are some of the ways to do this:

  • Thoroughly screen potential new hires by requiring a criminal history and by talking to past employers.
  • Never let any one employee, no matter how long tenured and how trusted, handle all the bookkeeping. You need a system of checks and balances.
  • Know your employees and consider the telltale signs of a potential problem: gambling losses, large medical bills, credit card debt, a standard of living above all possible income, etc.
  • Make every employee who has access to company funds take a long vacation every year while another employee performs his work and double-checks the procedures the absent employee follows.
  • Never sign checks that aren’t completely filled in or that lack supporting documentation like an invoice.
  • Require two signatures on checks over a certain amount, such as $500.
  • At least once per month, do your own mini-audit. Carefully check company credit card bills, cash flow and deposit slips, accounts payable, and other vulnerable items.
  • Have your business audited annually by an independent accountant.
  • Immediately fire any employee about whom you have strong evidence of theft. This person is not going to be rehabilitated through progressive discipline. And don’t worry about the fallout. If you can prove theft by the terminated employee, you will be protected from unemployment or discrimination claims.
  • Prosecute any thief to the full extent that the law allows. Often this is required by the insurance company if you want to recoup any of your losses. Some employers, like banks, are hesitant to do this because of the bad press it could cause. I think every employer has a societal obligation to prevent this from happening to another business by making sure the theft shows up on that employee’s criminal record from now on.

Employee on Cell Phone in Car can be Costly for Employer

Personnel Policies, Training

Debra Ford was driving on Interstate 16 in Georgia when her car was hit by a sedan driven by Vanessa McGrogan, an International Paper Company employee who was driving a company-owned car with the cruise control set at 77 mph in a 70 mph zone and according to a witness, talking on her company-issued cell phone at the time of the accident.

Ford’s car was overturned and slid along the asphalt and Ford’s arm got trapped between the car door and the pavement, leading to an amputation of her arm up to the shoulder.

Who do you think had to pay to settle the lawsuit that inevitably followed this horrific accident? International Paper, of course.

The employer-issued cell phone and company vehicle guaranteed that the party with the deepest pockets would be sued. McGrogan’s employer settled the case for $5.2 million in 2008.

Cell phone use also led to a woman who was severely injured by a salesman involved in an accident while he was talking on his cell phone being awarded $21 million by a Miami jury in a suit against lumber wholesaler Dykes Industries in 2001. The salesman was driving on company business at the time and talking on his cell phone.

In January 2010, a lawsuit in South Carolina was settled for an undisclosed amount just hours before trial. At stake was $55 million in insurance carried by the employer of Sharon King, who was not working at the time of the incident, but was driving a company vehicle and talking on her cell phone when she allegedly hit two bicyclists riding in a charity event. King pleaded guilty to a reckless driving charge.

The King case has received so much publicity in South Carolina that the legislature there is fast-tracking legislation to ban texting and talking on hand-held cell phones while driving. Some of that urgency may have resulted from the brilliant (and inflammatory) pretrial statement of one of the attorneys for the cyclist’s estate who called cell phone use in cars “the new DUI”.

Texas does not ban hand-held cell phone use for anyone other than bus drivers. What that means is that as a Texas employer, you have to take responsibility for training and monitoring your own employees who could put the company’s assets at risk by driving and talking or texting.

A texting driver is 23 times more likely to have an accident or come close to having an accident than a driver who is paying attention to her driving, according to a Virginia Tech study.

The National Highway Traffic Safety Administration says that 25% of all crashes are caused by distraction. Talking on a hand-held cell phone while driving has been shown to be significantly more distracting than eating or talking to a fellow passenger. And we can all agree that texting while driving is idiotic.

So how does an employer prevent its employees from exposing the company to enormous liability while driving?

Reconsider whether the liability associated with issuing company vehicles and company cell phones is worth the perk. Many companies would rather reimburse an employee his mileage for using his own car during work hours or pay a cell phone allowance than to assume the 24-hour per day liability that is associated with a company vehicle and a company cell phone.

You also need a written policy and extensive training of every employee followed by strict disciplinary enforcement of the policy prohibiting any use of a hand-held cell phone while driving on company business. Although a complete ban of cell phones in cars would be the safest policy, if that is impractical, you can at least buy Bluetooth headsets for your employees to discourage any hand-held cell phone use.

Finally, check your company liability insurance policies to make sure you are well covered if anything as horrendous as the King case happens to one of your employees.