Tag Archives: Texas Employment Law

Relativity in the Workplace

Discrimination, Management,

There is an old Hollywood story that warns of family-run businesses:

Despite their joint ownership (with Albert and Sam) of Warner Brothers studios, little love was lost between Jack and Harry Warner (who once chased Jack around the Warner Brothers lot brandishing a lead pipe, threatening to bludgeon him).

Albert Einstein was given a tour of the Warner studios. “This is the great Professor Albert Einstein,” an executive declared by way of introduction to Jack Warner. “He invented the theory of relativity.”

Warner suddenly perked up. “Well, Professor, I have proved a theory of relatives, too,” he remarked.

“Really?” Einstein replied.

“Yes,” Warner declared. “Don’t hire them!”

In my law practice, I often advise businesses in which several of the owner’s family members are employed. While many families are able to successfully avoid stepping on the landmines that are planted just below the surface of family businesses, others seem to blow up either the family or the company by forgetting to follow a few simple principles to avoid the explosives:

  • Make sure your family members are qualified to work in the role they are fulfilling in the company. I know of a successful entrepreneurial husband who wasn’t interested in worrying about the day-to-day tax, employment, accounting and management details of his business. He was a salesman and a very good one. So he left all those other details to his wife. She had no MBA, no training and no experience with the technical and financial aspects of running a business. Their business eventually suffered several large setbacks because neither spouse was qualified to manage the niggling but necessary details with which every business has to deal. The moral: either hire qualified non-family members to do the jobs which you and yours cannot perform, or require immediate and extensive training for any family member whom you expect to perform unfamiliar job duties.
  • Don’t discriminate between family and non-family members. If you have a policy manual that prevents all employee from smoking in the building, prohibits the use of alcohol while on duty or pornography on the company computers or requires all employees to show up on time, do not allow family members to break these rules. In fact, in my experience, the family members should meet even higher standards to set a good example and because they are always under more scrutiny by employees to determine whether there is a double standard applied.
  • Be careful about practicing your family’s faith in the workplace. I never advise an employer to cut out all references to faith in a business, particularly since following the tenets of your faith can create a much more ethical and wholesome workplace. However, the more family members or others of the same faith you have working in your business, the greater the possibility that applicants or current employees will feel like they have to pass a faith test to work in your business. This would of course be discriminatory, so you will have to be even more diligent about enforcing your equal employment opportunity policies, hiring employees of varying faiths, and making disciplinary decisions without regard to an employee’s beliefs.
  • Watch out for apparent authority problems. In Texas, those with apparent authority to speak for the company can bind the company to contacts and get the company in legal hot water for employment decisions. If it is well-known to your vendors and employees that your daughter is working at the company and is being groomed to one day take over the business, don’t be surprised if she is treated legally as having authority to make all decisions for the company, even if, as the owner, you don’t believe she is experienced or mature enough yet to actually make those decisions.
  • Family dysfunction can really cripple your business. If your son and daughter-in-law both work at the business, what will happen if their marriage starts to fall apart and they eventually divorce? Will you automatically fire your soon to be ex-daughter-in-law? Could this create a sexual discrimination issue? Could she make a claim in the divorce for part of the ownership of the business as community property? Those business owners who plan for the worst and hope for the best address these kinds of issues long before problems arise by requiring buy/sell contracts, pre-nuptial agreements and employment contracts with family members.

Protecting Your Company from Departing Employees

Termination

I may be naive, but I believe that most employees leaving one job for another want to leave in as amicable a way as possible. Most of them have no intention of stealing your trade secrets, unfairly competing against you or hurting your business in any way.

But then there are the other departing employees. They are the ones who take your customer preference lists, use your resources to set up a competing business, steal your trade secrets or sabotage your computer system as they leave. These are the bad apples that we have to address in non-competition agreements and confidentiality statements.

I think one of the most effective ways to protect your company from these pirates is to have a written policy explaining to your departing employees what is and is not proper behavior at the time of termination. You might want to include some or all of the following:

  • You may not take, copy nor provide to anyone outside of the company our list of current or prospective customers or [name other confidential documents];
  • You may not use our resources (computers, e-mail, telephones, offices, etc.) to start or run your own business or to aid or communicate with your new employer;
  • While you are still employed here, you may not encourage our customers, employees or vendors to end their relationship with us and join you in any new business or other company;
  • You cannot publicly announce your new position or business until you have left our employ;
  • You cannot remove files, manuals, papers or other documents from our premises if they belong to the company or address company business;
  • You cannot transfer any company information or data electronically to another employer or to yourself off premises or to any disc, flash drive, or other electronic storage device;
  • You may not delete, remove or destroy any data from the company computer system prior to your leaving your employment;
  • On your last day of work, you must return all keys, credit cards, laptops, cell phones, or other equipment that belongs to the company. You may request to remove personal information from this equipment under the supervision of a company representative;
  • If you have not already done so, you will be allowed to remove personal items from your office at a mutually convenient time after work under the supervision of one of our managers

This list certainly won’t address every way in which a departing employee may pilfer valuable information or equipment from your company, but it should get you started thinking about the problems you’ve had in the past which you would like to avoid from now on. If you have had more serious piracy in your workplace, such as the misappropriation of trade secrets or patented processes, you will want to consult with an employment attorney about an enforceable employment agreement that includes a noncompetition provision, as well as other protections for your intellectual property.

Keep An Employee Disciplinary Log

Discrimination,

In the May 2009 San Antonio appeals case of Cantu v. Frito-Lay, Inc., the employer beat a discrimination charge by a former employee because the company kept good records of the kinds of disciplinary action applied to employee misconduct and the reasons such actions were taken.

I often advise employers to keep a running log of each time the company issues a written warning, a suspension or a termination so that it is clear whether employees are being treated equally for similar misbehaviors. The Cantu case provides a good example of the importance of that information.

Kirk Cantu worked as a route salesman for Frito-Lay. He stocked bags of chips in HEB grocery stores. He was seen by a store employee tampering with the “sell by” dates on bags of chips that were later found to be stale. He was banned from servicing any HEB stores at the insistence of HEB, which led to his termination from Frito-Lay.

Cantu sued for gender discrimination, comparing his situation to that of Sandra Casso, a route salesman for Frito-Lay who serviced one HEB store. Casso was related to the store manager and told the store personnel that the manager was pregnant. The store manager asked that Casso be reassigned to another store, but did not want Casso reprimanded. Frito-Lay allowed Casso to bid on another route rather than terminating her employment.

Cantu claimed that he was treated differently than a similarly-situated female who had also been barred from servicing an HEB account, and therefore argued that he had been discriminated against on the basis of his age and gender (Cantu was 53 and Casso was under 40).

The Texas Supreme Court has previously ruled that to be a “similarly-situated” employee for comparison purposes in discrimination cases, the circumstances must be comparable in all material respects, including similar standards, supervisors and conduct. Therefore, the court said that not only does it have to examine the ultimate disciplinary action (both barred from servicing an account, yet one was fired while the other one wasn’t) but also the underlying circumstances.

In other words, to prove discrimination because of disparate disciplinary measures, the plaintiff has to prove that the misconduct he engaged in was nearly identical to that engaged in by a female that the company retained. Cantu was unable to demonstrate that Casso’s misconduct was nearly as serious as his, and therefore he was unable to demonstrate discrimination.

How does an employer assure that it can successfully defend such cases? By making and keeping very good records of the reasons that each employee was fired (or not fired) for misconduct and then showing the court that the employer has been consistent in applying disciplinary measures across all ages, races, genders, etc.

That requires a good log that each manager can access and review before deciding what disciplinary measures to take in an individual situation. If the log were to show that three people before were fired for lying on an application, then the manager would know that lying on an application is a firing offense.

However if the log showed that only the employees who lied about relevant past employment (by claiming experience they didn’t really have) had been fired, while those who lied about schooling (by claiming they had a high school diploma when they only had a GED) had not, the manager will have direction about which offenses are considered serious firing offenses and which are not as serious.

You can’t rely on all of your managers to know of or remember what disciplinary action was taken with each employee, or even the circumstances surrounding the misconduct. But it is easy enough to create a running log that each of them can access and add to as part of the normal disciplinary process. This simple step could assure a win if the company battles a claim of discrimination.

Smoking Policy Suggestions

Personnel Policies

Since 1966, we have been warned of the dangers of smoking. Here is a brief history of the Surgeon General’s warnings on cigarette packages:

  • Caution: Cigarette Smoking May be Hazardous to Your Health (1966-1970)
  • Warning: The Surgeon General Has Determined that Cigarette Smoking is Dangerous to Your Health (1970-1985)
  • SURGEON GENERAL’S WARNING: Smoking Causes Lung Cancer, Heart Disease, Emphysema, And May Complicate Pregnancy. (1985-)
  • SURGEON GENERAL’S WARNING: Quitting Smoking Now Greatly Reduces Serious Risks to Your Health. (1985-)

And yet, many businesses still wrestle with whether the company should have a nonsmoking policy for its employees and visitors. Legally, a company in Texas is free to make any policy it wants regarding smoking on the job or in its facilities.

Should your company have an anti-smoking policy? If you are paying all or part of your employees’ health insurance premiums, you should have a smoke-free workplace policy for economic reasons, if no other reason. A federal study based in Pueblo, Colorado, demonstrated that the rate of hospital admissions for heart attack declined 41 percent in the 18 months after a city smoke-free ordinance took effect compared to the 18 months prior to the ordinance. According to the Centers for Disease Control, smoke-free laws likely reduce heart attack hospitalizations both by reducing second-hand smoke exposure and by reducing smoking. Just think what that kind of reduction could do to your group health insurance premiums!

Since Amarillo and most Texas Panhandle towns have no city ordinances banning smoking, employers have to make their own decisions about what to do. Few employers allow employees to freely smoke in the building. Many Texas employers choose to create areas outside of the building and away from the entrances in which smoking is allowed. Others take it farther and ban all smoking on the premises. Baptist St. Anthony’s hospital in Amarillo created a brief uproar last year when it expanded its smoke-free campus policy to a blanket refusal to hire smokers at all. This is the most stringent smoking policy of which I am aware.

How do you institute a smoking policy at your company? Here’s a good lawyerly response: in writing, of course. Add a policy like this one from the Texas Workforce Commission’s publication, Especially for Texas Employers, to your employee handbook and post it in break rooms and on the employee bulletin board or intranet:

The Company maintains a smoke- and tobacco-free office. No smoking or other use of tobacco products (including, but not limited to, cigarettes, pipes, cigars, snuff, or chewing tobacco) is permitted in any part of the building or in vehicles owned, leased, or rented by the Company. Employees may smoke outside in designated areas during breaks. When smoking or otherwise using tobacco or similar products outside, do not leave cigarette butts or other traces of litter or tobacco use on the ground or anywhere else. No additional breaks beyond those allowed under the Company’s break policy may be taken for the purpose of using tobacco or similar products. Dispose of any litter properly in the receptacles provided for that purpose.

Or if you want a more restrictive policy that bans tobacco everywhere on your premises, here is the TWC’s suggestion:

The Company maintains a smoke- and tobacco-free office. No smoking or other use of tobacco or similar products (including, but not limited to, cigarettes, pipes, cigars, snuff, or chewing tobacco) is permitted at any point during a workday, while on company business, while in transit between work locations or assignments, while at client locations, in any part of a company building or within “x” feet of such buildings, or anywhere on or in company parking areas. There are no designated smoking areas inside or on Company premises, nor does the Company allow smoking breaks during the workday, i.e., no additional breaks beyond those allowed under the Company’s break policy may be taken for the purpose of using tobacco or similar products. If returning from a meal break during which you have used tobacco or similar products, do not leave cigarette butts or other traces of litter or tobacco use on the ground or anywhere else. Dispose of any litter properly in the receptacles provided for that purpose.

Weathering the Recession Without Extra Burden of Litigation

Termination

As an employment lawyer, I frequently am asked the question that all business people are asked these days: “How is your business faring in these troubled economic times?” I am personally happy that I can say, “My business is booming.” What I am not happy about is the reason for my current volume of business: more companies are being sued by their former employees, probably because the recession has created more “former employees”.

There are two approaches I recommend to prevent becoming just another company involved in expensive and frustrating employment litigation during this economic downturn:

  1. Don’t cut back on the practices that help prevent employee lawsuits. That means keeping your policies updated, training all of your managers annually on employment law issues like discrimination, continuing to use progressive discipline, and carefully documenting every employee interaction, particularly ultimate employment actions such as hiring, promotions, demotions, reduction in force and terminations. You’ll find lots of postings on this blog giving you more information about how to take these measures if you are a Texas employer.
  2. Prevent lawsuits by using severance agreements when you have to terminate employees. That’s what I want to discuss today.

Texas law is supportive of severance agreements, which are contracts between the exiting employee and the company giving the employee more pay than he is due in exchange for a release of most possible employment law claims. In 2008, 93 percent of U.S. companies who paid any additional severance pay to a departing employee required that employee to sign a release, according to a new study by consulting company Lee Hecht Harrison.

The study found that the traditional idea of severance pay based on tenure (one week for every year worked, for example) is being replaced by packages negotiated by the employees themselves, sometimes before they are even hired. The study found that nationwide, the minimum number of weeks paid in 2008 for all executive employees was 13 and the maximum was 38.

These figures are higher than what I see in the Texas Panhandle. I find that generally my clients are willing to pay 3-6 months of severance to key executives who are departing, while 4-12 weeks of severance compensation is much more commonly paid to lower-level employees when the company doesn’t want to mess with litigation.

Not every departing employee needs to be paid severance compensation, because you do not need a release from every terminated employee. If you have paid attention to the preventative actions described above, have strong written policies, used progressive discipline and documented everything, you may be able to terminate a low-performer without fear of litigation.

However, there are many instances where the firing is not so neat and clean, where the employee is known to be litigious, or where your gut (or your lawyer) just tells you that you need an extra measure of protection when letting a particular employee go. That’s when the severance agreement is helpful.

A severance agreement is a contract which has certain legal requirements to make it enforceable. So kids, don’t try this at home. Call an experienced employment attorney in the state in which the employee is located to help you draft an agreement that will relieve your company of liability and protect the business from the cost and burden of a lawsuit.

Texas’ Group Health Insurance Problem

Benefits

There was a very informative article in Time Magazine last week called “The Health Care Crisis Hits Home”. The author, a journalist with 15 years covering health policy, wrote of her brother in Texas whose kidneys are failing. He had been insured for 6 years with one company, buying a new individual short-term policy each six months because group health insurance wasn’t available through his employer. After being diagnosed, he found out that the short-term policies he purchased were “junk”. One expert said, “No one should ever buy them. It is false security that is being sold”.

This article demonstrates the catch-22 which we face in Texas. None of us want our employees to face overwhelming medical bills. However, many of us as employers feel like we can’t afford to provide health insurance for our employees. In fact, the Time article says that only 37% of small companies in Texas (less than 50 employees) offer group medical coverage. As a result though, 1 in 4 Texans is without health insurance. Even more are underinsured, like the author’s brother, who have some type of coverage but find out when they become sick that their policy is insufficient.

What can you do about this as a small Texas employer? Talk to your employees about whether health insurance is important to them and if they want to make a sacrifice to obtain it. More and more surveys that I see in my human resources and employment law trade magazines indicate that benefits are equally as important to an employee as the salary offered. I know of many employees, such as my husband and his fellow high school teachers, who are highly motivated by the benefits that their jobs provide to them and their families, particularly since their salaries are nothing to get excited about considering the importance of the work they perform.

In Texas, you can obtain a group health insurance policy as long as the employer pays 50% or more of the employee’s premium. Because the group rates are so much lower than the rates for an individual policy and the coverage is so much more complete, your employees may be willing to pay for as much as half of their premiums in order to be protected. This could also mean that you and your own family could obtain decent coverage.

Don’t Show a Texas Employee His File

Documentation, Employee Rights, Forms and Policies

Let me be clear: Private employers in Texas do not have to allow employees to see their personnel files. That’s right. I don’t care what other states do, or what they show on TV. The law in Texas is that the file belongs to the employer and the employee cannot demand to see it.

That being said, what does your personnel policy manual say? Many employers whom I help have policies that they copied from a generic software package or borrowed from a friend’s company with offices in another state. Those employee handbooks often say something like, “An employee may request to see his personnel file with 3 days written notice to the human resources department.”

If you have given your employees that privilege, it will appear discriminatory to deny them the opportunity to review their files if they make that request. So check your policy manual first. If you have a policy that promises that employees can see their files, you need to amend your policy to say, “Personnel records of the company belong to and are the property of the company. They are not available to an employee to review.” Then, whenever an employee asks to see her file, you can point to your policy and say, “no” without hesitation.

Why do I recommend that employers in Texas keep their files private? Because the most common mistake I see in my employment law practice is that employers do not document enough. They are scared to write anything down if they know that an employee can see it and question it at any time. The threat of employee litigation looms heavy over most of today’s managers.

I continually try to encourage supervisors to write down everything. I won a trial one time based solely on the informal, imperfect daily diary notes that a manager kept about any problems that he had during the day with his team. The employee who sued the company was mentioned so many times in the informal notes in the 3 months before his termination that it was clear that he was a problem employee and not the victim of discrimination or retaliation.

If you keep your employee files private and document consistently, you can avoid a lot of potential liability as an employer.

Controlling Absenteeism

Attendence

I often get questions from employers about firing employees for absenteeism. Like any good employment attorney, I ask the employer about the scope of the problem. How many absences has the employee taken? What were the reasons for the absenteeism? What sort of verbal and written warnings has the employee received for absenteeism?

Astonishingly, I usually discover that the employer hasn’t tracked the number of absences, issued any warnings to the employee to correct their behavior and doesn’t even know if the employee has used up all of his paid time off. Often, I am simply getting a call because the employee is absent that day and the boss is upset over it because the employee has missed “a lot”.

You can reduce absenteeism in your company, but it requires some consistent effort on your part. Here are some steps to consider:

  1. Give your employees a reasonable amount of paid time off (“PTO”) each year that can be taken for whatever emergency or need arises. Generally, for full-time employees that have been with the company more than one year,  a total of 15-20 days per year is sufficient to cover vacations, sick days, kids’ school activities, funerals, and all the other ways in which real life intrudes.
  2. Prepare a written policy that explains your PTO procedures. Include a statement along the lines of, “Employees are provided sufficient PTO for all foreseeable and unforeseeable reasons to be absent. Therefore, any absences that are not covered by the company’s PTO policy, other than Family and Medical Leave (“FMLA”) and civic duties like voting or jury duty, will be considered to constitute excessive absenteeism and will result in disciplinary action up to and including termination of employment.”
  3. Keep track of absences every single day. This seems so simple, yet is violated so often. If I can’t prove in court with clear documentation exactly how many days your employee missed, I can’t prove that the reason for her termination was absenteeism rather than discrimination based on age, sex, race, etc.
  4. Be prepared to enforce your policy, beginning with the first absence after all of an employee’s PTO is exhausted. I don’t care if the employee needs to go to the doctor (unless employee is on FMLA), has a flat tire or just can’t recover from last night’s binge, if he has exhausted his PTO, you need to start progressive discipline. Give him a verbal warning (which you document for your files). The next time he misses, give him a written warning that lets him know he is in danger of losing his job. With the third absence, suspension or termination should be imposed, after you call your employment lawyer to review the reasons for the absences and get the legal green light to fire.

Training Slashed Even As Employees File Lawsuits

Discrimination, Management, Training,

One of the ironies of recession is that businesses tend to cut back their training of their employees at the same time that layoffs are spawning the filing of higher numbers of employee lawsuits. This is happening again during the present deepening economic crisis. Unfortunately, this is one of those situations of businesses “cutting off their noses to spite their faces.” (Do people still say that or am I showing my age?).

During 2008, studies show that average training expenditures in U.S. businesses decreased 11%. The studies don’t pinpoint which types of training, i.e. safety, skills or sexual harassment prevention, are being cut, but I can guess. Few companies understand the incredible effectiveness of providing employment law training to defeating expensive and time-consuming litigation. Therefore, if they ever offered training to their supervisors on avoiding discrimination or to their staffs on recognizing and preventing harassment or violence, they probably will slash that expense this year.

At the same time that the finance department is telling their bosses that the training budget has to go, employees are being terminated in record numbers. The national unemployment rate for January, which will be released tomorrow, will probably be around 7.5%, a 17-year high.*

And what do employees do after they are fired? They look for someone to blame, which in many cases will be the company that fired them. So they file unemployment claims, discrimination complaints, and lawsuits. During the fiscal year 2008, the Equal Employment Opportunity Commission already experienced a 15.2% annual increase in charges of discrimination and retaliation filed. Just wait until FY 2009.

I can already tell from my own law practice that even in the Texas Panhandle, which has been unusually sheltered from the current economic storm, employee complaints and lawsuits are increasing. Many of my clients are starting to face the investigative powers of the EEOC or the Texas Workforce Commission’s Civil Rights Division. Many of those charges will turn into lawsuits alleging discrimination and retaliation.

If you are regular reader of this blog, you know I always advocate written policies and employee training as your first line of defense against an employee lawsuit. If you start cutting your budget for those things, you may see short-term financial relief, but in the long run you are leaving your company very vulnerable to very costly employment lawsuits.

*Note from February 6, 2009: As it turned out today, the national unemployment figure was even higher: 7.6% for January 2009. That means that almost 600,000 jobs were lost in January. That is the worst showing for number of job losses since 1974. In all, 3.6 million Americans have lost their jobs since this recession started 13 months ago.

Sexual Harassment for all Ages

Discrimination, Termination,

Texas courts have considered sexual harassment at both ends of the age spectrum lately. One case involved a teenager as a victim and the other involved a 62-year old harasser who claimed age discrimination when he was fired. Both cases have lessons to teach employers about sexual harassment, still one of the most common employment claims that companies face.

The case involving the teenager was tried in Houston last year. The EEOC filed the case on behalf of a 19-year-old who was hit upon by the owner of the dry cleaners in which she worked. The evidence showed that the owner inappropriately touched his young female employee, made many offensive comments, and held her against his will in her car while he graphically related his sexual desires and threatened her with sex against her will. The jury found that the owner had harassed the employee and awarded her $105,000.

A couple of things need to be learned from this case: Continue reading Sexual Harassment for all Ages →