Smooth Transitions : Rob Radcliff : Texas Non-Compete Lawyer & Attorney : Langley Weinstein LLP Law Firm : Dallas Employment & Employee Departures : Smooth Transitions Law Blog

Yesterday I had the opportunity to present a webinar through hr.com entitled "Protecting Your Company from the Departing Employee".  If you would like to actually view the webinar follow this link.

One of the issues that we discussed are employment policies that restrict the use of personal storage devices, like a jump drive, from office use.  The thought in implementing such policies is to restrict the ability to take large amounts of data with them from the office by using these devices.  Ken Vanko wrote on the subject earlier in the year. These types of policies can include smart phones, laptops, and tablets as well.  The White House has provided some examples of these type of policies.  An Internet search will provide you with a number of sample policies and suggestions, but they should be tailored to your business.  Most companies don't have these policies in place but they need them.

Additionally, the webinar included a few movie clips that I have posted below for some HR entertainment:  

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Regardless of your views on professional sports there is no doubt that the NFL and its teams invest a significant amount of money in 20-somethings who are drafted each year out of college. As part of that process, the teams put each potential player through a number of physical tests during the NFL combine that takes place each year in Indianapolis, Indiana. In addition to physical tests, each player is interviewed and subjected to a number of questions. Much like a typical job interview.

So comes the case of Manti Te’o. Manti unfortunately had a fake girlfriend who died during Notre Dame's run to the national championship game this past fall. It turned out that the dead girlfriend was in fact a man. Of course, the rumors swirled about the sexuality of Manti, though he denied that he was gay.

It has been reported that Manti and other draftees were asked whether or not they liked girls, had a girlfriend, or were in a relationship during combine interviews.  The intent of the questions was to determine if the candidate was gay.   Marriage status, sexuality, and religion are on the top of the list of questions not to ask during any interview. 

The New York attorney general is now investigating whether this occurred. According to the NFL, it is league policy to neither consider nor inquire about sexual orientation in the hiring process. Employers, don’t ask about sexuality it has no bearing on employment and will subject the employer to all sorts of problems.

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Any employee worth their salt usually will wait until after they've received their bonus compensation until making an employment change.  Often this coincides with year but not always.  Because of this employers need to anticipate some employment right about now.

So what should an employer do in anticipation of a small or large exodus - things that they should be doing throughout the year.  This includes:

1. Making sure all post-employment covenants are signed and enforceable;
2. Making sure all employment files are up to date with copies of all agreements;
3. Making sure all employment agreements are up to date; and
4. Making sure there are policies in place and procedures that are followed when an employee announces they are going to leave.

 Now,if the employee who is leaving has a garden leave policy (meaning they have to give notice of their departure before they actually depart) or a non-compete/non-solicit agreement remind them of their obligations.  Usually most employers will provide them with a copy of the agreement along with a nice but firm letter advising them of their obligations.

If there is certain proprietary information that the employee has access to, end their acces to that information once they announce their intentions or even before their announcement.  Hopefullly that employee hasn't already taken that type of information with them but often times they have.  If there is suspicion of such conduct review emails or access to networks at odd times to see if some type of "information dump" took place.  The IT folks can assist with this type of analysis.

Some of this may sound like paranoia but it pays to be proactive.  Employees will always depart for a variety of reasons - be ready.

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As we creep up on the end of the year employers should be considering/doing a  number of things:

1. Is the company employee manual up to date – any changes necessary? – The end of the year is always a good time to review those policies and procedures and see how they worked in 2012.  Often the year will show some deficiencies or problems with policies as they are applied.
2. Are employee files up to date?  Make sure all employees have acknowledged receiving the most recent HR manual or any changes to the manual. 
3. Are company employment agreements up to date?  Make sure any employment agreements are updated or amended to reflect changes in ownership or term expiration.  Quite often those agreements are forgotten about and there is no agreement in place.
4. Make sure employees have signed off on all non-compete, non-solicit, or confidentiality agreements.
5. Frequently the end of the year involves reviews.  Make sure those reviews are acknowledged by the employee and make it to their employment files.
6. Get your lawyer to take you out for lunch so they can update you on any new employees issues coming in 2013 and so you can pick their brain about any other issues.
    

Here are a few more thoughts from last year.  Good luck in 2013.

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The world of sports always seems to have good examples of unfortunate employer/employee situations.  Maybe this is because of the combination of significant amounts of money and the media spotlight.  Two seasons ago the Dallas Mavericks signed shooting guard Delonte West.  To say that West has some baggage is an understatement.  It seemed unlikely that the Mavericks relationship with West would end well - this turned out to be true.

West's previous stop was with the Cleveland Cavaliers.  While there it was rumored that West had an affair with Lebron James' mother. West was also arrested for gun possession when he was pulled over while on his motorcycle.  At that point he had a handgun in his pocket, another in his pant leg, and a shotgun in his guitar case that was strapped to his back.

Probably my favorite story was during the NBA strike last year.  West needed a job and filled out an application for a furniture store.  On the application, which went viral, he described the gun arrest as a misunderstanding.  Unfortunately, it is also reported that West has bipolar disorder and takes medication for his condition.   

Finally, West had one last ingredient for his employment cocktail - he is an active social media user.  Yes, West liked to use Twitter and also maintains a personal website. 

Season one with the Mavericks seemed to go well. Except for the incident where West gave a Utah Jazz player a wet willy and fined $25,000.00.  Season two spun out of control. Apparently there were two locker room outbursts that led to his release. 

What is the takeaway for employers?  Yes, everyone deserves a second chance but the odds are they are going to repeat their previous behaviors.  Sports are a bad example in that employers are willing to take huge gambles on athletes with serious issues because they can run fast or throw a tight spiral.  Typical employers should not take such risks.  Employment histories that include red flags should be extensively addressed by the employer before hiring.  Some times it pays for the employer to pay attention to their gut instinct about potential hires.  

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I thought this was a great graphic on the costs of obesity from the folks at Compliance and Safety:

Featured By: Compliance and Safety LLC

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Last week, we discussed the effect obesity would have on employers in the future because of weight related health issues. A very interesting article was published in the Texas Lawyer this week addressing the rising number of  Americans with Disabilities Act claims based upon obesity. The take away from the article, which at this point is only available by subscription, is that the EEOC and others are filing more and more obesity based lawsuits. The "stronger" cases have situations where the obesity is caused by some other type of impairment be it mental or physical - there was some other explanation other than overeating.  

The 2008 amendments to the ADA expanded what is considered a disability. Though the EEOC does not track obesity cases, the article maintains that there has been a spike in these types of claims based upon a review of recent cases.  We recently profiled one of the cases discussed in the article, which involved a Louisiana woman who claimed she was fired because of her weight.  The EEOC settled with the employer for $125,000.

So what is an employer to do? Number one, treat requests from overweight employees for some type of accommodation seriously.  It could be covered by the ADA.  Second, and this is totally self serving, talk to a lawyer.  As with most employment situations, there is no one-size-fits-all answer and a review of the circumstances and laws in your jurisdiction is necessary.

These days, it is usually a good assumption  that an alleged disability actually falls within the ADA.   Assuming it does, the employer then needs to make a determination as to whether a reasonable accommodation will permit the employee to fulfill the essential functions of his/her job. Usually this will entail an analysis of job descriptions (which are critical for this type of analysis) and whether the employee can do the work. At this juncture, it is probably better for employers to simply assume that obesity is covered and make the reasonable accommodation analysis.

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This recent quote from a Dallas Morning News story is troubling to say the least:

At the current rate of weight gain, by 2030, 57.2 percent of Texans will be obese. That could lead to 13 million more cases of chronic diseases like diabetes, heart failure and stroke, arthritis and cancer.

There has been a lot of time spent in this country arguing over the merits of health care reform including a trip up to the United States Supreme Court. Regardless of one’s views on health care reform, there is a universal truth with respect to to the health of Americans. We are fat and getting fatter.  The implications for our health care system range from more incidents of diabetes, heart disease and about every other bad health condition. It is not an overstatement to say this is an epidemic.  Employers will have to deal with this through lost work time, inefficiency, and increase health care premiums.   So the question is what to do?

Earlier in the year, we profiled several instances of employers using health related factors to make hiring determinations. This ranged from not hiring smokers to one hospital’s attempt to hire individuals based on their BMI Index. I believe that these trends will continue as employer’s attempt to avoid hiring individuals with certain health risks. Of course this conduct will always border on some type of actionable discriminatory conduct that employers will have to be sensitive to.

Wellness programs are often a good start towards improving health conditions in the workplace. I was recently in an office that had taken this step of creating secretarial stations where secretaries and other administrative staff could do work, usually for half hour intervals, while walking on a treadmill. Certainly this is a great step towards allowing for exercise and promoting healthy habits. Other companies do things such as offering a wide range of medical tests such as cholesterol, body fat etc. for their employees.  Others participate in fun runs or walks, and even monitoring what is kept in the company kitchen to ensure there are not too many M&M packages.  Most employees appreciate these types of efforts and they can contribute to morale and health.

No matter what the employer’s face chooses to do, something is better than nothing. The prospects of America’s future health are not good. The continued rise in obesity not only impacts health but will have a debilitating effect on our nation’s economy as more and more money is devoted to health care.

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A few years ago,  I profiled an employment termination based on an employee's overuse of company time and computers for his Fantasy Football league.  Fantasy Football has literally changed both the way fans watch football and the amount of time they devote to following football and making league decisions during work time.  There is a nonstop scroll on the bottom of every television screen during game coverage identifying the individual statistics for every player.  It seems like now we are more concerned with individual production as opposed to game scores. 

Nevertheless, as leagues continue to grow in their popularity, it is not surprising that participants use work time to adjust their teams, make trades, and follow the waiver wire for that one  player that may push them over the edge.  Fantasy Football is a big business, and literally millions of people participate in it each season.

So the question for the employer is, there is no doubt some employees are participating on company time, but what can you do about it?  Fantasy Football is no different than any other "online" participation forum.  There is really no difference between Fantasy Football, Facebook, Twitter or the employee who excessively shops on eBay.  The extreme position is to prevent employees from accessing any of these types of sites from their work computers.  Some businesses do that, but it certainly creates a big brother mentality.  The most pragmatic choice is to simply let employee access these sites in accordance with social media and other policies that may apply to the use of company computers, networks, etc. for personal use.  Employers will have to do their best to try to monitor these type of activities and reinforce any policies through e-mails about these types of issues.  

The reality is, employees are going to use some of the employer's time for personal hobbies like Fantasy Football or filling out the NCAA Tournament basketball bracket.  The expectation has to be clear to the employee that while some of this type of participation is expected, it should be kept to a minimum.  Make sure all company policies are up to date and make sure all employees understand what is expected.    

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There are certain standard items that every employment agreement should contain and for that matter any contract. Two of those include a choice of law and forum selection clause.  A forum selection clause specifies where a party can sue to enforce the agreement.  The agreement can specify once certain venue (preferable) or multiple venues depending upon the nature of the agreement.

The United States Supreme Court in the Bremen case recognized the right of contracting parties to contract for venue.  It is difficult to set aside a forum selection clause under Bremen.  A party challenging a forum selection clause generally has to show that its enforcement would be unfair or unresonable. 

Texas generally recognizes the rights to include form selection clauses and follows Bremen. See In re AIU Ins. Co., 148 S.W.3d, 109 (Tex. 2004).    In large states like Texas, many employers will have employees in different parts of the states that are several hundred miles away and those jurisdictions may vary different in terms of judges and jury pools.  There are certain jurisdictions in Texas that are friendlier to employees than employers and vice-versa.

The employer can eliminate any guesswork with respect to that by specifying the forum provision.   Do not leave it out of employment agreements.

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As we discussed a few weeks ago, the number of EEOC charges against Texas employers are on the rise.  The reality is a former employee can file a charge without a lawyer and with relatively little effort.  So the question becomes, once the employer receives the charge, how should they respond? 

Generally, the EEOC will request information related to the claims asserted by the charging party.  In Texas, the EEOC has essentially subcontracted out some of this work to the Texas Workforce Commission.  No matter what agency is leading the investigation, I always encourage clients to be responsive, provide a full explanation, and avoid any further requests from the EEOC or TWC for additional information.  Usually, requests may include witness statements, a response to the actual charge, evidence of other instances similar to the one alleged, and basic factual information. 

In many cases, the EEOC claim will have been preceded by an unemployment proceeding with the TWC.  Always review those filings, both by the employer and the charging party to make sure responses and allegations are consistent from case to case .  There always tend to be some admission by the employee in a TWC proceeding that could potentially bear on the EEOC proceeding.

During the EEOC proceeding, the parties will also have the opportunity to mediate the dispute.  Obviously, resolving cases is good and avoiding attorneys' fees is better.  An EEOC mediation does not cost anything and if you have a case that you think should or could be resolved, mediation might be worth a shot.   Some employers consider a request for a mediation a weakness, I disagree. Mediation provides both the lawyer and the employer an opportunity to size up what type of witness the former employee is actually going to be and provides for essentially some free discovery on a potential lawsuit. 

The majority of charges examined by the EEOC result in a dismissal and a right to sue letter.  Then the question becomes whether the employee will actually proceed with a lawsuit?  If the employee is represented by a lawyer during the EEOC process, odds are the employer is more likely to see a lawsuit. 

Employers, can of  course represent themselves through the EEOC or TWC proceedings.  Of course, as a lawyer, I recommend that they retain counsel to handle these matters.  Though there are many employers who have been through the process on numerous occasions and are more than qualified to deal with it themselves.  That is going to be a case by case, employer by employer determination.

Take the EEOC charge seriously, remember that whatever the employer files could potentially come back as evidence during a lawsuit.  Make sure that your positions are consistent between unemployment proceedings and the EEOC proceeding.

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A few weeks ago, the  fifth season of "Mad Men" came to an end.  The folks at the 1960's advertising agency, Sterling Cooper Draper Pryce have survived another year, but not without their fair share of partnership disputes and employee issues.  Obviously, the employment and partnership environments of the 1960's were quite different from what we experience today, but there are some interesting lessons to learn.  So, without further ado, here are my top five employment/partnership disputes at Sterling Cooper Draper Pryce for the years 1966-67.

1.  Sleeping Your Way to the Top:  Pete Campbell is the young partner is the office that everyone loves to hate.  When there was the opportunity to obtain the advertising business from Jaguar, it came with an implicit quid pro quo from a Jaguar executive that he have an intimate evening with the redhead Joan Harris.  Pete not so subtly suggested this to Joan and, in what had to have been a radical move for a woman in the '60's, she agreed to enter into this tryst in exchange for a partnership in the advertising firm. 

2.  Fist Fights to Resolve Partnership Disputes:   Pete also got into a dispute during a partner meeting with Layne Pryce, the British financial guru for the firm.  (Unfortunately, Layne would later commit suicide.)  What started off as an argument, turned into a fight.  In a scene reminiscent of some 1920s boxing match, Layne proceeded to land one punch and knock Pete to the floor.  At that point, the other partners intervened and ended the dispute.  While most partnership agreements may contain an arbitration provision or some other type of ADR process to resolve a deadlock within the partnership, I haven't seen one yet that deals with a standard fight to resolve issues.

3.  Employee Theft:  The aforementioned Layne had some issues with back taxes in England that he had to resolve.  Unfortunately, he was short on the funds.  Under an immense amount of pressure, Layne decided that he would forge the signature of Don Draper and cut a check for $5,000.00 to address his financial woes.  Draper discovered the forgery and fired Layne in a very dignified fashion.  Draper did not reveal the forgery to anyone, and before Layne could leave the firm, he decided to hang himself in his office.  

4.  The Smooth Transition:  Peggy Olson, one of the central characters of the show, is a young up and coming advertising exec in a strictly male world.  Draper took her under his wing in the first season.  They always had sort of a love/hate relationship.  Peggy eventually grew tired of the relationship and realized that it was time to make a move.  In probably the best scene of this season, she gave Draper her resignation.  Draper told her that he was essentially the reason for her success, which she did not dispute.  She told him he would do the same thing and he did not dispute the assertion.  In the ultimate employee transition, Don then kissed her hand as tears began to come down her cheeks. She left the firm in the midst of a party for securing the Jaguar business through the "hard work" of Joan.

5.  Office Nepotism:  Draper married his secretary, who was later promoted to the advertising side of the business.  It seemed a little awkward as a partner in the firm would walk in with his wife for each day on the job.  Apparently, the Sterling Cooper policies and procedures did not address nepotism, but it clearly created friction and issues within the firm, and provides good reason for such policies.

There are numerous other instances of interesting employment and partnership issues at Sterling Cooper.  Hopefully, employers and employees have made significant strides since this time. 

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 The EEOC recently made the breakdown of its individual charge filings available online for each state.  The statistics run from fiscal year 2009 through fiscal year 2011.  The top Texas discrimination charges are: (1) retaliation (41%);  (2) race (36.3%); (3) retaliation - Title VII (35.9%); and (4) sex discrimination (29.4%).

Total charges in Texas continue to rise as across the nation.  Employers need to anticipate and be ready for the EEOC charge, whether there is merit to it or not.  All it takes is a former employee to fill out the necessary paperwork and file it with the EEOC.  No lawyer is required and there is no charge for the filing.  From the employee's standpoint, what does it hurt? Maybe they can get the employer to pony up some money to resolve the dispute, even if it is baseless.

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Last week, the EEOC provided new enforcement guidelines to be used for determining whether the use of arrest and conviction records is proper in the hiring process as it relates to Title VII.  There has been a fair amount of electronic ink spilled on this topic and I have identified some good sources below for review.

The take away from the article and new guidlines is  that employers cannot use arrest and conviction records with impunity.  Unfortunately, it seems counterintuitive that an employer could not disqualify a potential candidate based upon a conviction.  The EEOC seems to be saying that if that policy is not uniformly applied or if it has disparate impact, there could be ramifications against the employer. 

I understand the distinction the EEOC makes between conviction and arrest records, although arrests usually are the result of some underlying conduct that the employer should consider.  That said, it seems a little much that the EEOC is going out of its way to prepare these new guidelines and regulations with respect to convicted individuals.  I am all for rehabilitation, but ultimately, the employer should be able to eliminate job candidates based upon convictions, when that criteria is uniformly enforced. 

Below are some articles you might consider and the regulations from the EEOC:

Guidance from the EEOC -http://www.eeoc.gov/laws/guidance/arrest_conviction.cfm

Q&A from the EEOC - http://www.eeoc.gov/laws/guidance/qa_arrest_conviction.cfm

Connecticut Lawyer Daniel Schwartz on the Issue

Ohio Lawyer Jon Hyman's Take

The Delaware Employment Law Blog Weighs In

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It should be no surprise that civil trials with juries are on a downward trend.  A recent Dallas Morning News article cites a number of factors from tort reform, the expense of trial, activist judges, binding arbitration, and the Texas Supreme Court. 

The most surprising was the theory that Judges distrust juries and therefore would rather resolve the case themselves as opposed to letting a jury.  Certainly there has been a rise in the granting of summary judgments according to the article, but I'm not sure that indicates a judicial distrust.

The reality is that for employers and business owners this is good news.  Employers do not want their employment disputes being dealt with by juries in most cases for the simple fact that everyone has been an employee, but not everyone has been an employer. Certainly jury trials are a fundamental cornerstone of our judicial system, but that doesn't mean they make sense for employers.  As discussed here there are numerous ways to avoid juries from arbitration to jury trial waivers - consider them. 

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Bruce Carton of law.com tracked down a great story about a Victoria, Texas hospital (in between San Antonio and Houston) that has implemented a hiring policy that requires potential employees to have a Body Mass Index of less than 35.  According to the Texas Tribune, the policy shapes up like this:

1. Existing employees who become obese over the course of their employment are not terminated;
2. The hospital offers to help job candidates get their body mass index down;
3. The policy is based upon the concept that an employee's physique "should fit with a representational image or specific mental projects of the job of a health care professional."

Suzanne Lucas provides her take on the policy and points out that  BMI is not a good indicator of obesity.  Of course, we can always debate over what constitutes obesity, the bottom line is that this country has a weight problem.  

Now the legality of the policy is another issue.  Being overweight is not a protected class, but a policy like this that has a disparate impact on a particular group could be.

"Health qualifications" for potential jobs are here to stay.  Earlier in the year, a Texas hospital implemented a no smoking hiring policy.  It would appear that health care business have a pretty good argument that nondiscriminatory policies which promote health, such as a no smoking or obesity policy make sense.  

The bottom line is that more and more employers are going to implement these type of policies.  Whether or not President Obama's health care legislation is upheld by the Supreme Court, the cost of health care continues to rise for private employers.  This is going to force private employers to consider health-related issues as they related to their health premiums, and will flow through into the hiring process.  Employers will have to be very careful in terms of what policies they ultimately implement to ensure they are not discriminatory.

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Employees stealing from their employer is nothing new.  Recently, a lawyer and his wife who were employed by the same firm were convicted of stealing in excess of $100,000 pounds from their firm's London office.  They did it with bogus expense reimbursements.  This story raises the importance of having clear policies in place for expense reimbursement.

One area that employers should always be sensitive to in terms of potential theft are expense reimbursements.  I cannot tell you the number of times I have had to sit through a deposition where an employee/officer, or owner in  a closely held company is raked over the coals over the propriety of their expense reports.  Unfortunately, there are many instances where companies, especially smaller companies, do not have clear policies in place in terms of what is reimbursable and what is not.  The reality of the situation is the employee simply submits the reimbursement to be signed off on without any real detail or scrutiny paid by management.  Avoid these situations.

Companies need to have clear policies, regardless of their size, in terms of what items can be reimbursed versus what items cannot be reimbursed.  In addition to having these types of substantive guidance, an employer also needs to have clear procedures in place in terms of completion of expense reports, approval of expense reports and further auditing of expense reports on down the line.  It will always be difficult to uncover individuals engaged in systemic fraud, but having clear policies in place is a first step.

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Sometimes employers are stuck with employees who simply do not exercise common sense or good judgment.  At the end of the day, they are left wondering whether the employee, who appeared to be so strong and qualified on paper, simply won't make the cut because they fail to exercise the judgment necessary for the job.  It begs the question - can that common sense or judgment be taught - I don't think so.  Certainly, as we gain more experience our judgment improves (hopefully) but common sense or street smarts seems another matter.

I was in a restaurant the other day and happened to look in the restroom on the towel dispenser, a picture of which I have included.  Unfortunately, that dispenser made me wonder about the quality of personnel at the restaurant.  I don't have an issue with any of the employees, but I wonder why such explicit directions were necessary to instruct an employee as to how to wash their hands.  I believe this is simply part of the company's risk management policy but it makes one wonder.

If you have an employee that needs this level of instruction on how to wash their hands, I'm not sure they're actually going to be a very good employee.  Similar to the hand washing example, there are certain situations that employees will deal with every day where common sense and good judgment are required.  This ranges from dealing with superiors, to customers, to subordinates.  Lack of the type of judgment that is necessary will be apparent and will not change.  The employer is going to have to make a change, the question is not so much as if, just when.

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Next Friday, March 2, I will be appearing on Stephanie Thompson's Proactive Employer Employer Podcast.   Stephanie's podcast is top notch and addresses a wide range of HR related issues.  We will be discussing hiring/firing issues as well as post-employment covenants.  Here is a little information about the podcast:

The Proactive Employer Podcast, hosted by Stephanie R. Thomas, is the leading weekly broadcast dedicated to EEO compliance and employment litigation risk management. The podcast covers a wide range of topics - HR best practices, social media in recruiting and hiring, compensation analyses, terminations and reductions in force, FLSA issues, gender and race discrimination, religious discrimination, disabilities, Department of Labor, EEOC and OFCCP issues, and current issues in employment law. Podcast guests include top employment lawyers, industry professionals, and educators. The listener base includes HR professionals, corporate counsel, employment attorneys, expert consultants, and others interested in EEO compliance issues in the United States and around the world.

The podcast airs every Friday morning at 8:30 AM Eastern on BlogTalkRadio, and is available for on-demand listening the same day here or via iTunes.

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I know it's been a while since my last post, but a trial always gets in the way of blog posts.  So after the dust has settled on the trial I have a few thoughts  on what business owners and employers should always consider when considering the pros/cons of going to trial.  Hopefully these are things that you already knew but better to discuss now than later.  So, off we go:

1. Loss of Control - The judge and jury will be making the decision, not management.  Unfortunately you can't always predict what the fact finder will do.
2. Trials are expensive - That's not groundbreaking news, but think about all of the extra costs:  (a) multiple lawyers, paralegals, and support staff working around the clock on the case (depending on size of course); costs for courtroom presentation equipment (rentals); meals for all involved in the trial; and the costs involved in having you employers tied up in a trial.
3. Trials are a time-suck - Employee witnesses will have to be on call.  Lawyers can never quite tell when the employee will testify.  Of course, a client representative will have to be at trial the whole time.
4. Trials are stressful for all involved.
5. People (witnesses) don't always say what they should or what you think they will say;
6. Things go wrong during trials that you don't expect;
7. The trial is not the end - there are always filings after the verdict, maybe another mediation, maybe even an appeal; and
8. Did I mention trials are expensive?

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Recently the IRS came forward with an amnesty program for workers who improperly classify their employees as contractors. There are a number of issues in considering the program.  These include the interplay between the IRS and the Department of Labor, the effect such an amnesty agreement would have on your business going forward, and whether the business actually misclassified its contractors. 

The Proactive Employer podcast considered the issue recently. I would recommend that discussion as a starting point for anyone considering this issue. It is complex and can have fairly significant ramifications. Please consult with an attorney before you make a decision one way or the other as to proceeding.

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Earlier in the week we discussed policies and procedures that should be in place to deal with end of year employee departures. Companies should also consider a number of other HR related issues as the year draws to a close. Here are my thoughts:

1. Evaluation of all employment policies, including the employee handbook;
2. A review of all federal and state law changes that may impact employment practices - talk to your lawyer;
3.  A review of all employment contracts;  
4. A review of all employment files - are they up to snuff?; and
5. An evaluation as to whether the company should adopt post-employment covenants including non-competes, non-solicitations, and garden leave policies.

Now is the time to make any necessary changes before the New Year begins. Let me know if you have any additions to the list.

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Generally, many employees will wait to move to another employer until after they have received any year end bonuses or commissions they are due.  We are all familiar with stories where a top producer bolts after they get their end of year check. 

For these reasons, it is important the employers be prepared to review company policies for employment transitions. This would include post-employment covenants such as non-competes.

Critical to the employment transition practice is ensuring that the employer has protected any proprietary or trade secret information that departing employees can access. Departing employees should immediately lose access to any type of proprietary or trade secret information. This should include locking the employee out of their email account or limiting access.  That employee is now a competitor.

Employers who are vigilant about having these types of policies in place will ultimately protect their business and their product from an inevitable employee departure.

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Many businesses have workplace dating policies in order to address potential conflicts of interest situations or sexual harassment claims. Another reason to consider having a policy is in the event of a relationship where one or both of the participants is married.

Many employers will run into a situation where this is an office affair. This could be between subordinates or a superior/subordinate relationship. Unfortunately, as long as people are people, these types of situations are going to arise. 

These types of relationships are distracting, generate all sorts of rumors within the workplace, and ultimately impact productivity. Employers need to be out in front by having a clear policy that is appropriately tailored for their business and circumstances.  Companies generally don't have anti-affair policies so in most circumstances the relationship will be governed by the dating policy.

There are a number of different policies that can be employed that range from outright prohibitions (which can be problematic) to a modified policy that requires a consent/disclosure. There is no one size fits all solution but some type of policy is recommended. 

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 I’ve seen a few employee handbooks in my time, but nothing quite like the 1943 Disney handbook, which is filled with a number of illustrations as one might expect and some blatant sexism along the way.  It’s kind of like watching an episode of “Mad Men” where you can’t believe what was acceptable or the norm.

Some of the highlights: 

• Charges of outgoing calls - “At the risk of interfering with the even tenor of your social life, we must ask that you limit personal phone calls to emergencies.  You know, of course, that you will be charged for all outgoing personal calls.”
• Holidays are the same - “You will be provided holidays for New Years’ Day and Memorial Day, Fourth of July, Labor Day, Thanksgiving and Christmas.
•  Not sure if there are any all male penthouse clubs any more - “Penthouse Club – For all particulars, membership, and like that, check with Walt Pfeiffer  - Men only!  Sorry, gals. . .”

There are a number of other interesting tidbits from the manual.  The running theme throughout the manual is that the exemplar male employee is obsessed with his co-female employee and restaurant waitress. (see below) By the way Walt Pfeiffer was a writer for Disney according to IMDB but apparently also ran the penthouse club.

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It recently came to light that two Merrill Lynch executives were fired and paid approximately $11 million in exchange for signing a non-compete and release agreements.  Some were outraged about the payment considering the current plight of BofA and Merrill. But for most employers, a severance payment in exchange for a release makes good sense.

In many situations it makes sense for an employer to seek a release from an employee at the time that their employment term ends. The conclusion of the employment relationship presents the opportunity for the employee to obtain a release in exchange for some type of severance payment. There is no hard and fast rule as to what that amount should be. Severance is not required in the state of Texas.

Under the Texas Payday Act and other statutes, the employer must pay the employee whatever he or she is owed at the time of termination. Put another way, the employee cannot be forced to sign a release in exchange for receiving money that they are already owed. 

The release should be designed to have the employee give up any potential claims that he or she may have against the employer. Please consult with a lawyer to ensure that the release is drafted broadly enough to cover the claims and that any statutory requirements are met for the release. The last thing you want to do is prepare a release that is ineffective. 

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Over the last few weeks we’ve discussed some key components in employment contracts including venue and jury trial waivers. Another key provision is choice of law. As was discussed in the Sam Adams case, choice of law  was critical because it permitted the employer to pursue an action against a former employee for breach of a non-compete agreement which would not be enforceable in the state of California. In that case, there is both a venue and choice of law provision for Massachusetts. 

As with venue and jury trial waiver provisions, the choice of law should be tailored to circumstances of the agreement at hand. Many employers like to default to the choice of law where their headquarters is located or many times the state of Delaware (shareholder disputes are very difficult to prosecute in that jurisdiction), but that will not always make sense in an employee/employer relationship. 

Additionally, courts do not always enforce choice of law provisions and employers should consult with their attorneys to put themselves in the best position contractually to enforce the provision. There is always a preference of the Court to enforce the contract based on laws of that jurisdiction because the judge is typically more familiar with those laws as opposed to some other jurisdiction. 

In the context of post-employment covenant litigation, there are certain jurisdictions state laws employers will want to avoid because they are not friendly to enforcement and vice versa. Employers need to be cognizant of the effect of a choice of law provision and also put some thought into its use because it will be an issue on down the road.

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Last week, Baylor Healthcare System made employment waves in Texas when it announced it would no longer be hiring individuals that smoked.  There is no prohibition that, as of yet, would prevent an employer from hiring or even firing an employee because of their use of tobacco products – they are not a protected class.

There have been a number of commentaries and articles about the policy, the links of which are below. The reasons for instituting such a policy vary. There is no doubt that smokers can affect workplace productivity. They take breaks during the day to smoke and those breaks affect workflow and continuity of the office. Additionally, there are the health issues to consider that come along with smoking ranging from respiratory issues to cancer.  Smokers can also drive up health insurance premiums.

It makes sense for a healthcare provider to implement such a policy, though I imagine there will be more to follow. There are not pros or benefits from smoking in the workplace. More and more employers, regardless of the industry are sure to implement such policies.

Links

The Baylor Policy

Lawyer Russell Cawyer's Thoughts

Related Stories

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Employers should always be careful and cognizant of venue provisions in their employment agreements. Many employers will simply include a venue provision making venue mandatory where the home office or headquarters is located, but this doesn’t always make sense in the context of an employment dispute. 

Recently, I reviewed a contract which required mandatory venue in the federal court where the company headquarters was located. Employees who would actually sign the agreement were located in a state a thousand miles away. While it’s nice to have venue in your own backyard, that doesn’t always work for enforcement of the agreement. 

In the context of most post-employment covenants, like non-competes or non-solicitation agreements, it is much easier to enforce these agreements in a venue where the actual defendant/former employee resides. In many of these cases, the employer will want to obtain equitable relief in the form of a temporary restraining order or injunction preventing the former employee from working or soliciting. 

It is much easier to institute and enforce these types of claims in the state or federal court where the actual employee lives, as opposed to one that is many thousands of miles away. In preparing employment agreements, employers should be cognizant of what makes sense in terms of enforcement, if enforcement is a key consideration. 

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To Jury or Not to Jury

It is always interesting to hear people talk about the runaway jury and risks of letting a jury determine the fate of a business/employer.  Most jury members, like most people, are not employers but are employees.  It's a fair statement that they are likely to have some bias against the employer whether they admit it during jury questioning or not.  That natural bias can be overcome, but it is not easy.  For all intents and purposes, employers are the "Man".

In the context of employment agreements two popular alternatives to juries have developed - the arbitration and the jury trial waiver.  Though arbitrations are a good alternative, they can be expensive and impractical for the typical employment agreement.  Opting for a judge as opposed to a jury can be a good alternative.

The Typical Waiver

Waiver of Trial by Jury. Seller and buyer knowingly and conclusively waive all rights to trial by jury, in any action or proceeding relating to this Contract.

The Texas Supreme Court ruled that the provision above was enforceable.  Though this provision was in a business transaction, it can be amended for use in the employment context. 

Yes or No.

First, the waiver eliminates any potential jury bias (of course Judges have their own biases).  Second, in most cases a trial date for a non-jury trial will be earlier than a jury trial setting because the cases take less time.  Finally, a non-jury trial is typically shorter and as a result less costly.

Waivers make sense.  They are  easy to use, enforceable, and probably a better alternative to arbitration these days. 

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Many Texas employer have policies that prevent their employees from keeping their guns in  employee parking areas.  As of yesterday, employees who have conceal carry licenses in the state of Texas can keep their guns in their cars as long as they are locked.  Of course there are exceptions in the law that went into effect September 1, and there is even an immunity provision for the employer.

Also, you can apparently hunt feral pigs from the air now for a fee. 

Don't Mess With Texas.

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I’m embarrassed to admit to watching “The Real World” when it first came out in the early 90’s. It’s been many years since I have tuned in, but I always wondered what the contract was like that cast members had to sign. Luckily, the Village Voice has obtained the agreement. 

Some highlights:

I acknowledge and understand that, as for the participating in other hazardous activities, my participation in the Program carries with it the potential for death, serious physical injury, extreme emotional distress, mental or physical illness and property loss.  

I understand and acknowledge that Producer may or may not screen or conduct background checks or investigations of the other participants or any other person who appears, or may appear, on the Program (including an investigation of any person’s medical, professional or criminal history) and Producer has no duty to conduct such an investigation.

The Producer is not responsible if any of the cast members obtain a sexually transmitted disease. 

And my favorite: 

I further understand that my appearance, depiction, and sexual portrayal in an in connection with the Program (including without limitation, the title of the Program), in my actions and the actions of other displayed in and in connection with the Program, may be disparaging, defamatory, embarrassing or of an otherwise unfavorable nature, may expose me to public ridicule, humiliation or condemnation and may portray me in a false light.

So, I get to live with persons who have had no background check and may be disease-ridden and the producers of the Program can portray me in any manner that they see fit, whether or not it is accurate or even true. Where do I sign up? Certainly not your typical employment contract.

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Dallas City Hall revealed that a number of city employees were on Facebook a few too many hours during the workday:

• A City analyst had his Facebook account open for 68 hours during a three month period beginning in January. 
• One racked up 198 hours in the same three month period. 
• Others, including a code Inspector, office assistants, convention centers, a convention center group leader, a water utilities engineer, and a cultural affairs coordinator all had in excess of 100 hours. 
• Employees together clocked in more than 3,000 hours on the site.

Now these numbers may be a little misleading because tracking the amount of time the actual user was logged in is not necessarily indicative of how long they were actually using the site. Needless to say, these results are not surprising. Take a walk around your office -  odds are someone is on some social networking site.

The question for the employer becomes how to govern this use?  In some cases, social networking may be encouraged for business reasons.  Ultimately, the employer must have a clear social media policy in place that addresses what appropriate use is or is not - policy - policy - policy.  This will vary from employer to employer.

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• Email - Does the company monitor employee email - probably not.  As distasteful as it may sound someone in HR or someone on the business side may need to examine the substance of the employee's emails (from the company email address).  How far back? Depends on the situation.  The employee's  emails need to be scrubbed to determine if they are offloading or have offloaded proprietary information to competitors or personal email accounts for future use.  Further, the IT department needs to maintain and preserve the email account but end the employee's access to the account either immediately or upon some agreed time.

• The network - Most employees are not going to email company information to a competitor or even a personal email account - some still do though.  The delivery device of choice is the thumb drive.  It's small, cheap, and can hold a lot of information.  I'm no IT expert but many IT folks can determine what type of downloading an employee has been up to including the use of zip drives or thumb drives.  How far back should the company go?  As far as necessary to obtain some "comfort" level.  

• Beyond email and the network - Many companies have proprietary databases where customer/client information is maintained.  In one non-compete case a client was able to show that the former employee had dumped the entire database (through printing) the night before they were fired.  Can you do the same?  Many databases require an additional log in and indicate the when, what and where of the employee access.  Was there a middle of the night access prior to quitting or strange access from home? Find out.

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Friends: I am pleased to announce that I have become a partner at Langley
Weinstein LLP. Langley Weinstein LLP is a Texas trial and appellate firm
practicing in the areas of surety and construction, commercial litigation, and
employment litigation with offices in Dallas and Houston.

My new contact information is:

Robert K. Radcliff
Langley Weinstein LLP
901 Main Street
Suite 600
Dallas, Texas 75202
rradcliff@lwllp.com
TEL: 214.722.7160
FAX: 214.722.7161

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Here is a link to a presentation on the Top Ten Issues for Texas Employer and FINRA Social Media compliance. I hope you find it helpful.

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Back in April I addressed the Supreme Court's review of City of Ontario, California v. Quon et al and the implications it might have on employer access and review of employee electronic communications.  A few weeks ago the Court's opinion was delivered and did little to shed light on the Court's view of privacy rights in text messages for private employees.

As you may recall, the opinion dealt with a police department that decided to review the personal text messages of one of its officers that were made with a police owned phone.  Justice Stevens upheld the search of the phone noting that Quon:

should have understood that all of his work-related actions–including all of his communications on his official pager — were likely to be subject to public and legal scrutiny

He also wrote:

The Court must proceed with care when considering the whole concept of privacy expectations in communications made on electronic equipment owned by a government employer.  Moreover, agencies and officers should explore whether state privacy laws might create a different standard. Some states have statutes that require an employer to notify an employee when electronic communications are being monitored.

So the Court was unwilling to go beyond the public employee domain, not surprising.  So questions remain:  Is the employee that uses a company owned phone subject to having his text messages reviewed?  What if there are personal emails on the company owned phone through a yahoo or gmail account?  What if the phone is owned by the employee but the service is paid for by the company?  These questions remain unanswered but employers should have policies in place that address these situations. 

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Mark Shank and Bridget Blinn are lawyers at my firm who focus on advising employers on the Fair Labor Standards Act.  Their recent article, What is Work? FLSA Pitfalls at the Beginning and End of the Work Day tackles this statute:

The basic requirements of the federal Fair Labor Standards Act (“FLSA”) are easy to understand. Employees must be paid a minimum wage of $7.25 per hour (per the latest increase that went into effect in July 2009). Employers must also generally pay nonexempt employees overtime at a rate of at least one and one half times the regular rate of pay for all hours work in excess of 40 hours in a work week.

Unfortunately violations of the FLSA can be costly for the unsuspecting employer:

These two seemingly simple requirements are surprisingly difficulty to implement. Getting it wrong can be costly: Employers found liable for violations of the FLSA may be assessed damages for the unpaid overtime or minimum wages, liquidated damages equal to the amount of unpaid overtime or minimum wages, and reasonable attorneys fees and costs. Willful violations may carry criminal penalties upon conviction with fines of not more than $10,000 or imprisonment for not more than six months, or both, and there are also civil money penalties (payable to the Secretary of Labor) for repeated and willful violations of minimum wage and overtime requirements.

Their article provides an up to date perspective on the FLSA and is worth a look.

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It’s amazing what people will put in their emails, even after they have been warned by their lawyers.  There have been a number of cases I have been involved in where an employer has been able to access emails from an employee's web-based hotmail account that show he or she is actively violating a non-compete or even sending work to a competitor.  The question is, can an employer access an employee's web-based email?

A recent law.com article investigated a number of decisions arising from use of the Stored Communications Act. The SCA creates a criminal offense and civil liability for whomever “intentionally accesses without authorization a facility through which an electronic communication service is provided” or “intentionally exceeds an authorization to access that facility” and by doing so, “obtains, alters, or prevents authorized access to a wire or an electronic communication while it is in electronic storage in such system.” 18 U.S.C. § 27.01.  The decisions vary.

The article suggests a robust electronic communications policy  will go a long way to protect the employer, but it is unlikely that any employer has a policy that would allow them to obtain and use an employee’s password in order to access their web-based accounts. Obviously, once the employer uses the emails in the litigation, it will become obvious that they have utilized the password to obtain that information.  The employer could consider simply requesting the communications through normal avenues of discovery.  If you are going to use such evidence be prepared for the ramifications.

(H/T to Jon Hyman of the Ohio Employer's Law Blog)

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Tomorrow I will be speaking at the University of Houston Law Center Advanced Employment Law Seminar in Dallas regarding employment torts.  The paper prepared for the presentation covers the latest and greatest in torts ranging from false imprisonment to tortious interference.   

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Two weeks ago on the Office, Michael Scott gave Dunder Mifflin notice of his  resignation. Upon return to Scranton, Michael hatched a plan to start Michael Scott Paper Company and started with some due diligence (I apologize for the advertisement but NBC has to pay the bills):

Michael then asked most of the Scranton staff to come to his new company and started working on putting together  paper order forms.  Eventually the higher-ups got wind of Michael's new venture:

Unfortunately, for Michael there is no two week "immunity" period. Employees in Texas can set the stages for starting a competing venture (assuming there is no non-compete or other restrictive agreement) on their own time, but not while at work.  The good news for Michael is that Pam the receptionist left Dunder Mifflin to join Michael.

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Recording phone conversations.

One issue that I frequently receive questions about is whether it's permissible to record phone conversations that you are a party to?  The answer varies from state to state.  In the absence of more restrictive state law, federal law permits an individual who is a party to the telephone conversation to record it. 

Some states require both parties to consent to the recording (two-party consent).  Texas does not (one-party consent).  The rub arises when there is an interstate call between a one-party state and two-party state. The California Supreme Court (.pdf) has held that in such a situation, two-party consent is necessary.

Recording a phone call can be a useful tool for avoiding misunderstandings and I have even used them in breach of contract cases where an oral agreement is disputed.  If you are going to record, the best practice is to get the consent of the other party.  If you're not going to do that make sure you know the law of your state and the state you are calling. 

Polygraph testing your employees.

Jon Hyman provided a primer on employee polygraph testing in the Ohio Employer's Law Blog this past week.  Frankly, I had never heard of the Employee Polygraph Protection Act of 1988 but it prohibits with limited exceptions:

• Requiring, requesting, suggesting, or causing an employee or prospective employee to take or submit to any lie detector test;

• Using, accepting, referring to, or inquiring about the results of any lie detector test of an employee or prospective employee; and

• Discharging, disciplining, discriminating against, denying employment or promotion, or threatening to take any such action against an employee or prospective employee for refusing to take a test, on the basis of the results of a test, for filing a complaint, for testifying in any proceeding, or for exercising any rights afforded by the EPPA.

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