Texas Employer Handbook

Insight on Employment Law for Texas Businesses

EEOC Trying to Change the “Status” for Transgendered Employees

Posted in In the News

On September 25, 2014, the EEOC filed lawsuits in Florida and Michigan accusing employers of discriminating against transgendered employees. These are the first two cases ever filed seeking to protect transgender workers under Title VII.

In the Florida Case, EEOC v. Lakeland Eye Clinic,  the EEOC claims that Lakeland terminated an employee, Branson, in violation of Title VII. Specifically, the lawsuit alleges that “[a]t the time of hire, Branson presented as male (e.g., used the male name ‘Michael,’ wore male attire, and otherwise appeared to conform to traditional male gender norms).” During the course of employment, however, Branson began identifying herself as a female, and presented herself as female. She also informed Lakeland that she was undergoing a gender transition and was in the process of legally changing her name from Michael to Brandi. Lakeland claimed that Branson’s position was being eliminated.  The EEOC, however, alleges that Branson was discriminated against because of sex when she was terminated because she was replaced by a male in the same position two months later.

The Michigan Case is similar to the Florida case. In EEOC v. R.G. & G.R. Harris Funeral Homes, Inc., a funeral home fired an employee who presented himself as male at the time he was hired but was terminated two weeks after the employee notified her employer that she planned to undergo a gender transition and planned on presenting herself as female—wearing female clothes and conforming to female gender roles. In the lawsuit, the EEOC alleges that the employer terminated the employee by “telling her that what she was ‘proposing to do’ was unacceptable.”

Two years ago I wrote about the EEOC’s position on protecting transgender employees.  These cases are proof the EEOC was serious.  If successful, the EEOC will have legal precedent to rely upon to pursue employers under a broader definition of “sex discrimination” under Title VII. Employers must think twice before terminating an employee for making the decision to change gender. I strongly recommend employers check with counsel to obtain guidance about how to proceed if this issue presents itself.

Shop Until You Drop – But Take a Day to Pray

Posted in In the News

From the time that S. Truett Cathy opened his first Chick-Fil-A in 1946, he made the decision to close his restaurants every Sunday to give his employees “an opportunity to rest, spend time with family and friends, and worship if they choose to do so.”  When I heard the news that S. Truett Cathy passed away yesterday, his management philosophy reminded me of an employment law enacted by Texas lawmakers in 1993 requiring retailers to give their employees a weekly break for worship or rest.

Specifically, retail stores cannot force an employee to work seven consecutive days without giving the employee one day off to worship or rest. Like the ADA, retail stores must also accommodate the religious beliefs of employees unless it would impose an undue hardship on the business of the stores.

If a retailer denies an employee a day off to worship, they’ll need to hire a criminal lawyer to defend the Class C Misdemeanor that they could be charged with. If, however, the employee volunteers to work and signs a written statement to that effect, the employer has an affirmative defense to prosecution.

In my last post, I suggested that employers not set out on a mission discover each employees religious beliefs. This remains true in this setting as well. Retailers should consider giving employees a random day off, unless they request a specific day off. If an employee requests a specific day off, remember that you should accommodate the employee’s request unless it would impose an undue hardship on the store’s business.

Employment Law 101: Worksite Lactation Breaks

Posted in Handbook Articles

Who, What, Why . . .

Who does it apply to: According to the Patient Protection and Affordable Care Act, all employers with more than 50 employees nationwide are required to comply. Employers with less than 50 employees may not comply if it would be an undue hardship.

What am I supposed to do: Employers must offer reasonable time for breaks to nursing mothers who need to express milk and must provide an appropriate space to do so.

Who is entitled to the breaks: Employees who are not exempt from overtime. (See the EH Edition on Overtime Exemptions for more information on that topic). Employers are not required to offer the breaks to exempt employees.

How many breaks per day must be given: There is not a specific requirement in the law. The employer must offer a break “each time the employee has need to express the milk.” According to the US Department of Health and Human Services (“DHHS”), an average employee will have the need to express milk two to three times per day for 15 to 20 minutes excluding set up and take down time and the convenience of the location. Employers should err on the side of caution granting as much time as necessary.

Do I have to pay: Strictly speaking, no. Non-exempt employees may be asked to clock out unless they use an already offered, paid, work break for lactation. Employers who choose to offer lactation breaks to exempt employees, however, may not dock their pay for the time.

What type of space is required: The law requires that the space be shielded from view and free from intrusion by co-workers and the public. The space may be temporary and created when needed by an employee. A lock is not required, but is suggested to avoid intrusion. It is important to note, however, that the space must be offered in any location where an employee requiring lactation breaks is stationed – even if there is only one employee at the location.

How long do I have to offer breaks: Breaks must be offered up to one year following the birth of the employee’s child.

What is sufficient to show “undue hardship”: As noted above, employers with fewer than 50 employees nationwide who show undue hardship may opt out of the Act. There have been no cases reported on this subject yet, but employers must at least show “significant difficulty or expense, when considered in relation to size, financial resources, nature or structure of the employer’s business.” The Department of Labor (“DOL”) openly states it believes this to be a stringent standard available in very limited circumstances.

Are there any signs to post: There are no employer posting or notice requirements in the law. The DOL encourages employees to provide advance notice to their employers so the employer can prepare for compliance. Employers can likewise ask a pregnant employee whether she intends to take lactation breaks after the baby is born.

Is there any upside: While many employers will perceive this as one more encroachment upon their ability to get work done, there may be tangible monetary benefits other than helping employee morale. According to the DHHS, employers are likely to have lower health insurance claims because breastfed infants have up to three times fewer medical visits. Turnover rates are likely to be lower because 86-92% of breastfeeding employees return to work when offered lactation break options versus 59% otherwise.

Common Situations:

Ewww, not there: Commodes Unlimited is splitting at the seams with staff. There are very limited spaces available to offer for worksite lactation breaks. The company puts a lock on the women’s restroom to create the space. It complies with the law in every respect . . . except one. The law specifically states the space for lactation breaks cannot be a restroom. Sanitation is a concern.

Seriously? How can I do that: United Parcel Express has delivery drivers in trucks all day, every day. Janet, a delivery driver, has recently returned from having a child and would like to express milk. The company has more than 50 employees, but no real means to provide a space. What is it supposed to do? Comply. The law has no pity for inconvenient businesses. I searched on-line to try to find ideas for a scenario like this. The only thing I found about shipping companies was a UPS driver’s use of dressing rooms in various shops along her route. That hardly sounds compliant. Through a little looking, I did discover there appear to be “Workplace Lactation Consultants” who may be able to help with troublesome situations.

What should I do:

Good: Consult with employees who plan to return to work after giving birth. Work toward a mutually agreeable solution. If you have buy-in from the employee, you are unlikely to have a complaint from the employee or the DOL. Create a temporary place to meet the employee’s needs and offer adequate time for the employee to express milk daily. If you plan to claim undue hardship, please consult with your legal counsel about the appropriate path.

Better: Create a permanent space for employees to express milk. Consult with a lactation consultant to work through more difficult workplace scenarios such as traveling employees.

Best: Consider becoming a recognized Texas “Mother-Friendly Business.” In addition to the requirements of the federal law, employers only have to add access to a clean, safe water source and a sink in the space and a hygienic place to store expressed milk to meet the standard.

Losing My Religion: Do I Want to Know My Employee’s Religious Beliefs?

Posted in Quick Questions

The Fifth Circuit Court of Appeals recently updated employees’ guide to southern manners. Don’t worry, employees should still say “yes ma’am” and “no ma’am.” But you know the old saying that you should never discuss politics or religion at work? Well employees better forget that saying ever existed. Not only should employees discuss their religion at work, they should make their religious beliefs known to management when religious accommodations are necessary. Yes. You read that right. Employees should tell their bosses about their specific religious beliefs to establish their inclusion in a protected class.

In Nobach v. Woodland Village Nursing Center, Inc., et al., the Fifth Circuit ruled that if a company’s decision makers involved in an employee’s termination are unaware of the employee’s religious beliefs, then the company cannot be liable for religious discrimination. Nobach, a certified nurse’s aide at Woodland Village Nursing Center, was terminated for refusing to pray the rosary with a patient. Nobach refused because she was a former Jehovah’s Witness and still held many of the same beliefs.

Unfortunately, Nobach made a big mistake. She didn’t discuss her religious beliefs with her boss. I know most people are thinking, “well of course she didn’t!” But the Court held that because the managers involved in her termination were not made aware of her religious beliefs until after her termination, they could not have discriminated against her based on those beliefs. So the Fifth Circuit overturned her sizeable monetary award granted by a jury.

Employers, I’m not suggesting that you go out on a “witch hunt” and attempt to identify the religious beliefs of all of your employees. I’m suggesting quite the opposite. While most employers know not to ask about these sensitive issues in an interview, if a current employee does not tell you about their religious beliefs or need for a religious accommodation, DON’T ASK! This is one case where what you don’t know actually can’t hurt you. If you’re not aware of someone’s inclusion in a protected class—age, sex, religion, race, color, ethnicity, pregnancy, military status, disability, genetic information, and national origin—then it will be hard for a court to find that you to discriminated against an employee without knowledge of their protected status. Now you can’t turn a blind eye or bury your head in the sand. But some classes are more discreet than others. Obviously, if an employee is wearing a burqa and refuses to pray the rosary – you probably have some idea that the employee was may be Muslim (and, hence against her religious beliefs).

That said, employers need to have open lines of communication with management teams. If a manager learns about someone’s religious beliefs, national origin, or other inclusion in a discreet protected class, there needs to be policies and procedures in place that require reporting up the food chain. Such policies will allow upper management to avoid unlawful discrimination and protect the company from potential lawsuits.

For those who missed it, “Losing My Religion” is the title of a 1991 REM song.  I forget that some people who read this won’t be of my vintage.

Employment Law 101: Pregnancy Discrimination

Posted in Handbook Articles

Who, What, Why . . .

Who does it apply to: The law applies to all employers with 15 or more employees.

What is the issue: Title VII was passed in the 1960’s to protect against discrimination based on race, color, religion, sex or national origin. Since that time, other laws have been passed adding protection against discrimination toward other groups. The Pregnancy Discrimination Act (“PDA”) was passed in 1978 to modify Title VII to specifically protect against discrimination based on . . . you guessed it . . . pregnancy.

What am I required to do: Employers are required not to discriminate against employees on the basis of “pregnancy, childbirth, or related medical conditions.” More specifically, employers are required not to treat an employee adversely because of these characteristics in relationship to any significant aspect of employment.

What constitutes a violation: There are two kinds of violations – direct mistreatment and disparate impact.  

  • Direct mistreatment is straightforward. If an employer affirmatively mistreats an employee because of pregnancy by failing to hire, firing, demoting, or any other type of significant slight someone might dream up, it can be actionable as pregnancy discrimination.
  • Disparate impact is more subtle. If an employer creates a policy that is neutral or non-discriminatory on its face, that policy might have a consequence of negatively impacting pregnant workers more significantly than others. An employer policy that employees who like pickles and ice cream together must be fired, is not discriminatory on its face because it may affect any worker. That said, conventional wisdom suggests that pregnant women like strange food combinations during pregnancy. This facially neutral rule has a disparate (greater) impact on pregnant workers and may create a claim for discrimination against the employer as to all pregnant employees. Of course, in the real world, the policy, the violation, and the impact will likely be much more subtle so these claims are often much more complicated to bring.

What if my employee violates without my consent: Choose carefully who you place in charge. Employees placed in positions of authority with the power to control the circumstances of other employees are not personally liable. Their liability is placed with the employer even if the employee acts without authority. The same is true of independent contractors (whether properly characterized or not) placed in positions of authority over employees.

Hasn’t this law been in the news lately: Why, yes. Yes it has. The Equal Employment Opportunity Commission (“EEOC”) recently issued new “guidance” for employers regarding the scope of protection for women under the PDA. Even though the PDA does not provide any of these protections in writing and pregnancy is not a “disability,” the EEOC has decided it will enforce the PDA as though pregnant employees must be given the same protections a disabled person is provided under the Americans with Disabilities Act (“ADA”). 

Specifically, the EEOC now insists that employers “reasonably accommodate” pregnant employees. For example an employer would need to redistribute non-essential functions of the pregnant employee’s job duties to others, modify a pregnant employee’s work schedule to take more breaks, or modifying equipment or seating to make the workspace more comfortable for pregnant employees. Additionally, the EEOC wants employers to implement light duty policies for pregnant workers to allow for different job duties during pregnancy or an altered work schedule.

Do I have to follow the EEOC guidance: Yes and no. While the EEOC’s guidance will probably not stand up in court as the law exists right now, it will cost a lot of money to fight it. Plus, there is a law proposed in Congress now entitled the Pregnant Worker Fairness Act which would essentially make the EEOC’s guidance law. In a year or so, the legal requirements will likely match the EEOC’s guidance so it can’t hurt to start abiding by the rules now.

Common Situations:

Maternity Leave: Doulas United is a small, Austin based, company providing pregnancy coaching for expectant mothers. Natasha, one of the company’s coaches, has, herself, become pregnant. When the time comes for Natasha to have her baby, she asks for maternity leave to care for her new child. Operating on a bit of a double standard, Doulas tells her the company just can’t afford to grant her time off. If she leaves to care for her newborn, her position will be given to someone else. Natasha makes a claim under the PDA. Is she in for a payday? Nope. The PDA only prevents discrimination. Doulas does not have 50 employees so the federal Family Medical Leave Act (which grants up to 12 weeks unpaid leave) does not apply. With no maternity leave law in Texas, Doulas can let Natasha go without creating a legal issue if she fails to return immediately to work.

Take that, EEOC: Anger Management Trainers, Inc. (“AMT”) hates government intervention and refuses to kowtow to the EEOC’s new guidance. When Sue asks for a new keyboard and desk set up as a reasonable accommodation of her pregnancy-related carpal tunnel syndrome, AMT management tells her to jump in a lake. Has AMT jumped into troubled waters? Unfortunately, yes. Even though the EEOC’s guidance is not law and won’t likely stand up in court at this time, Sue’s request is protected under the ADA. All pregnancy related illnesses are likely disabilities within the meaning of that law and reasonable accommodation must be afforded the employee.

Octomom: Billy operates Billy Bob’s Breeding, a thoroughbred horse breeder. Lilly has been a rising star in the company, but has become pregnant and plans to have more children. Billy, a father himself, treats Lilly perfectly during pregnancy and gives her three month’s maternity leave even though his company is not required to do so. Billy even pays Lilly ½ wages during her leave. When she returns, Billy welcomes her back into the company. Months later, however, when it comes time to choose a manager for the company so Billy can take more time off, Billy selects a male employee who is barely qualified. He just doesn’t feel that he can count on Lilly to handle the reigns with her new baby and plans for a bigger family. Has Billy erred? Yes. Even though he treated Lilly properly during pregnancy and immediately after, he cannot retaliate against Lilly for her pregnancy and plans for a large family.

What should I do:

Good: Count up your workers every few months to know whether the law applies to you. Once you have more than 15, institute an anti-discrimination policy including pregnancy discrimination.

Better: In addition to developing a policy, control who is permitted to interview and make material decisions about employees to be sure they are aware of the concerns of pregnancy and other discrimination.

Best: In addition to the items above, create job descriptions for each position. Use the job descriptions to prepare advertisements for positions, to ask objective interview questions, and to create a uniform and objective performance review system to avoid accidentally discriminating against someone based on pregnancy.

Employment Law 101: Travel Time

Posted in Handbook Articles

Who, What, Why . . .

Who does it apply to: All employers who are subject to the Fair Labor Standards Act, which is virtually every employer.

What is the issue: Employers are required to count certain time spent traveling toward an employee’s hours worked each week unless the employee is exempt from overtime. (For more information on who is exempt from overtime, see the Exemptions edition). The problem is that not all time must be counted and the rules can be quite tricky.

Is the drive from home to work covered: Let’s start at the beginning of the day (and the end). Of course, most of you are thinking the commute to the office can’t possibly count.  Like many legal issues – it depends. In it’s simplest form, compensable travel time starts when work begins whether that is picking up food for the office or sitting in traffic on a conference call. If the Department of Labor (DOL) considers the travel “for the employee’s benefit” it does not count. If, on the other hand, the DOL considers the travel to be “for the employer’s benefit,” it does count. The Common Situations section will help you understand this point better.

What if the employee drives a company car: If the employee drives to a business location to pick up a company vehicle before heading out to the first job of the day, their time starts to count as soon as they get in the vehicle.  If the employee drives the company vehicle to and from home, and from home to work or business calls, the time is treated like a regular commute and does not count.  On the other hand, if the employee drives the vehicle to pick-up co-workers or materials on the way to work, the time counts as soon as the employee leaves home.

How is travel during the workday treated: Once an employee arrives “at work” (whether that be a jobsite, first call, or office) any additional travel during the day up to the end of the workday or last call of the day is counted.  This time is clearly for the employer’s benefit with the possible exception of driving to and from a meal break location.

Who gets paid for time in a carpool: Again, it depends.  If a group of employees decide on their own to carpool, the time does not count.  If the employees take their own vehicles to a common location to ride in a bus or other vehicle to a jobsite, the bus driver is on the clock, but the riders may not be.  If the riders are not obligated to use the company vehicle their ride time does not count.  There is some question about whether ride time counts if the employees are unable to drive directly to the ultimate destination themselves – perhaps to a construction site or factory.  Check with your employment counsel in that situation.

What about travel out-of-town: Out-of-town travel is generally broken down into two categories: “special” trips all in a day’s work and longer trips, usually overnight.  If an employer sends an employee out of their usual work area for a special one-day project, the company must pay for the travel to and from that site, less the employee’s usual commute.  If the employee travels to the airport to fly to another town, the flight time to and from the location counts, but the drive to the airport does not.

If an employee is sent out-of-town multiple days for work, travel time that is outside of their usual work time is counted.  Hence, an employee who usually works Monday – Friday, 8 to 5 will be paid for all time (including the drive to the airport since it is not a regular workday) on a Sunday to arrive for a Monday meeting. The employee will also count time in a plane or other mode of transportation returning to his home location.  Travel of this type can also be complicated.  Check with your employment counsel about more complicated situations such as an employee leaving early to visit friends in the destination location.

How is travel overseas treated: Overseas travel is complicated and beyond the scope of this edition. Check with your employment counsel about travel time of this type.

Does on-call or emergency travel change anything: Employees required to travel outside of their normal work hours to a location other than their primary work location must be paid travel time to and from the location.  Employees called in to their primary work location after hours are not paid for travel to the location.  It is an odd dichotomy, but those are the DOL’s rules.

Common Situations:

Donut stop: Maggie stops for donuts on the way into work just to be nice to her co-workers.  Even though she made a stop for the benefit of her co-workers, her employer did not require it, so the time is not counted.  What if Maggie’s boss decides to reimburse her after she shows up with the donuts?  The stop was still of Maggie’s own volition, so it does not count.  Now, what if Maggie’s boss asks her to stop and pick up a case of coffee at the grocery store and Maggie still decides to buy the donuts for her co-workers?  Now it counts because Maggie is making a stop for her employer’s benefit.  How much of Maggie’s 45-minute commute counts, though?  That is up to Maggie.  If she stops at the grocery store five minutes from her house, 40 minutes count.  If she stops at the grocery store 5 minutes from the office, only five minutes count.  The same would be true if Maggie’s boss asked her to make the stop on the way home.

Hitching a ride: Sylvia lives 15 minutes from Maggie, just off Maggie’s regular route to work.  If Maggie stops to pick Sylvia up, does that count as work time?  It depends.  If Maggie’s boss asks her to pick Sylvia up, the time counts. If Maggie is just being a good co-worker, the time does not count.  Either way it doesn’t count for Sylvia.  Now, what if Sylvia completes a report for work that her boss has been waiting on during the ride?  This time, Sylvia must count the time.  Simply because she is not in the office and is using time that would otherwise be her commute, does not mean she loses the time.

Travel here, there and everywhere: Joe works for Cable Two as an installer.  He was given a fully equipped truck to drive each day.  For the company’s convenience, Joe is allowed to drive the truck home each night so he can go straight to his first call each day and from his last call home. You might think Joe’s day starts the moment he leaves the house. Not true. Because Joe is allowed to drive the vehicle home for his convenience, he does not start counting time until he arrives at his first call of the day and his time stops when he starts home from his last call every day.  The fact that Joe reports to different locations at the beginning of each day and drives home from a different location does not make the time count.  This is true even if the drive time is different each morning and evening.  There are situations where employees drive two to four hours for their first job each day and none of that time counts toward the employee’s hours for the week.  That said, it may be hard for the employer to keep employees under those circumstances.

Ride and work: Calvin rides from an assembly point each day on a bus into the plant where his construction company is performing an upgrade.  The ride is about 30 minutes each way. Initially, Calvin and his co-workers could listen to music or talk on their phones during the ride.  Over time, Calvin’s supervisor figured out he could save time when the employees arrive at the jobsite by using the ride to go over the day’s assignments.  Is the ride compensable?  Of course – it is used for the employer’s benefit.  It is not a novel circumstance for a situation like this to naturally arise.  The head office starts with an approach designed to comply with the law and someone with no understanding of the rules decides to be more efficient.  Oops.  Now you’ve got a problem.

What should I do:

Good: Analyze all the common situations for your business and determine the compensability of employees’ time.  Act on your determinations accordingly.  Plan travel away from home locations or overnight in advance to be sure that you handle it appropriately. There may not be time to get advice of counsel after the employee returns and before their paycheck is due.

Better: As you can tell from this edition, there are many situations in which you may find yourself. When in doubt, consult an attorney.

Employment Law 101: Child and Spousal Support

Posted in Handbook Articles

Who, What, Why . . .

Who does it apply to: All Texas employers are required to respond to garnishment requests. There is no minimum employee exception for child and spousal support.

What are my obligations before receiving an order to garnish: All employers are required to report hire date, name, address, and Social Security Number for new hires to the Texas Employee New Hire Operations Center of the Texas Attorney General’s Office within twenty days of the employee’s first day of work. Employers with employees in more than one state may report in each individual state or one state. If reporting in one state, however, employers must do so using the state’s electronic system and notify the Federal Office of Child Support Enforcement (“OCSE”) in writing.

Employers must also respond to requests from OCSE and the Texas Attorney General’s Child Support Division for information regarding the identity, location, position, compensation, income, and benefits of an employee to help that office determine child support obligations.

Employers may meet each of these obligations using the Child Support Division’s electronic filing system.

What types of support exist: Most employers associate state garnishments with child support only. As you can see from the title of this edition, however, spousal support may also be deducted. Additionally, deductions may be made for medical insurance support and child and spousal support which are past due or in arrears. There is a very specific order of priority among these types of support also. Currently due child support takes the highest priority followed by current spousal support, medical support, and child support in arrears. Spousal support in arrears then occupies the very last position.

How does withholding work: An employee may be required to pay up to 50% of his or her “disposable earnings” for support. Disposable earnings are those earnings above and beyond withholding required by law (state and federal taxes, Medicare, and Social Security, etc.) and exceeding union dues, non-discretionary retirement contributions, and contributions for health and disability insurance.

What if there are multiple withholding orders: This is the messiest part of handling child support. Employees are sometimes subject to withholding orders from different states, which require employers to divide the disposable earnings up between the various orders. There are very specific rules for applying these payments. Disposable income must be applied to the total current support for each order equally first and then equally to arrears support. Seek the advice of employment counsel or the Child Support Division to be sure these payments are correctly made.

What about withholding for severance or bonus payments: Employees receiving a lump sum payment in excess of $500 as a bonus or other payout, may be required to contribute up to 50% of the disposable earnings portion of the payment to support in arrears. Employers are required to contact the Child Support Division to determine what portion of the payment must be sent in for support. Similarly, employees receiving a lump sum for severance at the end of employment must make an appropriate disposable earnings contribution to regular support equal to the number of paychecks the sum would represent. For example, a severance payment of $10,000 for an employee who usually earns $2,000 per month would require deductions for five months of regular support contributions.

How do I make payment: Employers must send the payment on the pay date on which money is withheld. Employers with more than 50 employees must remit payment electronically. Employers submitting paper checks for multiple employees must submit the proper processing form dividing all of the amounts for each employee so that the state may properly apply the payments.

How does support for medical insurance work: Employers may be ordered to place the dependent of an employee on the business’ medical insurance even if the employee is not participating in the plan. Employers will receive a National Medical Support Notice from either the OCSE or the Child Support Division requesting that a dependent be added to a plan. Employers must complete the forms attached and return them to the requesting agency within 40 days of receipt. This will let the agency know whether the request has been met or if there is a reason it cannot be met – such as the employee’s ineligibility for coverage. Employers should then deduct the premiums from the employee’s pay to the extent the plan requires deduction according to the regular withholding rules. Should the plan lapse, the employer must let the requesting agency know within 15 days.

What if the employee leaves: Employers must report the separation of an employee subject to a child support order to the Child Support Division and\or the OCSE within seven days of the date of separation.

Common Situations:

Woman on a mission: Sadie is the owner of a taxi company in Tyler and the single parent of a beautiful daughter. Sadie has zero tolerance for ex-husbands or ex-wives who shirk their responsibility and believes that people who have child support garnishments are just above snails in the food chain. Sadie refuses to hire anyone with a child support order and finds an excuse to release all employees who become subject to a child support order while working for her. Is Sadie on a taxi ride to the big house? Well, not the big house, but Sadie is subject to a lawsuit by each and every employee she has refused to hire or let go for this reason. It is illegal to discriminate against an employee based on child support status.

I didn’t hear you: Kevin operates Medieval Armory manufacturing replica armor for collectors all over the world. Kevin isn’t a paperwork kind of guy. He ignores all requests to deduct money from his employees’ wages and never reports new hires. What consequences does he face, if any? Let’s just say the State of Texas does not like to be ignored. Kevin may be penalized $25 per new hire he has neglected to report, but failing to withhold is the mother lode. Kevin is subject to a $200 fine per pay period and becomes liable to the person who was not paid support for the amount owed, plus all attorney fees to collect it from Kevin. Kevin better have some really, really, rich collectors.

Turn off the spigot – Now: Cal has been waiting for this day for the last six months. His son has turned 18 and Cal is ready for the child support payments to end. Cal strides into the Human Resources office showing a copy of his son’s driver’s license and demands that the payments cease. Cal is planning to buy a new truck and this money will put him over the top to get it. Can Cal head to the dealership this week? Not with his child support money. HR tells Cal that it needs an order from the Child Support Division to let him off the hook. Cal runs home and brings back his divorce decree showing that child support ends at 18 for his son. All better? No. Employers are not lawyers or judges. They are not required to interpret court orders or rely upon common perception about when child support ends (which can be age 25 in some cases). Cal’s employer should wait for an order from the Child Support Division. If Cal has a refund coming, he can get it from them.

What should I do:

Good: Provide notice of new hires, comply with all withholding orders, and provide notice of separation when employees leave. Don’t forget to deduct up to $10 per month as an administrative fee for handling support deductions (but not medical insurance).

Good gets it done this month. Because each of the obligations above is mandatory, there is no room for employers to take a “Better” or “Best” approach.

Employment Law 101: Bonuses

Posted in Handbook Articles

Who, What, Why . . .

Who does it apply to: You guessed it . . . any employer who chooses to pay a bonus to employees.

What counts as a bonus: There are a lot of ways to describe a bonus. For our purposes, a bonus includes any discretionary or non-discretionary payment or “compensation” to an employee outside of their regular hourly, salary, commission, or piece rate pay. A bonus then includes any prize or award to an employee in addition to traditional “bonus” payments.

What is the difference between discretionary and non-discretionary bonuses: I’m glad you asked. It is one of the key dividing lines in payment of bonuses. If a bonus is discretionary, it does not count toward an employee’s overtime calculation and may not be owed to an employee regardless of that employee’s separation from the company. Non-discretionary bonuses on the other hand count toward overtime and an employer may be responsible for them even if an employee leaves. Of course, if the employee is exempt from overtime this distinction matters less (see the prior EH editions on Overtime and Exemptions from Overtime).

What is a discretionary bonus: You know what is, and is not, discretionary. Of course, what you think is discretionary and what the government thinks is discretionary may differ. To be discretionary in the eyes of the law:

• The employer must control whether a payment is granted

at all;

• The amount of the payment must be discretionary;

• Determining the amount and making payment must occur near the end of the period for which the bonus is granted; and

• The bonus must not be subject to a prior contract with the employee or a promise causing the employee to expect payment.

If the employer surrenders control over any of these items, the bonus will become non-discretionary.

How does this break down in layman’s terms: If you tell your employees that you plan to pay a bonus at a particular point in the future, but retain control over the amount, it becomes non-discretionary. If you tell the employees how much a bonus will be (or give them a way to calculate it), but don’t say when it will be granted, the bonus becomes non-discretionary. Examples of non-discretionary bonuses include payments for: attendance, retention to encourage working undesirable shifts, safety criteria met, meeting individual productivity criteria, the company meeting certain criteria, reporting fraud or criminal activity, recruiting bonus and bonuses that may have been discretionary in the past which have become expected through repetition of payment.

How does a non-discretionary bonus affect overtime: Employees who are not exempt from overtime must have all money for non-discretionary bonuses included to determine their overtime rate. To use a simple example, an employee paid a weekly safety bonus of $100.00 who works 50 hours at $15.00 would receive overtime of $92.50 with the safety bonus calculated instead of $75.00 based on just 1½ his or her hourly rate (See the EH edition on Overtime for more information about how this calculation works). Bonuses paid quarterly would then be spread over the employee’s pay for the entire quarter on a weekly basis and an additional overtime payment would be due for overtime weeks with the bonus.

What if the employee leaves before the bonus is due: For discretionary bonuses, the employee clearly will not be entitled to the bonus. For non-discretionary bonuses, the employee will be entitled to a pro-rata portion of the bonus unless the employee was terminated for good cause or the program providing the bonus specifically states that the employee must be present at the time the bonus is awarded to receive it.

What about prizes and awards: Prizes and awards are generally treated like non-discretionary bonuses which count toward overtime for non-exempt employees, unless: (1) the prize or award is not given for an employment purpose; or (2) the prize or award has no value. Prizes given for activity outside of work and working hours that are beyond the employee’s usual duty and different from what the employee regularly does will meet the exemption requirement. Otherwise, the value of the prize must be included in the employee’s overtime.

Common Situations:

Back in the saddle: Mary takes six weeks unpaid time away from Tom’s Tortilla Factory to care for her elderly mother. Mary’s time away is covered by the Family Medical Leave Act (“FMLA”) (see the EH edition on the FMLA for more information). Mary arrives just in time for payment of the quarterly plant safety bonus to employees, but does not receive her bonus check. Upon inquiry, she is told by Tom that she does not qualify because she was out for a substantial portion of the quarter. Has Tom violated the law? Yes. Because the safety bonus is not tied to Mary’s productivity and relates to the overall safety of the plant, Mary is entitled to receive her check. Safety, attendance, and other bonuses related to the activity of all employees fall into this category. That said, Tom may pro-rate the check for the portion of the quarter for which Mary was present.

I’ll take that, please: Sadie’s Circuit Boards pays handsome bonuses to sales representatives who meet certain sales goals. Joel makes a huge sale to uPod Mobile Music, Inc. and receives a large bonus based on that sale. Months later uPod backs out of the agreement and Sadie appears at Joel’s desk with her hand out demanding repayment of the bonus Joel received on the sale. Can Sadie take this approach? It depends. If Sadie has included a claw-back provision in the bonus structure for sales representatives, it is possible she can recoup the money from Joel. Without such an agreement in writing, her demand will not stand up. Claw-back agreements are becoming more common in businesses and raise a large number of issues – especially for executives and officers. IRS Section 409A governing parachute programs and Sarbanes Oxley can come into play if repayment is permitted over time. Check with your employment counsel before implementing a claw-back provision.

Santa Claus is coming to town: Nick has been working on the line at Tawny’s Toy Factory for more years than he can count. For as long as he can remember, Tawny gives the employees a “Christmas Bonus” that is not tied to productivity, but has truly come to be expected. Is the bonus subject to overtime? It may be discriminatory, but it is not subject to overtime. Even though the bonus has been given so long that it is no longer truly discretionary under the law, the Department of Labor has specifically excluded “Christmas Bonuses” and bonuses paid solely for longevity with a company from overtime calculations as long as the bonus is not so large as to be considered part of the employee’s regular compensation. That said, a bonus of this type tied in any way to productivity would be included in overtime so employers should be careful.

What should I do:

Good: Evaluate any bonus program you have and be sure to pay overtime on bonus amounts for non-discretionary bonuses.

Better: Follow the advice above, plus put non-discretionary bonus programs in writing to be sure everyone is clear on what the rules are and be certain to include a provision that employees must be employed at the time the bonus is awarded to receive it.

Best: In addition to the above, have all employees sign acknowledgements regarding all bonus programs. Be careful to avoid discretionary bonuses becoming non-discretionary by varying the award from year to year and the timing of such award.

Employment Law 101: Age Discrimination

Posted in Handbook Articles

Who, What, Why . . .

Who does it apply to: The Age Discrimination in Employment Act (“ADEA”) applies to virtually all employers with 20 or more employees in 20 or more calendar weeks in the current or preceding year. Be careful how you count, though. Businesses under 20 employees may be covered if they are connected to other businesses by interrelated operations, shared bank accounts, common record keeping, overlapping ownership, or centralized control of the human resources function.

Who is protected: Applicants and employees 40 and older. Interestingly, the ADEA does not care about those 39 or younger. Employers are free to prefer employees 40 and older over younger workers. Although age discrimination can still occur between employees over 40, an age difference of less than 10 years is usually not considered significant enough to warrant a remedy. The law also protects U.S. citizens working abroad for U.S. controlled companies in most circumstances. And, finally, if you have a contractor working for you who is mischaracterized (see the Independent Contractor v. Employee EH edition) they may be able to bring a claim.

Who is not protected: (1) True independent contractors, and (2) business executives over the age of 65 who have spent the last two years in a “policy making” position and are entitled to a non-forfeitable annual retirement benefit meeting certain criteria. The executive exception is very technical and is not intended for middle management. See your employment counsel about this exception.

What constitutes a violation: There are two kinds of violations – direct mistreatment and disparate impact. Direct mistreatment is straightforward. If an employer affirmatively mistreats an employee because of his or her age by failing to hire, firing, demoting, promoting younger employees, or any other type of significant slight someone might dream up, it can be actionable as age discrimination. Disparate impact is more subtle. If an employer creates a policy that is neutral or non-discriminatory on its face, that policy might have a consequence of negatively impacting older workers more significantly than others. For example, if an employer institutes a policy that employees who wear reading glasses must be let go, the policy itself does not seem discriminatory because it may affect older and younger people. That said, 90-some percent of people have to start wearing reading glasses by age 40. This facially neutral rule has a disparate impact against workers over 40 and may be actionable.

What if my employee violates without consent: Choose carefully who you place in charge. Employees placed in positions of authority with the power to control the circumstances of other employees are not personally liable. Their liability is placed with the employer even if the employee acts without authority. The same is true of independent contractors (whether properly characterized or not) placed in positions of authority over employees.

Are there circumstances where I can exclude older workers: There are some jobs that older workers simply cannot or should not do. This is recognized under the ADEA. If an employer has a Bona Fide Occupational Qualification (“BFOQ”) that requires workers above certain ages to be excluded, it will not violate the law. To have a BFOQ, the employer must demonstrate a factual basis that provides a basis to believe that all or substantially all older persons are unable to perform the job safely and efficiently. Employers must be careful with BFOQs. They are often challenged and rarely hold up unless there is strong evidence that all older workers can’t do the job.

Common Situations:

But I just got here: David just bought all of the assets of Hal’s Hot Links. To keep the business running smoothly, he bought the name and hired several of the employees Hal let go at the time of sale. A few weeks into his new business, David receives an EEOC charge of age discrimination for things that happened to an employee David hired that used to work for Hal. The employee complains of things that happened back when Hal had the business. Why is David involved? There is a concept of “successor liability” under the ADEA. If there is continuity of operations and workforce, notice to the new owner, and no chance for the employee to recover from Hal (who has run off to Aruba with his young girlfriend), David might have some responsibility. The rules here are complicated. Check with your employment counsel about these issues. The message here is to be careful when making an “assets only” purchase of another business. That might not be enough to protect you.

The law of supply and demand: The Springfield Police Department does a pretty good job of keeping its employee pay Age Discrimination rates separated by rank and department, but the nearby town of Highland Park has started paying new recruits what Springfield pays its sergeants. In need of new officers, but unable to raise the payroll of all of its officers, Springfield raises the pay for new recruits to match Highland Park. This angers several of Springfield’s sergeants who are all over 40. Many file claims against Springfield. Have they got a point? No. It is not a violation of the ADEA to pay workers what they are worth in the workplace. Springfield has to do something to compete. That said, Springfield better keep good records of its reasons and what is happening over in Highland Park to prove its position.

It’s time to retire, pops: Sarah’s Widget Works has finally run its competitor, Bill’s Big Bad Widgets, out of business. Several of Bill’s most talented employees have come by to apply for a job with Sarah. Sarah has a full complement of staff, but several are getting up into their 60s. Sarah calls in each 60+ employee and asks about their retirement plans. Each indicates they are thinking of working another 2 or 3 years. Sarah decides to offer an early retirement package to eligible employees over 55 to see if any of her older workers will choose to retire early. Has Sarah gone off the deep end? Not yet. It is not illegal to ask an employee about his or her retirement plans, but Sarah should be careful not to let the employees take it wrong. It also is not illegal to offer a neutral early retirement program to all eligible employees. If some of Sarah’s employees take it, she will have room to bring in Bill’s talent as long as she does not discriminate against Bill’s older workers.

Classified ads: Mikey runs the local motorcycle shop and needs someone to come in to do part-time stocking work. Hoping to help a kid at the local college, Mikey runs an ad in the school paper looking for a “college student” for help stocking shelves. While it seems harmless enough, has Mikey broken the law?

In an edition devoted to the ADEA, I suppose you’ll think so. You’re right. Mikey has committed two sins. First, he advertised for help only in the college newspaper. Employers have to draw their prospects from neutral environments open to all workers. Only the local college students read the school paper and while there may be some non-traditional older students, the ad is primarily aimed at young people. Second, Mikey asked for a college student. Employers must avoid terms like “college student”, “boy”, “girl”, “young”, “25 to 30”, and “recent college graduate”. These can violate the law. Of course, remembering that the ADEA does allow discrimination in favor of older workers, there is nothing wrong with advertising for a “retiree” or someone “50 to 60”.

What should I do:

Good: Count up your workers every six months to know if the law applies to you. Once you are over 20, institute an anti-discrimination and anti-harassment policy for all protected groups (and including “older” workers over 40).

Better: In addition to developing a policy, control who is permitted to interview candidates to be sure they are aware of the concerns of age and other discrimination. Be conscientious about advertising positions to be sure all age groups are targeted and that words referring to young people are left out. If you let go an older worker you are concerned may make a claim, try to replace them with a worker of similar age to reduce the effectiveness of a possible claim.

Best: In addition to the items above, create job descriptions for each position. Use the job descriptions to prepare advertisements for positions, to ask objective interview questions, and to create a uniform and objective performance review system to avoid accidentally discriminating against someone.

Employment Law 101: I-9 Forms

Posted in Handbook Articles

Who, What, Why . . .

Who Does It Apply To: All business owners hiring employees to work within the United States.

What Is An I-9 Form: Hopefully, you are all familiar with the I-9 Form. All employers are required to complete one for all new employees by the Department of Homeland Security and the U.S. Citizenship and Immigration Services (“USCIS”). Its purpose is to help employers determine whether applicants are authorized to work in the United States. Of course, it is also used by USCIS to make sure employers don’t hire workers who are unauthorized to work in the United States.

How Do I Properly Complete The Form:

How does the form work: An I-9 Form requires both the completion of basic citizenship information and verification of identification proving the right to work. There are three parts or “Sections” to the document. Section 1 is information about the employee. Section 2 is the verification of documents for employers. Section 3 can be used if an employee is rehired within 3 years of separation.

When to fill it out: An I-9 Form must be completed for every new employee hired after November 6, 1986. Prepare the form before the employee begins work on their first day by completing Section 1. Then, be sure the employee meets the requirements of Section 2 within 3 business days of the first day of work. Never complete the form before the prospective employee is offered employment and accepts the job. Doing so earlier creates a possible discrimination claim if the person is not hired.

How do I fill out Section 1: Employers do not fill out Section 1. It is to be completed by the new employee before beginning work on their first day. The employee must complete their full name, address, date of birth, attest to citizenship or immigration status, and sign and date the form. Employers do have responsibility to make sure the employee has completed all of Section 1 with information that conforms to the questions asked in Section 1, i.e., putting an address in the address box.

How do I fill out Section 2: Within three business days of the first day of work, the employee must present original documents found on the Lists of Acceptable Documents at the end of the I-9 Form. The employee must be sure the documents you accept are not expired. You then fill out Section 2 of the I-9 Form and retain it. Do not specify to your new employees which documents they provide or ask for different or additional documents, or comment on their choices.

How do I fill out Section 3: Employers may choose to complete Section 3 if rehiring an employee within 3 years of prior separation. Employers are not required to use Section 3 for a rehire and may fill out a new I-9 Form.

How do I know the documents are real . . . or should I care: Employers are required to accept documents that “reasonably appear” to be genuine. This gets into sticky territory for employers. After all, you are not an expert on documents. If you complain that documents are not real when they are or appear to be, you can get in trouble for discrimination. If you accept documents as real when they are not, you again make a mistake and get in trouble with USCIS. My advice – print yourself a copy of the illustrations of acceptable documents from Part 8 of the USCIS Handbook for Employers. Unless the documents appear patently false, accept them. If you make copies for examination by the human resources office at hire, don’t keep the copies. If you keep them, USCIS can examine what you looked at and decide for you.

What if I get contradictory documents: If the employee correctly follows the List of Acceptable Documents, you should not get contradictory documents. Sometimes, however, an employee will bring in what appears to be a valid non-immigrant alien document from List A and a social security card or US Citizen ID card. If the person only presented the non-immigrant documents, you would be fine, but we all know it would be difficult to have a social security card and a non-immigrant status at the same time. In this situation, you have a judgment call to make. You can take the document from List A and move on or you may consider calling USCIS for advice.

What do I do with the completed form: Employers must retain every employee’s I-9 Form while the employee works for them. As noted above, I don’t recommend keeping copies of the documents you receive, but remember to keep them for all employees if you keep them for some. I-9 Forms can be retained either on paper, or electronically.

Form I-9 – Employee Eligibility Verification

Forms are stored, they must be in a secure location or system that protects against the alteration or loss of the Forms.

What about reverification: Employers are not permitted to reverify employees who present permanent right to work documentation, however, employers are specifically required to reverify all employees who present documents of a temporary right to work. Reverification must be done by the expiration date so employers need to calendar this responsibility.

What do I do after the employee leaves: After termination, employers must keep the I-9 Form for the longer of: (a) three years after the date of hire, or (b) one year after the date employment terminated, whichever is later.

What is E-Verify: E-Verify is a federal database to help employers confirm the employment authorization of new hires that is free and available in all 50 states. Employers who participate in E-verify must complete an I-9 Form and then create a “case” in E-verify that includes information from both Sections and the employee’s social security number. E-verify will issue a response regarding the employee’s authorization status. Employers may not use E-verify to pre-screen applicants for employment, check employees hired before the company became an E-verify participant, or reverify employees. If an employer uses E-verify to authorize one employee, it must use it for all employees. E-verify is currently voluntary for all Texas employers, except for federal contractors, but may be made mandatory for all employers soon.

Common Situations:

Consistency is key: Ray has attested to being a U.S. citizen on Section 1 of the I-9 Form, but presented his new employer, Callahan Auto, with a “green card” the next day to complete Section 2. Should Callahan accept this document? No. Employers are not expected to be immigration law experts, but the document is inconsistent with the status attested to and therefore, is not reasonably related to Ray.

But I didn’t do it: SMI acquired McGuire, Inc. along with its employees. SMI did not take any action towards verifying Maguire’s employees’ identity and employment authorization. Is SMI liable for errors made on Maguire’s I-9 Forms? Yes. Companies acquiring another company’s employees have the option to either retain the previous owner’s I-9 Forms or complete new I-9 Forms.

English as a second language: Estoban’s Fine Restaurant hires Isabella because of her world famous cooking skills. She speaks only Spanish. Estoban locates and prints off the Spanish I-9 form which Isabella completes with no complications. Six months later the restaurant is audited. The only violation they can find is Isabella’s I-9. Why? As ridiculous as it may sound, the Spanish I-9 form is only for use in Puerto Rico.

What Should I Do:

Good: Don’t complete the I-9 Form before the employment relationship is consummated. Notify new employees to bring documents for the completion of Section 2 on the first day of employment and get it out of the way. Don’t keep copies of the documents for Section 2. Be careful not to discriminate against employees based on their documentation. Make sure the I-9 Forms are stored in a secure location that can still be accessed on three days’ notice.

Better for Some, Not for All: All of the above, and use the E-verify system to ensure you are maintaining a legal workforce. Certain industries, however, may not want to voluntarily subject themselves to E-verify. You know who you are.