Texas Employer Handbook

Insight on Employment Law for Texas Businesses

Employment Law 101: A Guide to At-Will Employment

Posted in Handbook Articles

Who, What, Why . . .

Who does it apply to: All employers regardless of size or shape.

What does “at-will” employment mean: You might be inclined to think that it means that employees serve at the will of the master, or at the master’s pleasure. While this historically makes sense, “at-will” employment is something more. It represents the idea that employer and employee are each free to terminate their relationship at any time without any strings attached for good reason, bad reason, or no reason.

Why an entire edition devoted to it then: If there are no strings attached, why would we need this edition? As I tell clients, at-will means you can let them go, but it does not mean they won’t sue you to claim it was for an illegal reason. The courts and legislature have created exceptions to the at-will doctrine. This edition is designed to give you a list of all the ways that the at-will employment doctrine is limited so you can minimize the risk you will be sued.

What is the exception created by the courts: Employees cannot be discharged solely for refusal to commit an illegal act. This does not include acts which would bring an administrative penalty or a lawsuit down on the employer. And, it only works if the sole reason for termination was the refusal.

What are the exceptions created by a statute: There are a bunch. Both the federal and state legislatures have created exceptions to the at-will doctrine:

Union or pre-union activity: Employees may not be discharged for being in a qualified union, acting under a collective bargaining agreement, or engaging in pre-union concerted action (complaining about the terms and conditions of employment).

Discrimination: Employees may not be discharged because of their membership in a protected class, i.e. race, sex, sexual orientation, pregnancy, national origin, religion (Under Title VII, the Texas Labor Code “TLC,” and other laws), age (under the Age Discrimination in Employment Act “ADEA”), disability or handicap (under the Americans with Disabilities Act “ADA” and Rehabilitation Act, genetic information (under the Genetic Information Non-Discrimination Act “GINA”), or military status (under the Uniformed Services Employment and Reemployment Rights Act “USERRA” and TLC).

Polygraph: Employees may not be discharged for refusing to take prohibited polygraph examinations under the Employee Polygraph Protection Act.

Without required notice: Employers engaging in a mass layoff must follow the Worker Adjustment and Retraining Notification Act.

In retaliation: Employees may not be discharged in retaliation for making a complaint of discrimination or coming to the aid of another person who makes a complaint of discrimination (Title VII, ADEA, ADA, GINA, and USERRA). Employees also may not be terminated in retaliation for taking medical leave (under the Family Medical Leave Act), approved military leave (USERRA), responding to a subpoena (TLC), attending jury duty or a political convention (TLC), making a good-faith workers’ compensation claim (TLC), refusing to join a union or participate in an abortion (TLC), or, believe it or not, refusing to make a purchase at a company store (TLC).

Wage and hour: Employees may not be discharged for making a claim for overtime, unpaid minimum wage, or other claim under the Fair Labor Standards Act. Employees also may not be discharged for complying with an investigation by the Department of Labor.

Health and safety: Employees may not be charged for filing complaints, assisting in investigations, testifying in a proceeding or otherwise exercising their rights under the Occupational Safety and Health Act, Hazard Communication Act, or Agriculture Hazard Communication Act.

Employment benefits: Employees may not be discharged to prevent them from vesting in employee benefits.

Returning from Military Service: Under USERRA, a vet cannot be let go for a year after returning from duty without cause.

What about employment agreements: An at-will employment relationship is a contract of sorts, but it can be terminated by either side at any time. That said, sometimes an employment contract is entered for a specific length of time or an employer sets down a particular set of rules limiting the employer’s ability to let an employee go. These agreements can be oral or written, with certain limitations. An agreement that specifically requires more than one year to perform must be in writing and all limitations on at-will employment must provide in a specific and meaningful way that the employer has a restriction on its right to terminate the employee.

Common Situations:

Whistleblower who: The captain of the ship Devil May Care, and owner of Angel Transport Company, discharged the bilge tank of his transport ship in environmentally protected coastal waters near Galveston. One of his crew discovered the act and confronted the captain, who, in turn, asked the employee not to report the violation. The employee refused and the captain fired him as soon as the ship landed. Is the employee protected? No. Employees are protected from termination when asked to commit an illegal act. The exception to the at-will doctrine does not extend to a request not to report the illegal act of another.

The old employee handbook trick: Mary discovered a provision in her employee handbook that promised employees would not be punished for reporting the negative or inappropriate acts of their co-workers. Taking this to heart, and being a lifelong tattle-tail, Mary took to reporting everyone – for everything. Mary could hardly get her work done she was tattling so much. This wore on the company’s owner to a point she could no longer take it and fired Mary. Mary filed a lawsuit claiming that she could not be fired for reporting the acts of others. Did the court side with Mary? Not in this case. The employee handbook included a couple of key “outs” for the company. It stated the handbook could be changed at any time and that nothing in it could change the “at-will relationship.”

You won’t be fired for . . .: Bob worked for Titan Oil and Gas Company, a giant oil production company. Titan had a policy of prohibiting employees from competing with the company without express written permission, so when Bob got an opportunity to go in with his brother to open a gas station he asked his supervisor, who sent Bob an email back indicating that Titan would not stand in his way. Years later, Titan changed the policy to require approval from senior management and told Bob to drop his interest or be fired. Bob filed suit. What was the outcome? Bob won. The company specifically provided a rule and Bob followed it. The fact that the rule was later changed did not affect Bob’s initial compliance with the rule at the time.

What should I do:

Good: Review this edition each time you let someone go as a quick check to be sure that your risk of suit is low. Remember, former employees will grasp at anything. You may not think there is a claim there, but the employee may make it up. Be careful in your consideration and, if you have doubts, check with your lawyer for some guidance about managing your risks.

Better: Follow the above advice and be sure that your employee handbook provides that no change from at-will is created by it.

Best: All of the above, plus, be careful about the language in any employment agreements regarding termination. Be sure your offer letters reiterate that no period of employment is guaranteed, even if there is an “annual salary.”

Employment Law 101: Recordkeeping Guide Part II

Posted in Handbook Articles
Who, What, Why . . . 
Who does it apply to: In this edition, it varies according to the requirements of the particular law identified below. I am taking a short two-part break from my regular format to bring you the record keeping requirements under Texas and Federal law.
Federal Unemployment Tax Act (FUTA) and Federal Insurance Contributions Act (FICA): Any employer with employees must keep these records relating to payroll taxes for four years:
• Employer Identification Number (EIN);
• Amounts and dates of all wage, annuity, and pension payments;
• Amounts of tips reported to you by your employees;
• Records of allocated tips;
• The fair market value of in-kind wages paid;
• Names, addresses, social security numbers, and occupations of employees and recipients;
• Any employee copies of Forms W-2 and W-2c returned to you as undeliverable;
• Dates of employment for each employee;
• Periods for which employees and recipients were paid while absent due to sickness or injury and the amount and weekly rate of payments you or third-party payers made to them;
• Copies of employees’ and recipients’ income tax withholding allowance certificates (Forms W-4, W-4P, W-4(SP), W-4S,
and W-4V);
• Copies of employees’ Earned Income Credit Advance Payment Certificates (Forms W-5 and W-5(SP));
• Dates and amounts of tax deposits you made and acknowledgment numbers for deposits made by EFTPS;
• Copies of returns filed and confirmation numbers; and
• Records of fringe benefits and expense reimbursements provided to your employees, including substantiation.
Occupational Health and Safety Act (OSHA): OSHA records must be kept for five years depending on the number of employees and industry in which the business operates. Employers with either 10 or less employees at all times during the calendar year, or more than 10 employees in businesses of the type listed at the end of this edition must only keep records of fatalities or hospitalizations involving three or more employees. Employers with 11 or more employees in a business not listed at the end of this edition must keep records using OSHA forms 300, 301, and 301-A regarding work related injuries that involve:
• Significant injury or illness diagnosed by a licensed healthcare professional;
• Death;
• Days away from work;
• Restricted work or transfer to another job;
• Medical treatment beyond first aid;
• Loss of consciousness;
• Cuts and other wounds contaminated with another person’s blood or an infectious material;
• Situations where medical removal is required by an OSHA standard;
• Hearing loss; or
• Exposure to tuberculosis at work.
Employee Retirement Income Security Act (ERISA): Employers that have an employee benefit plan subject to ERISA must retain for six years all annual reports filed with the Secretary of Labor, summary plan descriptions (including any summaries of plan changes not contained in the summary plan description), and the bargaining agreements, trust agreements, contracts, or other instruments under which the plan is established or operated.  Additionally, employers with ERISA covered plans shall maintain records on the matters of which disclosure is required under ERISA, providing in sufficient detail, the necessary basic information and data from which the plan documents may be verified, explained, or clarified, and checked for accuracy and completeness. This includes retaining all vouchers, worksheets, receipts, and applicable resolutions.

 Immigration Reform and Control Act (IRCA): Applicable to all businesses, the IRCA requires employers to retain completed Form I-9s for as long as the individual works for the employer.  If terminated, the employer must keep the Form I-9s the longer of three years after the date of hire, or one year after the date employment is terminated.

 Texas Worker Compensation Act: The Act does not specify the information to be retained, but does require employers to retain a “record of injuries to employees” for an unspecified period of time. It is recommended that employers retain all filings with the Texas Department of Insurance regarding worker’s compensation claims, all documents received from the employer’s worker compensation carrier (if a subscriber), and received from the injured employee for a period of four years after the claim is concluded regardless of whether the employee returns to work.

 Lilly Ledbetter Fair Pay Act: The Ledbetter Act, passed in 2009, has played havoc with employers’ document retention policies.  In a nutshell, the Act (which will be covered in a future edition) extends the period of time an employee can make a claim that they were unfairly paid less because of a protected characteristic: race, color, religion, national origin, sex, pregnancy, age, military status, or genetic information. Employees in Texas used to be able to make a claim of this type for wages up to 300 days before they filed a claim. Of course, this cut out an employee’s ability to make a claim for discrimination that may have gone on for years.  The Ledbetter Act extends that period to two years.  The problem for employers is that prudence then dictates that employers should retain payroll records, employee evaluations, and other information that informs on pay decisions all the way back to the time the employee making the claim was hired to show patterns of fairness to employees having various protected characteristics. This is far beyond the period required presently by law.

 What should I do:

 With two editions covering document retention requirements, I am sure you are all ready for some simplified guidelines.  Pundits are all over the place with suggestions on this point that vary extraordinarily.  These are my thoughts:

 Payroll\Payroll Taxes: 4 years after creation;

Medical and FMLA leave records: 4 years after creation;

Benefits\Plan records: 7 years after creation;

Form I-9: 3 years after termination;

Hiring and Applicant records: 4 years following hiring decision;

Injury records: 6 years after occurrence; and

Personnel files and personnel actions: 4 years (but possibly longer at your discretion considering the risk of a fair wage claim under the Ledbetter law).

Should I Give References After Separation?

Posted in Quick Questions

Periodically, an employer will ask about giving references for an employee.  Some feel compelled to provide at least a neutral review, others feel that they have to protect the world from making the same bad decision they did.  Still others think it is the “law” to provide the dates of employment and whether the person was eligible for rehire.

Bad ReferenceSo, what is the best advice?  Don’t return the call.  Or, if you happen to get stuck on the phone with someone asking for a reference, simply say “We do not provide references” and hang up.

Why?  Well, that’s a different question.  It is all about managing risk.  If you provide a reference and it is not sufficiently glowing, your former employee may sue you.  You could have told the absolute truth, but who, other than you and this stranger on the phone, really knows what you said?

And, what if that stranger is really the friend of a former employee with a recorder?  Think about it.  If you left a job under questionable circumstances, or even good circumstances, you may want to know what kind of a reference your former boss will provide.  Wouldn’t it make sense to have a friend call from “Vandalay Industries” (hopefully you get the Seinfeld reference) and ask for a reference?  Sure.  And, if you suspect your former boss has a particularly hateful view of you that is not necessarily accurate, wouldn’t you record it?  Darn right.  In fact, this exact situation happened to one of my clients.  They got sued and spent thousands having me defend a basically meritless claim only to settle for a few thousand dollars to cut off the legal expense.  Ouch!

If you don’t provide a reference, you have zero risk of this type of claim.  Given that the reward for providing a reference is basically nothing, this seems like the smart path.

Now, what if you want to be really sneaky?  Give that poor performing employee a glowing reference to get them a job quick so they will get off the unemployment rolls.  This path is also fraught with danger.  A Texas medical group did just that with a former nurse that provided dangerously poor patient care.  She was given a glowing recommendation and quickly snatched up by the new group.  Then she darn near killed a patient.

During the medical malpractice lawsuit against the nurse’s new employer, the injured patient obtained the personnel file for her from the original medical group.  As part of the legal process the file was provided to the new employer who went through the roof!  Then, they filed a cross-claim against the former employer for fraud and negligent misrepresentation.  I guess that approach doesn’t work either.

I realize it is counter to the system of cooperation between employers, but maybe my advice isn’t so bad after all.  If you tell the truth, you can get sued.  If you tell a lie, you can get sued.  If you say nothing – ah ha - you can’t get sued.

That said, if you still insist on providing references, at least control the situation.  Limit references to one supervisory employee who is trained to appreciate the risks and knows what to say.  Even if they did not work with the employee, they can get the scoop and sanitize it for the prospective employer.

P.S. In case you were still wondering at this point – there is no law about references.  The approach of reporting dates of employment and rehire status has been adopted by many very large corporations to limit their risk.  The idea is now so pervasive that it has effectively become a “law” in the minds of many.

New I-9 Form Released

Posted in In the News

New form I-9The U.S. Citizenship and Immigration Services (“USCIS”) have released a new form I-9.  This is the first change in almost 25 years according to the Society for Human Resource Management.  The new form incorporates new fields and has been reformatted.  USCIS hopes this will reduce errors in completion.

Employers may begin using the new form as of March 8, 2013, but have a 60 day window until May 7, 2013, to continue using the old form.  The form is also available in Spanish, but the Spanish form is for use in Puerto Rico only.  Businesses in the 50 states may use the new Spanish form for reference but must complete the English language form for all employees.

Employers are not required to complete new I-9 forms on existing employees and should only use the new form for employees starting after March 8, 2013.

The new form is easily recognizable because it is 2 pages as opposed to the former 1 page form.  It adds areas for an employee’s foreign passport information (if applicable), email address, and telephone number.

As noted in my recent handbook editions on Recordkeeping, employers must keep the I-9 forms for their employees as long as they are employed and the latter of 3 years after the employee’s start date or 1 year after the employee leaves the company.

Employment Law 101: Recordkeeping Guide Part I

Posted in Handbook Articles

Who, What, Why . . .

Who does it apply to: In this edition, it varies according to the requirements of the particular law identified below. I am taking a short two-part break from my regular format to bring you the record keeping requirements under Texas and Federal law.

Fair Labor Standards Act (FLSA): The FLSA is applicable to virtually all employers. It requires retention for three years of payroll records, specifically including:

• Employee’s full name and social security number;

• Address, including zip code;

• Sex and occupation;

• Time and day of week when employee’s workweek begins;

• Hours worked each day (not required for employees exempt from overtime – See the prior edition on Exemptions from Overtime for more information);

• Total hours worked each workweek (not required for exempt employees);

• Basis on which employee’s wages are paid (e.g., “$9 per hour”, “$440 a week”, “piecework”); (not required for exempt employees);

• Regular hourly pay rate (not required for exempt employees);

• Total daily or weekly straight-time earnings (not required for exempt employees);

• Total overtime earnings for the workweek;

• All additions to or deductions from the employee’s wages;

• Total wages paid each pay period;

• Date of payment and the pay period covered by the payment; and

• Records of all sales and purchases of the business, i.e. dollar volume of sales or business, total volume of goods purchased or received, in the form usually kept by the employer.

And two years of:

• Time and earning cards or sheets;

• Records regarding the amount of work accomplished by the employees;

• Wage rate schedules, including those for straight and overtime calculations and piece rates;

• Originals or copies of all customer orders, shipping, billing and delivery records, but not including individual sales slips or register tapes; and

• Records supporting all deductions from pay or reflecting the dates, amounts, and nature of any deductions.

Equal Pay Act: The Equal Pay Act is applicable to virtually all employers and has the same requirements as the FLSA, but also requires records be kept for two years which describe or explain the basis for payment of a wage differential for persons of the opposite sex, including: wage rates, job evaluations, job descriptions, merit systems, seniority systems, collective bargaining agreements, and description of practices.

Family Medical Leave Act (FMLA): FMLA has limited applicability to Employers with 50 or more employees for 20 or more work weeks in the current or past calendar year. Employers must provide benefits, but only to employees: (1) with at least 1250 hours (including overtime) in the past 12 months, and (2) who work within 75 miles of a location with 50 or more employees. It requires employers keep all the records required under the FLSA for two and three years (see above), plus the following records for three years:

• Dates FMLA leave is taken (or hours if less than a full day);

• Records indicating leave is designated as FMLA leave;

• Notices furnished to employee by employer regarding FMLA leave;

• Documents reflecting all employee benefits, policies or practices regarding the taking of unpaid leave;

• Premium payments of employee benefits;

• Records of disputes between employees and employers regarding FMLA leave including all investigative documents; and

• Records and documents kept regarding certification, recertification or medical histories of employees or their family members created for purposes of documenting FMLA leave (such records must be maintained in a separate file as a confidential medical record).

Title VII (anti-discrimination), Americans with Disabilities Act, and Genetic Information Protection Act: Employers with 15 or more employees are required to keep all personnel or employment records, including but not limited to, requests for reasonable accommodation, forms submitted by applicants for employment and other records having to do with hiring, promotion, demotion, transfer, lay-off or termination, rates of pay or other terms of compensation, and selection for training or apprenticeship for one year, and one year from termination for all employees involuntarily terminated. Employers with more than 100 employees are also required to keep the most recently filed EEO-1 report provided to the EEOC for one year.

Age Discrimination in Employment Act: Employers with 20 or more employees are required to maintain the following information regarding employees for three years: name, address, date of birth, occupation within the organization, rate of pay and compensation earned which is already required under the FLSA. Additionally, these employers are required to keep the following items for one year from the date they are created:

• Job applications, resumes, or any other form of employment inquiry whenever submitted in response to an advertisement or other notice of existing or anticipated job opening, including records pertaining to the failure or refusal to hire any individual;

• Promotion, demotion, transfer, selection for training, layoff, recall, or discharge of any employee;

• Job orders submitted to an employment agency for recruitment of employees;

• Test papers and results of any aptitude or other test considered by the employer in connection with any personnel action;

• Results of any physical examination considered by the employer in connection with any personnel action; and

• Any advertisements or notices to the public or to employees relating to job openings, promotions, training programs, or opportunities for overtime work.

The following must be kept in place for one year after termination: documents regarding any employee benefit plans such as pension and insurance plans, as well as copies of any seniority systems and merit systems which are in writing. Note, if the plan is not in writing, a memorandum fully outlining the terms of such plan or system and the manner in which it has been communicated to the affected employees, together with notations relating to any changes or revisions thereto, shall be kept on file.

Employee Polygraph Protection Act: See the previous edition on the EPPA for the limited circumstances where a test can be administered. When properly administered the following information must be kept for three years from the later of the date the test is requested or conducted:

• The statement setting forth the specific activity under investigation and the basis for testing that particular employee;

• Records identifying the loss in question and the nature of the employee’s access to the person or property subject to the investigation, if the test is related to the manufacture, distribution, or dispensing of controlled substances;

• The written statement setting forth the time and place of the examination and the examinee’s right to consult with counsel;

• The written notice to the examiner identifying the person to be examined; and

• All opinions, reports or other records furnished by the examiner related to the examination.

Note: Employers in a union environment may have different or additional record-keeping requirements.

What should I do:

Simplified retention guidelines will follow at the end of the Recordkeeping Part II edition.

Are “Working Interviews” Legal?

Posted in Quick Questions

One of my dental practice clients called this week to inquire about an idea he heard of recently called a “working interview.”  The idea is to have an hygienist come in for a couple of days to find out whether they are good at their job without officially hiring them.   What is better, my client said, “you don’t have to pay the person for their time.”

I don’t know how the idea of working interviews became so pervasive in the dental world.  It was probably a topic of discussion at one of those dental practice building seminars.  From there I imagine it spread like wild fire.  And, like the game we used to play in my kindergarten class passing some phrase down the line, the details of what was said at the seminar got lost in the translation.  Dentists everywhere got the idea that a working interview is a way to find out if a prospective employee will work for you without having to follow any of the employment law rules in the process.

It is time to put out the straight dope on the subject and shatter a few myths in the process:

1.  Pay – The theories on pay for a working interview are all over the map.  Some, like my client are led to believe that you don’t have to pay the person for their time.  Others are told that you can just issue a check without proper withholding and 1099 the payment.  Wrong. Wrong.  If you bring someone in for a working interview you must pay them for their time in compliance with state and federal law and make appropriate withholding.

2. Paperwork – Some believe that since they are only going to be there for a few days, you don’t have to do new-hire paperwork.  Just skip the I-9, background check, application, and W-2.  Wrong again.  If you hire anyone – for 1 day or 1,000, you have to do new hire paperwork.

3. Unemployment – Still others believe that you are not responsible for unemployment if you choose not to hire the person. Wrong, yet again.  Unemployment tax is tied to the prospect’s wages during the preceding year, not the employer.  That said, the shorter period the person is employed by you the less they will draw from your unemployment account.

Yes, I’m a kill-joy.  My client was looking forward to the free time from a prospect employee and the ability to learn whether someone will be a good fit without having to go through all the motions.  Unfortunately, most of what he was hoping for is not legal.

But is there anything that can be done?  Yes there is.  Depending on how long you would like to conduct your interview, we can create a day contract or a week contract for the prospective employee.  This will limit your exposure under unemployment compensation laws, and you can even reduce the amount you pay.  Where you might pay a good hygienist $20 per hour or more as a full time wage, you can pay them minimum wage during a working interview.  You might also forego the background check, etc, during this brief period having the person only complete a W-4 and an I-9.

Changes to FMLA Service Member Leave Become Effective March 8, 2013

Posted in In the News

On February 5, 2013, the Department of Labor announced the final rules for changes to the Family and Medical Leave Act (FMLA) permitted under the National Defense Authorization Act of 2010.  From the time the act was passed until now, there has not been any final guidance for employers on the DOL’s position with respect to the changes to the law.  Now, final rules which become effective March 8, 2013, are available to assist employers to properly handle service member leave.

Highlights to the changes are:

1. Putting more meat on the bone regarding coverage for “covered veterans” which previously were not protected under the act.

2. Providing guidance on what is considered a serious injury or illness for a covered veteran.  Serious injury will include:

  • A continuation of a serious injury or illness that was incurred or aggravated when the covered veteran was a member of the Armed Forces and rendered the service member unable to perform the duties of the service member’s office, grade, rank, or rating;
  • A physical or mental condition for which the covered veteran has received a VA Service Related Disability Rating (VASRD) of 50 percent or greater and such VASRD rating is based, in whole or in part, on the condition precipitating the need for caregiver leave;
  •  A physical or mental condition that substantially impairs the veteran’s ability to secure or follow a substantially gainful occupation by reason of a disability or disabilities related to military service or would do so absent treatment; or
  • An injury, including a psychological injury, on the basis of which the covered veteran has been enrolled in the Department of Veterans Affairs Program of Comprehensive Assistance for Family Caregivers.

3. Permitting eligible employees to obtain certification of a service member’s serious injury or illness (both current service members and veterans) from any health care provider as defined in the FMLA regulations, not only those affiliated with the DOD, VA, or TRICARE networks.

4. Extending “qualifying exigency” leave to eligible employees who are family members of members of the Regular Armed Forces (previously limited to National Guard and Reserves) and adding the requirement for all military members to be deployed to a foreign country (not previously required) in order for service member leave to apply under the FMLA.

5. Increasing the amount of time an employee may take for qualifying exigency leave related to the military member’s Rest and Recuperation (R&R) leave from five days to up to 15 days.

6. Creating an additional qualifying exigency leave category for parental care leave to provide care necessitated by the covered active duty of the military member for the military member’s parent who is incapable of self-care.

And, finally, outside the service member revisions, the new rules create a unique method of calculation of leave for airline flight crew employees.

What does this mean for employers?  You need to update your policies and your thinking.  If your FMLA policy in your handbook is specific enough to list the details of service member leave, it now will be out of date.

Employment Law 101: Up In Smoke – A Smoking Discrimination Guide

Posted in Handbook Articles

Who does it apply to: All employers who have employees or prospective employees that smoke.

What is the issue: According to recent statistics 18.5% of the adult population in Texas smokes. Smoking affects productivity of the smoker and can affect the health of all employees. A lot of publicity has come to ideas regarding charging higher healthcare premiums for smokers, requiring employees not smoke at all, and offering health programs to stop smoking. Employers want to know what options are legally available to them for regulation of smoking among employees.

What is the law: Smoking at work implicates a variety of laws, but most importantly the Americans with Disabilities Act (“ADA”) and the Health Insurance Portability and Accountability Act (“HIPAA”).

Smoking and nicotine addiction were not disabilities under the ADA before the amendments of 2009. After 2009, the question has been reopened and there have not yet been any determinative cases to provide a clear cut answer. Employers may still be required to accommodate employees who suffer consequences of smoking. That said, the act of smoking still should not be protected. Employees claiming difficulty breathing or emphysema will have their condition improved if an employer restricts their ability to smoke in the workplace. An employee who claims a nicotine addiction can be reasonably accommodated in a no-smoking workplace by using a nicotine patch or chewing nicotine gum. In fact, the ADA may be used to prohibit smoking. Employees with asthma or allergies to smoke may require a smoke-free environment.

HIPAA comes into play in two areas – charging different pricing for healthcare and the use of wellness programs. Under the law, an employer cannot discriminate against or charge certain employees more for health coverage due to “health factors” which include smoking and nicotine addiction. Employers and health plans cannot require an individual to pass a physical examination for eligibility for coverage or use a questionnaire to exclude coverage (a questionnaire can be used to determine overall, but not individual premiums). Nor can employers charge a higher premium to employees with a higher risk or incidence of claims.

When it comes to wellness plans, HIPAA requires that programs with a reward component meet certain criteria. These requirements include: (1) limitations on reward size; (2) purpose of plan to promote overall health; (3) eligibility to qualify once a year; (4) rewards available to all employees; and (5) offer a reasonable alternative for employees who cannot qualify under the primary program. When it comes to smoking in particular, all efforts geared at stopping smoking must be voluntary. Employers cannot force smokers to participate in a program to stop smoking. (Wellness programs will be covered in a later EH piece).

Are smoke breaks required: Businesses are not required to offer employees breaks of any kind during the work-day. Employers who do allow employees to take short breaks during the day on company premises can regulate where\whether the employees smoke by regulating smoking on the company’s premises. Employees on a lunch break who are free to leave company premises are generally free to engage in whatever conduct they choose during that time.

What about union businesses: Smoking policies are generally a mandatory subject of bargaining under a collective bargaining arrangement. Be sure to consider this issue before implementing any smoking related policy.

Common Situations:

This is the 5th degree: Angie’s Ashtrays decides to become proactive about the smoking issues in all phases of her relationship with employees. Angie begins asking potential hires whether they smoke or are addicted to nicotine and starts a pre-hire health screening to find out if applicants are lying about smoking. Has the company stepped on any laws? Yes and maybe. The ADA prohibits employers from asking questions about disabilities in advance of an employment offer. It could be interpreted that the company wants to find out about smokers to avoid dealing with nicotine addicts and people who may have other health issues. So, Angie cannot ask the question before an offer of employment. Pre-hire screenings are also illegal under the ADA except under certain circumstances. If Angie can provide a legitimate business and position related reason for the screening, she may do so after a conditional offer of employment is made.

Residual what: Red, the owner of Red’s BBQ Pit, simply cannot stand the smell of smoke. Of course he has a rule that employees may not smoke during work hours, but Red wants to take it a step further and institute a regulation that employees may not come to work with “tobacco residuals” on their clothing, i.e. they cannot smell of smoke. Has Red gone too far? Nope. There is no law preventing an employer from requiring that employees present to work free of tobacco smells. In fact, in a workplace with a particularly sensitive asthmatic, it may be a reasonable accommodation for that person to implement such a rule.

Smoking away from work: Cancer Hospital decides that regulating smoking is not enough to promote its image as a cancer fighting organization. The Hospital decides to require employees not to smoke in their off-duty hours. Is this legal? If it is very clearly to promote an image, the restriction is probably legal in Texas. A number of states have adopted laws ranging from preventing discrimination based on lawful off duty activities to specific prohibition of discrimination based on smoking. Texas is not one of those states, having no laws at the state level regulating smoking. The risk will be that the restriction is a HIPPAA violation, so Cancer Hospital must be careful. As long as the hospital’s goal is to promote its image and not to drive down its insurance premiums, there is not anything preventing Hospital from creating such a rule.

What should I do:

Good: Not everyone has a problem with employees smoking in the workplace. If you don’t, you simply have to watch out for the complaint of a disability, like asthma aggravated by smoking, and reasonably accommodate the employee if a claim is made. If you want to stamp out smoking in your workplace, institute no-smoking policies on company premises to clear out the atmosphere. Don’t connect these policies to reducing healthcare costs or claims.

Better: If a clear atmosphere is not enough, consider stepping the policy up to prohibit tobacco residual so that smokers are not allowed to have the smell of smoke on their clothes, hair, or breath. Again, avoid connecting the policies to reducing healthcare costs or claims. Consider also, eliminating the availability of smoking breaks during the day.

Best: Institute a workplace wellness program where voluntary information is made available to all employees regarding smoking with the hope that some of the smokers will make their own decision to stop smoking.

Will Texas Prohibit Employers from Asking for Social Media Passwords?

Posted in In the News

Please enjoy this guest post from Travis Crabtree, my colleague in Houston whose practice focuses on internet law.  Visit Travis’ blog at www.emedialaw.com

Democratic Texas State Representative Helen Giddings filed a bill prohibiting employers in Texas from asking for social media passwords from applicants and current employees. Texas joins a long list of states that have either passed or proposed similar legislation.

On December 21, 2012, HB 318 was pre-filed. Democratic State Senator Chuy Hinojosa filed the exact bill with the Senate as SB 118. The bills read:

(b) An employer commits an unlawful employment practice if the employer requires or requests that an employee or applicant for employment disclose a user name, password, or other means for accessing a personal account of the employee or applicant, including a personal e-mail account or a social networking website account or profile, through an electronic communication device.

(c) This section does not prohibit an employer from:

(1) maintaining lawful workplace policies governing:

(A) employee usage of employer-provided electronic communication devices, including employee access to personal accounts on those devices; or

(B) employee usage of personal electronic communication devices during working hours;

(2) monitoring employee usage of employer-provided electronic communication devices or employer-provided e-mail accounts; or

(3) obtaining information about an employee or applicant for employment that is in the public domain or that is otherwise lawfully obtained.

Six states already have similar laws and many others are considering similar legislation. The National Conference of State Legislatures has a good resource that tracks what all of the states are doing in this area.

Here are a couple of issues I see with the Texas version.

1. There is no exemption for employers to investigate wrongdoing.

For example, Michigan lays out some exceptions that exclude “Disciplining or discharging an employee for transferring the employer’s proprietary or confidential information or financial data to an employee’s personal internet account without the employer’s authorization”; and “conducting an investigation or requiring an employee to cooperate in an investigation . . .”

2. There is no exemption for highly-regulated industries like securities.

The Michigan law exempts employers “if there is specific information about activity on the employee’s personal internet account, for the purpose of ensuring compliance with applicable laws, regulatory requirements, or prohibitions against work-related employee misconduct.”

3. What about shoulder-surfing?

The statute forbids employers from using “other means for accessing a personal account” but there is a qualifier at the end that seems to limit the employer’s access to the account ”through an electronic communication device.” So, can an employer tell an applicant or employee to log-in to Facebook while I look over your shoulder? It is certainly not clear. Other states take a more direct approach. The California law expressly forbids requiring an employee to “access personal social media in the presence of the employer” which would prevent shoulder surfing.

4. Immunity for employers who can no longer access social media accounts.

I normally advise companies not to use social media to screen applicants unless you have and follow a specific plan. I could foresee, however, that a mishap could happen at work and a creative plaintiff’s lawyer could argue negligent hiring because a social media search would have revealed the employee was racist, sexist, violent, etc. It would make sense then that if employers are prohibited from doing thorough social media research, they should not be held liable for failing to do so if something went wrong. Michigan has addressed this in its version by stating:

Sec. 7. (1) This act does not create a duty for an employer or educational institution to search or monitor the activity of a personal internet account.

(2) An employer or educational institution is not liable under this act for failure to request or require that an employee, a student, an applicant for employment, or a prospective student grant access to, allow observation of, or disclose information that allows access to or observation of the employee’s, student’s, applicant for employment’s, or prospective student’s personal internet account.

5. What about students?

Many of the bills apply the same rules to secondary school, colleges and universities. If we care about privacy, shouldn’t we apply it to them as well. These are just a few issues and I still question whether this a fix in search of a problem. Yes, there have been one or two publicized incidents of employers demanding access to social media accounts. But, I’m not the only one that questions whether laws forbidding requests for social media accounts are necessary. As the economy recovers, I would think this is something the market will handle. Besides, I see certain positions where such requests would be encouraged such as youth camp counselors or mental health providers, security personnel and employees for religious institutions.

This is the second part of our Texas Leg Watch 2013. The Texas Legislature meets every odd year, so we will monitor any bills of interest to the online media, marketing and start-up community. Our first post looked at a proposal that would allow civil lawsuits to be brought against internet online advertisements that resulted in human trafficking perhaps usurping the federal Communications Decency Act protections.

Too Sexy To Work Here: Fired for Being Attractive

Posted in In the News

Melissa Nelson is “devastated” according to ABC News.  She was fired from her job as a dental assistant after 10 years of service because her male employer found her attractive and felt termination necessary to protect his marriage.

Nelson was hired in 1999 at the age of 21 to be a dental assistant in the office of James Knight, DDS in Webster County, Iowa.  Over the next 10 years, she worked side by side with Dr. Knight and thought of him as a father figure.  During the last six months of Nelson’s employ, she and Dr. Knight began texting one another about mostly benign personal matters.  Dr. Knight’s wife discovered the texting and demanded her husband terminate Ms. Nelson.  After talking with their priest, Ms. Nelson was called in and terminated with the priest present as a witness.

Shortly after termination, Nelson made a sex discrimination claim on the basis that Dr. Knight would not have terminated her if she were a male.  The Iowa Supreme Court, did not agree with Ms. Nelson and commentators everywhere seem to have an opinion.  When the issue was discussed on Good Morning America, the female hosts both commented how wrong it was for an employer to fire a woman for being attractive.  Ms. Nelson, when interviewed, stated that it signals that men can do whatever they want in the workplace.

It is a sad situation and I am sorry Ms. Nelson lost her job, but I agree with the court – not just on the law, but on the facts as well.  I can’t speak for Iowa, but in Texas where employment is at-will, the employer can terminate an employee at any time and the employee can quit at any time.  Both parties are generally permitted to terminate the relationship for no reason at all.  If Dr. Knight felt his marriage was at risk, who should say that he could not fire the employee?

Would Ms. Nelson say that she should not be able to quit if her husband wanted her to because Dr. Knight was young, rich, and handsome?  And, what about the female business owner that terminates the attractive male employee to protect her marriage?

In this case, the evidence showed that Dr. Knight never harassed or propositioned Ms. Nelson.  He met his obligation to be respectful of her.  The fact that she was a female was not the deciding point.  Should Dr. Knight be forced to continue to work in an intolerable environment – which he is supposed to have total control over – just because it might be unfair to Ms. Nelson?

No, he should not.