Co-authors Marcus Fettinger and Fred Gaona

Discrimination based on sex is illegal. Does that include sexual orientation? It depends on where you live. In Texas, discrimination based on sexual orientation may be inappropriate, but it is not illegal. Elsewhere in the U.S. that is changing, and Texas could soon be impacted as well.

On February 26, 2018, the United States Court of Appeals for the Second Circuit, which has jurisdiction over Vermont, New York and Connecticut, ruled that discrimination based on sexual orientation can be sex discrimination. This differs from the view of the Federal Court of Appeals over Texas, creating a division, or “split” across the country. Citizens of different states can now be treated differently under the same federal law and the U.S. Supreme Court does not like it when that happens. For reasons that are easy to understand, the Supreme Court would like the law applied the same across the whole country.  Continue Reading Game Changer? New Sex Discrimination Case Regarding Sexual Orientation

The days of the lone landman driving around the back roads taking leases and visiting courthouses are becoming a thing of the past. Though there are still a few independent landmen who fit this mold, clients have demanded change and consolidation. Now there are brokerage firms and other combinations of landmen. It is not a bad thing. It is just different. The fly in the ointment is that the government views landmen who work for these companies as employees and not independent contractors.

Continue Reading Landmen as Independent Contractors: Is the government’s voluntary settlement program too good to pass up?

On March 13, 2014, President Barack Obama issued a presidential memorandum directing the Secretary of Labor to “modernize and streamline the existing overtime regulations”.  The Department of Labor (DOL) took action and, in new rules set to become effective Dec. 1, 2016, raised the minimum salary threshold for exempt workers in many categories.  Since then, employers have been gearing up for the change — modifying pay rates, altering job responsibilities, switching formerly exempt employees to hourly and restructuring their workforce.

In response to the new regulations, 21 states and a coalition of business groups filed a federal lawsuit in Texas seeking to prevent the regulations from going into effect. On Tuesday, their wish was granted. The judge (an Obama appointee) issued a nationwide preliminary injunction halting the implementation of the new overtime regulations.

What Does This Mean for Business Owners and HR Professionals? 

It means you can hold off on implementing any changes you planned for compliance for the moment. Though the DOL could file an emergency appeal, the states were smart by suing in Texas. The appeal must go before the conservative judges of the 5th Circuit Court of Appeals who we expect will be unlikely to disturb the District Court’s ruling in the short run.

President-elect Trump is vehemently against these regulations and, with a Republican Congress that largely agrees, he has promised to repeal them. Assuming an emergency appeal is unsuccessful, the preliminary injunction then affords Congress and President-elect (then President) Trump a window of opportunity to stop the new regulations from ever taking effect.

Is This Outcome Guaranteed?

Not at all, but it is likely given the views expressed by the incoming administration. If for some reason the new administration does not act and the 5th Circuit chooses to reinstate the regulations they would only  go into effect after the decision is made. If the 5th Circuit does not take on the emergency appeal, the decision will be left to the District Court at a trial some time from now.

For more information on the now halted overtime regulations, click here.

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Businessman working late signing a document or contract in a dark office with a fountain pen by the light of a lamp, close up view of his hands.

For the last year, the U.S. Department of Labor (DOL) has been working on proposed rule changes related to overtime exemptions. These changes are designed to substantially decrease the number of employees who are exempt from overtime. Today, the Department of Labor released the final rule changes. Employers are required to be compliant with these changes by December 1, 2016.

Below are the key points to the changes in the law employers should know and address:

Higher Minimum Salary for Overtime Exemptions

In addition to the other requirements for an employee to be exempt from overtime, the minimum salary requirement is increasing. What used to be a minimum of $455 per week will now be $913 per week or $47,476 per year. This doubles the current salary threshold level, but is slightly lower than that proposed in the rule. This is the primary reason many currently exempt employees will lose their exemption.

Automatic Updates to Salary Levels Every 3 Years

In an effort to maintain a salary level that is equal to the 40th percentile of full-time salaried workers in the lowest-wage Census region, the minimum salary to be exempt will be increased every three years. This is better than what the DOL originally proposed which was annual increases. The first of these updates will go into effect on January 1, 2020.

Duties Test Unchanged

Though the DOL discussed changing the other specific requirements associated with exemptions from overtime, it decided not to make any changes to those requirements.

Change to Highly Compensated Employee Exemption

One of the exemptions from overtime relates to highly compensated employees. The threshold for this exemption was set at $100,000 per year. The new threshold is set at the 90th percentile of full-time salaried workers nationally, $134,004 per year.

If you have questions or concerns about complying with the new law, Gray Reed’s employment team will be glad to audit your present practices and ensure you are compliant before the December 1, 2016 deadline.

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On November 17, a federal jury returned a verdict against AutoZone in favor of a single plaintiff for the insane amount of $185,000,000.00 in punitive damages. The plaintiff alleged gender and pregnancy-related harassment, discrimination, and retaliation. On November 19, a federal judge in the U.S. District Court for the Southern District of California upheld the jury’s verdict and finding on punitive damages. The case is entitled Juarez v. AutoZone (Case No. 3:08-CV-00417). An appeal will surely be filed.

Ms. Juarez was employed as an AutoZone store manager. Ms. Juarez alleged that when she became pregnant the district manager harassed her and attempted to force her resignation. She complained to AutoZone human resources department, but alleged that nothing was done. She further alleged that despite her complaints to human resources, she was demoted to parts manager while AutoZone promoted less qualified males. As a result of her perceived discrimination, Ms. Juarez filed a charge of discrimination with the California Department of Fair Employment and Housing and also filed suit. Subsequently, she was terminated and claimed that AutoZone retaliated against her for filing her charge and her lawsuit. The jury believed Ms. Juarez and returned a verdict in her favor finding that AutoZone was liable for discrimination, harassment, and retaliation. She was awarded $872,719.52 in compensatory damages and a whopping $185,000,000.00 in punitive damages.

While this is an extreme example, employer’s need to realize that there is real money at stake in a single plaintiff discrimination, harassment, or retaliation case. These cases must be taken seriously from the time a charge is filed with a state agency or the EEOC. As a practical matter, employers need to take measures in the workplace to avoid these claims ever being brought. A good employee handbook outlining an employer’s discrimination, retaliation, and harassment policies and a consistent application of those policies will certainly aid in prevention. While I doubt that the $185 million punitive damages award will hold up on appeal, it certainly should serve as an eye opener for employers across the country.

The EEOC is back at it! This time it has targeted corporate wellness programs and is challenging the legality of such programs under the ADA. The EEOC contends that the biometric testing and health risk assessments are “disability-related inquiries and medical examinations” that are not job-related and consistent with business necessity and, therefore, violate Title I of the ADA. The EEOC is focusing on the voluntary element of employee’s participation in a wellness program. Because while it is permissible for an employer to conduct a truly voluntary medical examination, it is illegal to force an employee to submit to such testing involuntarily, absent some statutory exception for the testing.

The EEOC is arguing that an employee should not have to submit to a medical examination in order to avoid a monetary penalty such as having to pay his full insurance premium or some cancellation fee. Where steep penalties are imposed for failing to participate in the wellness program, the wellness program is arguably involuntary, certainly in the eyes of the EEOC.

Employers should be careful when starting or managing a corporate wellness program. While this area is not settled by any means, these decisions will be an important guide for employers. To be safe, employers should make sure that when an employee elects not to participate in a wellness program they are not punished or penalized.

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.

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.

A disagreement between two federal appeals courts regarding whether payroll taxes must be paid on severance payments made to laid-off workers has landed the issue in front of the U.S. Supreme Court. Oral arguments began January 14th, 2014.  How the Supreme Court decides the case, called United States v. Quality Stores, Inc., may result in payroll tax refunds being owed to both employers and employees who paid or received severance over the past few years.

Pending the outcome of the Supreme Court’s decision, the IRS has suspended action on payroll tax refund claims involving severance payments filed by employers in the Sixth Circuit (Kentucky, Michigan, Ohio, and Tennessee).  For employers outside the Sixth Circuit, the IRS is continuing to disallow employers’ refund claims.  However, employers both inside and outside of the Sixth Circuit should promptly file amended employment tax returns to preserve their rights.  For employers outside of the Sixth Circuit who file a refund claim, if the end of the two-year period for filing a refund suit after a notice of disallowance is approaching, then the employer should use IRS Form 907, Agreement to Extend the Time to Bring Suit, to extend this deadline.

Individuals laid off in the past three years can file IRS Form 843 to make a refund claim for his/her individual portion of payroll tax overpayments due to receipt of severance payments.  However, the employee should first ask his/her former employer if the company is pursuing a payroll tax refund.  Some companies have alerted former workers that they are doing so, but they are not required to notify former employees unless the IRS agrees to pay a claim (and the IRS is unlikely to pay any claims until after the Supreme Court decides the Quality Stores case).  At that point, the employer generally asks the former workers for consent to include their claims with its own.  This sets up a process so that the company can pay former workers their shares of refunded payroll tax. If the individual’s former employer did not file a refund claim, then the individual can file IRS Form 843 to make his/her own claim.  Note that the individual must make this claim within the statute of limitations, which is generally three years after he/she files the tax return reporting the severance payments.  Also note that if a taxpayer is successful and receives a payroll tax refund, the refund is not taxable, but the interest paid on the refund is taxable.

Whether a payroll tax refund is owed to an employer or an individual will be specific to each employer and each individual.  To determine if you may be entitled to a payroll tax refund and how to best preserve your right to a refund, we encourage all employers to contact Jason Luter at Gray Reed & McGraw, P.C.; 469-320-6076.


Last week the Associated Press reported that the EEOC was sanctioned by a US District Court judge for $4.7 million dollars.  The sanctions were awarded because the EEOC brought a number of frivolous and groundless claims against trucking company CRST.

According to the opinion, the EEOC filed a lawsuit in 2007 against CRST alleging sexual harassment of a number of female employees.  In litigation over the next three years, the EEOC could not prove its claims and CRST sought to recover its attorney fees for defending the suit.  The Court ruled that 153 claims of the total claims brought by the EEOC initially were without foundation and sanctioned the EEOC approximately $4.5 million dollars.

The EEOC appealed to the 8th Circuit Court of Appeals.  On a technicality the case was reversed and returned to the US District Court for further rulings.  Again CRST sought its fees and again the judge ruled in its favor, this time adding the fees CRST incurred on the appeal.

This is an important decision for employers.  It will hopefully cause the often overzealous EEOC to temper its approach.  It also provides the basis for other employers across the US and Texas to make the same request if they prevail in a claim against the EEOC.  With the real possibility of recovering their fees, hopefully more employers will stand up to EEOC abuses and further reign in the agency’s excesses.

Of course, the sadest part of the whole situation in my opinion is that we the tax payers to this already strapped government will bear the cost of paying CRST.  Someone should be held accountable for the consequence to us and I, for one, have asked my representatives in Congress to do so.