Employment Law Update Dallas / Houston / Austin€¦ · wages fall below the minimum wage unless...

Dallas / Houston / Austin

Presented By

Employment Law Update

CPA Firm Management Association

2017 National Practice Management Conference

June 21, 2017

Devon D. Sharp

Agenda


Tips for Employers / Pitfalls to Avoid and "party favors" for you to bring back to your business!

1. Written acknowledgement regarding former employment: Avoiding tortious interference claims

2. Deductions from wages: Obtaining employee consent

3. Payment of wages under the FLSA: Safe harbor policy

4. Independent contractor arrangements: Correct classification and sample form of agreement

5. Basic separation and release agreement: Nuts and bolts

6. Defend Trade Secrets Act: Language to include in all confidentiality and non-disclosure agreements

7. Arbitration agreements for employees: Key components and sample form of agreement


Recent Employment Law Developments / Issues on the Horizon

DOL’s withdrawal of employee classification and joint employer guidance

Fate of the DOL federal overtime rule Title VII – sexual orientation discrimination

F-word Facebook firing case

Other issues to watch for on the horizon

Written Acknowledgement Regarding Former Employment



Most of your new hires were employees or contractors elsewhere before coming to you.

You need to ensure they aren’t violating any confidentiality or other obligations to their former employers. – Why? Because if you don’t, you could easily get pulled into a

dispute.

Most common claim for the “new” employer: Tortious Interference

Other potential claims: Misappropriation of confidential information or trade secrets; conversion; civil conspiracy; aiding and abetting breach of fiduciary duty



Best way to prevent/defuse legal claims: – Obtain a comprehensive written acknowledgement from

the new employee at the outset of employment

– Obtain all confidentiality, non-disclosure, non-solicitation and non-competition agreements under which employee is bound BEFORE hiring them. Have your employment lawyer review them.


Sample Form of Acknowledgement

Deduction from Wages


Wage Deductions: Obtaining Employee Consent

Rules vary from state to state. But most states require advance written authorization

for most wage deductions.



Generally, an employer may only make a deduction that is either: – Legally authorized, or

– Voluntarily authorized by the employee, and for the employee, not the employer’s, benefit.

Best practice: Obtain authorization for deduction of expenses at the time of hiring. – Authorization agreement shouldn’t be overly broad, but it should

adequately cover the likely deductions that and employer may need to make from the employee’s wages.

Remember that even if an employee agrees to the deduction, the deduction may not make the employee’s wages fall below the minimum wage unless authorized by the FLSA.



In sum – Before making deductions: – First consider whether the deductions are authorized by

federal law or court order.

– If not, you must generally have an agreement signed by the employee.

– Finally, you must consider whether the deductions would result in the employee’s wages dropping below minimum wage.


Sample Form of Texas Wage Deduction Authorization Agreement

Payment of Wages Under the FLSA


FLSA Safe Harbor Policy

The DOL’s rules on the “white collar” exemptions from federal overtime and minimum wage requirements under the FLSA provide a “safe harbor” that may preserve an employee's exempt status in the event impermissible deductions are made.


FLSA Safe Harbor Policy

Safe Harbor Rule – The salary basis component of the exemption test is not lost if the employer: – has a “clearly communicated” policy prohibiting improper

deductions, including a complaint mechanism;

– reimburses employees for any improper deductions; and

– makes a good faith commitment to comply in the future.

This safe harbor is not available if the employer willfully violates the policy by continuing to make improper deductions after receiving employee complaints


Sample Form of FLSA Safe Harbor Policy

Independent Contractor Arrangements


Independent Contractor Arrangements: Getting it Right

It’s critical to classify your workers correctly. The DOL and IRS have stepped up their enforcement

efforts in recent years – that might change now – to be discussed later

Standard is promulgated by the IRS.


Independent Contractor Arrangements: Getting it Right

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?


Sample Form of Independent Contractor Agreement

Basic Separation and Release Agreement



When you need to end an employment relationship, a severance package coupled with a release agreement can serve both the employer and employee’s interests.

Not necessary or appropriate in every instance, but useful when risk factors are at play.

Typical provisions: – Amount and delivery method for severance

– Taxes and insurance

– Confidentiality

– Non-disparagement

– OWBPA language if 40 or older



More critical elements of a release agreement: – Short; plain English; limit legalese

– Reference specific employment statutes, both by name and legal citation

– Statement that employee was given a reasonable period of time to consider

– Statement that employee was encouraged to consult with an attorney

– Statement that the release doesn’t restrict the employee’s right to file a charge with the EEOC or similar agencies, but it does restrict the employee’s right to recover damages as a result


Sample Form of Separation and Release Agreement

Defend Trade Secrets Act



Amends the Economic Espionage Act by providing a civil remedy for trade secret misappropriation.

Effective May 11, 2016. Largely parallels the Uniform Trade Secrets Act

(adopted in 48 states). Does not preempt state law.



So how does it change things? – Allows suit in federal court

– Ex parte seizure orders carried out by law enforcement in extraordinary situations

– Potential extraterritorial reach

– Notice requirement to employees



What do employers need to do? – Notice regarding immunity provisions must be given “in any

contract or agreement with an employee that governs the use of a trade secret or other confidential information.” Only required in contracts entered into or updated after DTSA.

Includes agreements with consultants and independent contractors.

– Penalty for noncompliance: No attorneys’ fees or punitive damages.



What agreements must include the notice? – Offer letters or employment applications with contractual

language

– Employment agreements

– Restrictive covenant agreements

– Nondisclosure agreements

– Stock or incentive plans

– BYOD and computer use agreements

– Separation agreements

What if the employer has one slip-up?


Defend Trade Secrets Act Language

Arbitration Agreements for Employees



Benefits of arbitration: – Faster

– Less expensive

– Private

– No jury / Select an arbitrator with specific expertise

– Limited discovery

– More relaxed / No formal rules of evidence

– Right of appeal is limited



Drawbacks of arbitration: – Typically no emergency injunctive relief

– Fewer dispositive motions

– Greater likelihood of award versus dismissal

– Limited discovery

– More relaxed / No formal rules of evidence

– Right of appeal is limited



Mandatory class action waivers in employee arbitration agreements: – NLRB has said they are unenforceable.

– Seventh and Ninth Circuits have followed the NLRB.

– Second, Eighth and Fifth Circuits have rejected the NLRB’s ruling.

– U.S. Supreme Court is considering the issue now.


Sample Form of Arbitration Agreement

Recent Employment Law Developments and Issues on the Horizon


DOL Yanks Obama-Era Wage and Hour Guidance

BUT: – Democratic states may opt to step in and adopt rules similar

to those of the Obama administration.

– Just because the DOL may scale back its enforcement efforts doesn’t necessarily mean that state labor departments will.

– Many attacks on employee misclassification come through private lawsuits and class actions.

– The Browning Ferris case is still out there.


DOL Yanks Obama-Era Wage and Hour Guidance

Takeaways: – Continue to analyze prospective independent contractor

relationships carefully and follow the IRS’s guidance.

– If you engage workers through a temporary or staffing agency, consider the language of your contract with the agency and try to take a “hands-off” approach with respect to the workers to the extent possible.


Fate of the DOL Federal Overtime Rule

New overtime rule was set to take effect on December 1 but was blocked by a federal judge in Texas.

What’s next? – The DOL is deciding whether to continue pursuing its appeal

of the Texas litigation. New (extended) briefing deadline is June 30.

– Labor Secretary Acosta has acknowledged that the salary threshold needs to be increased, but believes that $47,476 was too much. He may support a threshold of ~$33,000.

– What the DOL will do regarding the rest of the proposed rule is uncertain.


Title VII: Sexual Orientation Discrimination

Hively v. Ivy Tech Community College – On April 4, the Seventh Circuit ruled that sexual orientation

claims are actionable under Title VII.

– “Discrimination because of sex” includes discrimination because of sexual orientation.

Currently, almost half of the states in the country have laws prohibiting sexual orientation discrimination in employment. Some additional states protect state workers from such discrimination.

Consider local ordinances, as well.


F-Word Facebook Firing Case

NLRB v. Pier Sixty, LLC – Second Circuit ruled that an employee who used a public

Facebook page to curse out not just his boss, but also his boss’s mother and entire family, should not have been fired from his job.

Bob is such a NASTY MOTHERF___ER don’t know how to talk to people!!!!!! F__k his mother and his entire f__king family!!!! What a LOSER!!!! Vote YES for the UNION!!!!!!



NLRA prohibits employers from discharging an employee for concerted or union-related activity.

Was the Facebook post “so opprobrious as to lose the protection that the NLRA affords union-related speech”? – No, due to the circumstances. The subject matter of the Facebook

post “included workplace concerns: management’s allegedly disrespectful treatment of employees, and the upcoming union election.” Also, employer permitted managers and employees alike to use profanity in the workplace on a regular basis with few repercussions. Finally, statement was not in the immediate presence of customers, did not disrupt the catering event, and there was no evidence that the statement reached any customers or potential customers.



Takeaway: Consult your employment attorney before firing someone based on a social media posting!


Other Issues to Watch For

No action yet to fill vacant NLRB positions, but nominees will almost certainly be pro-employer/anti-union. – Prior NLRB precedent could go on the chopping block once a Republican

board majority is in place.

– But change will take time, because the NLRB tends to interpret the law through decisions rather than through rulemaking.

Within other federal employment law agencies (EEOC, DOL – Wage & Hour Division), although some of the top positions have been filled, none of the key policymaking decisions have been filled/replaced. So, many of those positions are still held by Democratic appointees.

The latest budget proposal out of the Trump administration keeps funding for these agencies steady, which will allow them to continue to operate at the level they operated at in the prior administration.


Questions?

Devon D. Sharp Munsch Hardt Kopf & Harr, P.C.

Dallas / Shareholder 214.855.7539

[email protected]

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