What is Your Expectation of Privacy in the Workplace?

Recently the U.S. Supreme Court was asked to determine if an employee has the right to prevent an employer from viewing the employee's text messages sent or received on an employer-issued pager. Here is an article discussing the case. It is fair to say most people (from low-level employees to corporate executives) have sent or received personal correspondence during work, whether it was a telephone call, email, fax, or text message. When you sent or received that correspondence, what was your expectation of privacy? Does your answer change if your employer provides you a written policy stating your employer may record and view all correspondence sent or received on company-owned property? How do you think the U.S. Supreme Court will decide? Post your comments and answers below. We will continue to track this case and see how your responses correspond with the Supreme Court's decision.

New Year - New Formatting

As we approach 2010 we thought it appropriate to add a new component to the Blog. We started the Blog as a vehicle to promote communication between the Firm and you, our readers. Periodically we will pose employment-related questions regarding current issues in the news or work place. Feel free to provide your thoughts and comments. We would like to hear what you have to say.

Coles Corner Winning Wine: December 2009 (Archive)

December 2009: Gauge Wines 2007 20 Gauge Chard. This surprisingly smooth chardonnay opens with delicate nots of sweet melon. Slight hints of the classic buttery chardonnay remain but this doesn't taste like a classic chardonnay. Although you might associate this wine with warmer months, try 20 Gauge if you're shooting for a crowd pleaser this holiday season.

HR Isn't All Bad - The Personal Side of Personnel

Human Resources often is saddled with many unenviable tasks, with the two main culprits disciplining and terminating. As employment lawyers, unfortunately, we usually only interact with Human Resources regarding these unenviable tasks. It seems appropriate as the year winds down and the holiday season approaches to remember all the beneficial and seldom-recognized tasks Human Resources provides to employees and the company as a whole. So if you are in Human Resources and feeling overwhelmed by your unenviable tasks, an executive tired from continually dotting your "i's" and crossing your "t's," or an employee worn out from all the protocols and procedures, remember HR . . .

H onors employees for their years of commitment to the company.

U nites employees and management in a common goal.

M aintains valuable documents and files.

A ssists with new hire orientation and company retreats.

N urtures during difficult times.

R ecognizes employees for outstanding work.

E ncourages teamwork and dedication.

S upports employees throughout their tenure.

O rganizes company events and parties.

U mpires employee disputes.

R esponds to inquiries regarding benefits, job openings, and payroll.

C ounsels employees regarding any and all aspects of their job.

E xplains company policies and procedures.

S erves the company with unwavering enthusiasm.

While this list describes only a small fraction of the services HR provides, the list illustrates all the positive benefits HR provides employees, managers, and the company as a whole. Human Resources is the backbone of any company, so take some time this holiday season to say thanks.

Coles Corner Winning Wine: November 2009 (Archive)

November 2009: Boutari Skalani. Impress your friends with your taste for rare international wines. Skalani Boutari is a blend of Kotsifali and Syrah. Cultivated on the Isle of Crete, this earthy wine is reminiscent of a South American Malbec. As you sip this wine, one can’t help but imagine the peaceful sounds of waves splashing against the rocky Cretian coast. Find this wine online at www.boutari.gr.

How to Conduct a Proper Harassment Investigation

Harassment claims are one of the most significant and popular threats against employees and employers today. Harassment and harassment-related claims are destructive to workplace morale, reduce employee productivity, and detract from an employer’s mission and purpose. While the most common form of harassment is sexual harassment, harassment based on any protected status is improper.

To further complicate matters, employers also must be concerned with lawsuits filed by accused harassers who were terminated in the employer’s attempt to provide prompt remedial action without conducting a proper investigation.

To avoid liability to both the complainant and the accused harasser, it is imperative for an employer to conduct responsible, thorough, and effective investigations into harassment complaints. Employers must act affirmatively to create policies against harassment and must effectively implement these policies.

So, what should you as the employer do? The steps below are a good general guide to avoiding harassment claim liability:

Step 1: Create Anti-Harassment Policies – Every employer should promulgate a clearly written, well-publicized anti-harassment policy. Make sure your policy applies to any harassment based on protected status. A policy always should include (1) the company’s opposition to harassment, (2) examples of harassment, (3) complaint procedures, (4) individuals to contact if an employee feels he/she is being harassed, (5) a statement that the company will promptly investigate any complaint, and (6) a strong statement that retaliation against complaining employees will not be tolerated. Always distribute a copy of your anti-harassment policy to all employees and require all employees sign a form acknowledging receipt. You should also post a copy on workplace bulletin boards and periodically redistribute the policy. It is also a good idea to periodically revise and update your policy based on any changes in the law.

Step 2: Implement Anti-Harassment Policies – You should establish an easy line for communicating harassment complaints. You also should designate at least two people, one male and one female, to whom an employee should complain about harassment allegations. Once a harassment complaint is made, you should choose an investigator trained in conducting harassment investigations. The investigator always should be impartial, unbiased, and objective.

Step 3: Conduct a Thorough and Proper Investigation – A good investigation always should begin by reviewing (1) the company’s existing policies and procedures, (2) applicable federal and state discrimination laws, and (3) all relevant documents, including the complainant’s and accused harasser’s personnel files. Next, the investigator should interview the complainant. The interview should be held in a neutral place where other employees cannot observe the interview. A witness should always be present for the complainant’s interview. After the interview, the investigator always should ask the complainant to sign a statement summarizing the complaint. The witness also should take notes of all relevant facts stated during the interview. After the complainant interview, the investigator should interview the accused harasser. Always make sure the accused understands the investigation process and understands the company will not tolerate any retaliation against the complainant. Finally, the investigator should interview all relevant witnesses including (1) those who witnessed the incident(s), (2) those with relevant information, (3) authors of relevant documents, (4) people the complainant asked to be interviewed, and (5) people the accused asked to be interviewed. The investigator always should draft witness statements after interviews and have each witness review and sign the statements.

Step 4: Come to a Resolution – You always must complete the investigation process. This includes final resolution. After all the interviews and document review, the investigator often must make some credibility determinations. After resolving any credibility issues, the investigator must draw a conclusion as to what happened and recommend appropriate corrective action. The goal of corrective action should be to prevent future harassment. The investigator should present his or her written recommendation to a designated supervisor – usually a human resources manager. Once a decision is finalized, you should work to implement the results in a timely manner. First, meet with the accused harasser to explain the results. Second, meet with the complainant to discuss (1) the investigation results, (2) the nature of any disciplinary action, (3) what the complainant should do if he or she experiences retaliation, and (4) continued confidentiality requirements regarding the investigation. There is no need to notify any other employees.

It is important to remember that each harassment case is different and these general guidelines may be insufficient for your particular case. You should take care to create anti-harassment investigation policies that are flexible for each individual case. If you are ever in doubt, your best bet is to contact counsel before proceeding.

Coles Corner Winning Wine: October 2009 (Archive)

October 2009: Llano 2007 Vinter's Selection Cabernet Shiraz. If you've never tried Texas wine, this wine is a great introduction. The fruit is brighter than a traditional Cabernet and the unmistakable spice of the Shiraz shines through. Grab a bottle of this wine now and next October be sure to mark your calendar for the 17th Annual Llano Estacado "Grape Day."

The Importance of Human Resources

In our practice, we often encounter companies with little to no Human Resources department, division, or personnel. More often than not, small businesses assign the administrative HR tasks (processing applications, completing I-9s, administering health insurance plans, payroll, etc.) to other office personnel, whether it is an Office Manager, a Staff Accountant, or an Executive Assistant (or some combination/split thereof). While most small businesses view this as a cost-saving measure, these setups can be quite harmful to businesses in the long run.

While HR may not be a traditional revenue-generating arm of your business, HR certainly can save your company money and even may add to the bottom line. To see this, though, you must recognize HR is much more than a payroll and personnel paperwork administrator.

So how can HR save your company money? Any business that has been involved in significant employment discrimination/retaliation litigation should know this answer. In such litigation, the existence of HR personnel, as well as the HR personnel’s performance, is critical. Whether or not a case proceeds to trial (and by extension the risk of a large judgment against the employer) hinges on several key questions:

• Did the company have an HR department?

• Did the company have policies regarding discrimination/retaliation/harassment and complaint procedures?

• Did the company follow those policies and procedures?

• Did the company take steps to remedy any discrimination/retaliation/harassment?

These are issues a highly skilled and trained HR professional handles best. Your payroll clerk, benefits administrator, office manager or accountant may not have the time or skills to assess and address these vital issues adequately and appropriately. As a result, any failures may result in a large judgment assessed against your company. I’m willing to bet your small business does not have a line entry on your balance sheets for “large adverse jury verdict.” A competent HR department (or a competent HR employee) is your first line of defense against such judgments and, by extension, can save you significant money.

You may remember I said earlier that HR can make you money. I know you might be questioning my sanity at this point, but it is true. Statistics regularly show a happy workplace is a more productive workplace. Higher productivity often leads to higher revenue. For example, think about how much it costs you every time an employee quits and you must hire and train a replacement. So how do you get a happy workplace?

We’ll be blogging soon about the human side of HR (which absolutely leads to a happy workplace) but, in the meantime, HR can create a happy workplace if you:

• Act as a sounding board for employees

• Train first-line supervisors and managers about proper employee supervision, providing positive feedback, and resolving employee disputes

• Ensure all company policies and procedures are followed and uniformly applied

• Act as a company’s first-line mediator between feuding co-workers

I think we can agree we each want a happy workplace that is as productive as possible. After today, I hope we also can agree achieving that goal calls for a Human Resources department or, at a minimum, a skilled Human Resources employee.

Coles Corner Winning Wine: September 2009 (Archive)

September 2009: Wall 2006

Cabernet Sauvignon: For Cab

lovers a big and bold red

wine is a necessity. This Cab

is not quite as big and bold

as a classic Cab. But this Cab is ready to drink and delivers bright mixed berries and

a long finish.

"Salaried" Employees Are Not Always "Exempt"

Employers often hold a common misconception that salaried employees absolutely are exempt from overtime wages under the Fair Labor Standards Act (FLSA). This misconception, as well as the resulting consequences from misclassifying a non-exempt salaried employee, can be costly. Salary is merely one aspect of some FLSA exemptions. The employee's duties and not his or her title or method of pay truly determine an employee's exempt or non-exempt status under the FLSA. Paying a non-exempt employee a salary does not determine per se whether the employee is entitled to overtime wages.

To best determine an employee's status you should contact an attorney, but the most common exemptions (and those exemptions in which salary is included in the analysis) include:

• Professional Exemption: Primary duty requires knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized instruction OR primary duty is work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor.
• Administrative Exemption: Primary duty is office or non-manual work (must directly relate to management or general business operations of employer or customers). The employee must also exercise discretion and independent judgment on matters of significance.
• Executive Exemption: Primary duty must be management and the employee in question must regularly direct the work of two full-time employees (or equivalent). The employee in question also must have authority to hire and terminate employees OR recommendations on these issues are given particular weight.

Again these are simply the three most common exemptions (the FLSA includes a lengthy list of exempt employees) and even the particular requirements for these exemptions can be tricky. Assuming the employer properly classified the employee as exempt, an employer still can destroy this exemption by its actions. Some common actions that destroy exempt status are: docking pay for work quality or quantity and using exempt employees to perform non-exempt work.

Remember, your general conceptions regarding salaried versus non-salaried employees might not be entirely accurate. Ensuring you properly classify your employees as exempt or non-exempt will save you money in the long run.

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Coles Corner Winning Wine: August 2009 (Archive)

August 2009: Terrunyo 2005 Carmenere: In a word, this wine embodies the quintessential red wine: rich fruit, smooth, and bold. The Carmenere grape is most commonly associated with Chile, and this wine showcases the grape and the Chilean contribution to the wine industry. Readers of this blog will know that we prefer light tannins and easily accessible wines and this wine is a prime example.

Are You Prepared? USCIS Conducting Random H-1B Inspections

If you employ H-1B nonimmigrants you should note the U.S. Citizenship and Immigration Services (USCIS) is conducting thousands of random on-site inspections of employers who sponsor H-1B nonimmigrant employees. Several sources indicate USCIS intends to conduct upwards of 20,000 site visits in 28 cities. The purpose behind the visits is to verify information submitted in the nonimmigrant petitions by the employers. Specifically, USCIS is confirming the employer is paying the prevailing wage and the employee is employed in the position identified in the petition.

What do these inspections mean for employers of H-1B nonimmigrants? First, ensure you fully comply with the H-1B visa requirements, i.e. paying the prevailing wage. Second, properly maintain a Public Inspection file for each H-1B petition you filed. Included in this file should be a copy of the petition and any supporting documentation provided, a copy of the certified Labor Condition Application, proof of the prevailing wage determination, copies of all required posted notifications, and documentation evidencing compensation paid to the H-1B nonimmigrant employee. As many of these inspections are being conducted by contracted workers it is impossible to know the exact information an individual inspector will request. Maintaining a file with the documents identified above, however, should make any inspection less painful. In addition, you should contact your immigration lawyer if USICS contacts you or arrives at your site for an inspection. Your immigration lawyer likely has more knowledge regarding the information provided in the petition.

Keep DREAM-ing

In March 2009, we wrote a blog on the DREAM Act (http://colesfirm.blogspot.com/2009/03/dream-economic-stimulus.html), a proposed federal law to address, in part, the issue of illegal immigrants in the U.S. Someone recently asked me for an update on the status of the Act. Thus far, the DREAM Act has stalled in Congress. Not surprising, frankly. In this economic climate, granting additional rights for illegal immigrants is hard to sell to constituents. Perhaps we are not selling (or packaging) the benefits of immigration reform properly.

Recently, I was asked why states are not involved in this issue. Historically, many changes in public policy began at the state level. As states lead the way, federal legislation often follows. Additionally, state level efforts often provide an opportunity to test and refine legislative proposals in a real-world environment. With that in mind, I realized state governments have an opportunity to address the illegal immigration problem, even in ways the federal government cannot. Arizona attempted to tackle the problem by threatening businesses with revocation of their license for knowingly employing illegal immigrants. The Arizona statute also mandates employers use the federal E-Verify system to verify if employees are providing legitimate documentation. While that proposal certainly satisfies the anti-immigration forces, I cannot say the new law actually changes anything. Add to that the fact that the E-Verify system has acknowledged flaws and inaccuracies, and the Arizona statute may be more window dressing than legislative action.

Here are a few ideas for state proposals that may have an impact on illegal immigration:

1. Public education – Currently, illegal immigrants attend public elementary and high schools across the country. Post-secondary education, however, is not as available. The authors of the DREAM Act intended to address this issue, but have been unable to do so. States can intercede and institute a number of policy and regulatory changes, including permitting illegal immigrants to enroll in post-secondary institutions and requiring the illegal immigrant students to (a) perform on-campus work, (b) volunteer for community organizations, (c) pursue degrees in industries with labor shortages, like nursing and teaching, or (d) repay the non-resident cost of tuition over a specified term. These policy and regulatory changes provide an opportunity for those illegal immigrants who often reside in the U.S. through no fault of their own and who seek opportunities for greater integration into mainstream society but find most avenues blocked due to a lack of education. This policy and regulatory approach acknowledges the futility of a pure deportation approach and instead seeks to address the underclass of laborers who provide an environment ripe for unscrupulous and predatory employers.

As an aside, states also could offer high school graduates the privilege of a driver’s license. States could provide a license for those students who enroll in post-secondary schools, maintained a certain grade point average in high school or college, and/or otherwise comply with the laws of the state.

2. Corporate taxes – Most states tax employers based on profit and typically permit employers to deduct their employee costs from their gross revenue. States could enact a law or regulation that makes clear that employers may not deduct the salaries paid to individuals without correct Social Security Numbers. States can elect to use the Social Security Administration’s database to determine which employees do not have valid Social Security Numbers. The salaries paid to those employees, as shown by the employer’s quarterly state unemployment tax filings, could be added to the employer’s otherwise taxable revenue to create a greater tax base and effective rate. In effect, the employer does not receive a tax credit for employing illegal aliens.

3. Automobile insurance – It is a commonly-accepted fact in some parts of the country that illegal immigrants create a population of uninsurable drivers. The tax-paying citizens of the state bear the cost of the accidents caused by these drivers. First, uninsured motorist coverage reflects the reality that insured drivers and their passengers need coverage in the event of an accident with an uninsured motorist. Second, county healthcare facilities (and, thus, the taxpayers in the county) often bear the cost of treating patients without insurance coverage. Third, hit-and-run accidents are to be expected when the driver fears deportation for a minor traffic offense.

To be clear, not all uninsured drivers are illegal aliens. That said, culling illegal aliens from that group would decrease the risk of an accident with an uninsured motorist and reduce the cost to taxpayers. But doing so would require states to issue illegal immigrants drivers licenses and mandate insurance companies offer automobile coverage without regard to the driver’s immigration status. States could enact a policy simply stating insurance companies may not charge discriminatory rates or refuse coverage to any driver in possession of (1) a valid license issued by the state and (2) a valid Social Security Number or Individual Taxpayer Identification Number (ITIN). This would encourage illegal immigrants to obtain an ITIN and further the common goal of reducing the cost of illegal immigration. Insurers certainly could charge rates using other factors which apply equally without regard to immigration status.

4. Unemployment tax rates – Most states tax employers 2-3% for unemployment taxes. This rate may be increased by an “experience rating,” which measures an employer’s history of unemployment claims. States could modify their formula to include an increase in unemployment tax rates for employers hiring illegal immigrants. Much like the corporate/franchise tax proposal, this proposal focuses on wages reported by employers and uses the state’s taxing authority to discourage hiring illegal immigrants.

As a final note, these proposals may not work in every state. Some laws and/or regulations currently in place may prevent a state from enacting such a law or pursuing such a policy or regulatory shift. The point of this blog is two-fold. First, we should work collectively and creatively to address a widespread issue that will not go away if we ignore it. Second, purely punitive efforts aimed at illegal immigrants typically punish the community and encourage the criminal.

Employee Codes of Conduct Reconsidered

This time of year is big news in Dallas, and Texas in general. As high school, college, and professional football seasons begin, even the most casual sports fan will find it impossible to avoid conversations about Cowboys and Longhorns.

In the HR context, recent news from the NFL has focused attention on Employee Codes of Conduct. As you likely heard, two NFL players have been suspended for at least part of the 2009 – 2010 NFL season. Michael Vick, recently released from prison for operating a dog fighting ring, faces an uncertain future; NFL Commission Roger Goodell suspended Vick for his off-field conduct and recently “conditionally reinstated” Vick. When Vick will play in his first game for his new team is a question only Commissioner Goodell can answer. Donte’ Stallworth, however, absolutely knows he will not play NFL football until after the upcoming season ends. Commissioner Goodell suspended Stallworth without pay for the entire 2009 – 2010 season after Stallworth pleaded guilty to DUI manslaughter. Commissioner Goodell suspended Vick and Stallworth, in part, based on the NFL’s personal conduct policies.

The Vick and Stallworth cases are fairly easy cases, at least in the HR context. Both Vick and Stallworth pleaded guilty to criminal acts. An Employee Code of Conduct that prohibits illegal acts hardly raises an eyebrow. But what about acts that are not illegal? Off-duty policies may prohibit a wide range of personal (perhaps private) conduct. Intoxication, smoking tobacco, and nudity are not per se illegal. When and where you do it determines if you violated a law. When, why, and how may an employer regulate such off-duty conduct, especially when such conduct is not prohibited by any state law?

Oddly enough, state and local laws provide some guidance…but in the opposite direction. Several states have enacted “lifestyle discrimination” statutes that protect employee conduct that occurs off-duty and off-premises, so long as that conduct is legal. The vast majority of these statutes protect smokers, while only a handful protect “any legal activity.” In the absence of these legal protections, employers may discipline and/or discharge at-will employees for off-duty conduct wholly unrelated to their work.

To be clear, some employees, some employers, and some conduct are of the sort that bad publicity can be severely detrimental to an employer’s business. In an era where everyone seems to live their private lives in an online public forum, Employee Codes of Conduct have and serve a legitimate business purpose. Most, if not all, businesses will benefit from an Employee Code of Conduct. If nothing else, a candid internal discussion about such a policy will create a more enlightened (and hopefully more self-aware) workforce that understands their role as ambassadors for their organization. Let’s face it, a Code of Conduct is not an attempt to impose a one-life-fits-all approach. At its core, such a policy should remind us that we live each day as representatives of our friends, families, schools, clubs, and employers. Coaches regularly remind their players that they represent their organization and serve as role models in the community. It may shock employees to learn the same applies to them.

Coles Corner Winning Wine: July 2009 (Archive)

Sokol Blosser's Evolution is a fun and lively blend of nine grapes. A self-described lush, off-dry, somewhat tropical wine, we found it fruit forward and easy to drink. Enjoy it this summer as a great wine for the season.

Immigration Update

As always, USCIS and DOL continue changing and unchanging rules and regulations. Some important changes of note are the further delay of E-Verify and DOL's lifting of the H-2A suspension. As noted in a previous posting, E-Verify already moved its deadline impacting Federal contractors several times. Recently USCIS announced a further delay and federal contractors will not be required to use E-Verify until September 8, 2009. We will have to wait and see whether this date gets moved once again.

In another change of note, the DOL recently lifted its H-2A visa suspension. Seasonal employers (traditionally farmers) often rely on H-2A visas to staff their temporary and seasonal needs. On December 18, 2008, DOL changed the requirements for employers who sought seasonal workers using the H-2A visa. These new regulations had an effective date of January 17, 2009. DOL, however, on May 28, 2009 announced a nine-month suspension of these regulations. In response to an injunction, DOL lifted the suspension on June 29, 2009. We are now left with the amended regulations posted in the Federal Register on December 18, 2008.

While it is not necessary to discuss the changes in detail, one significant change means employers are required to not only advertise the available position in the area of intended employment, but also advertise in any state which DOL designates as a state of traditional or expected labor supply. This new requirement increases employers' costs as employers must place newspaper advertisements in several states.

Ties That Bind Event a Tremendous Success

Last week The Coles Firm traveled north to the Collin County Adventure Club and led the DAYL Ties That Bind presentation. Over 50 young men from the YMCA sports camp attended the presentation. The crux of the presentation focused on teaching these young men, ages 12 - 17, the importance of dressing professionally and culminated in necktie tying lessons. It was quite an adventure teaching so many young men at one time how to tie a necktie, but by the end of the day everyone had a perfect knot.

DAYL's Ties That Bind committee works with local schools and organizations to teach young men and women ages 12 - 17 the importance of dressing professionally and making positive first impressions. The participants are taught how to tie neckties and scarves in a variety of knots. Ties That Bind seeks to help young men and women begin laying the foundation for a successful career. If you know a school or organization to whom Ties That Bind can present or if you are interested in conducting a tie drive at your office, please contact Paul Simon at PaulS@colesfirm.com. Ties That Bind will present to over 200 kids this year and greatly appreciates all donations.

Rethinking Ricci

On April 22, 2009, we posted here about a race discrimination case pending before the United States Supreme Court called Ricci v. DeStefano. In that case, white and Hispanic firefighters in New Haven, Connecticut sued the city, claiming they were denied promotion because of their race. For those of you who have not heard (this case has been all over the news and now plays a significant role in the Supreme Court confirmation hearings for Judge Sonia Sotomayor), the Supreme Court issued a decision on the case on June 29, 2009.

In a 5-4 decision (written by Justice Kennedy and in which Justices Roberts, Scalia, Alito, and Thomas joined), the Supreme Court decided in favor of the firefighters and held the city's action in discarding the promotion test results violated Title VII.

The city argued they discarded the test results because the results appeared to violate Title VII's disparate impact provisions. Specifically, the city argued the test results favored white and Hispanic firefighters over black firefighters. The white firefighters, however, argued the city engaged in disparate treatment discrimination against them. Justice Kennedy sought to resolve the conflict between disparate impact and disparate treatment provisions in Title VII. In doing so, he adopted the "strong-basis-in-evidence standard" to resolve any conflict between disparate treatment and disparate impact provisions.

Justice Kennedy wrote that before an employer can engage in intentional discrimination, the "employer must have a strong basis in evidence to believe it will be subject to disparate impact liability if it fails to take the race-conscious, discriminatory action." Justice Kennedy found the city had no strong basis in evidence that the promotion tests were inadequate or flawed. Justice Kennedy also held fear of litigation alone is not enough.

Moving forward, therefore, employers must remember this strong-basis-in-evidence standard when making race-based decisions in the workplace. Does the employer have a history of racial disparity? Is the employment decision-making process open and fair? What exactly forms the basis for the employer's decision to make a race-conscious decision?

The more interesting (and less discussed) portion of the Court's decision in Ricci is Justice Scalia's concurrence. Justice Scalia argues an inherent conflict between the disparate treatment and disparate impact provisions in Title VII. Justice Scalia argues any race-based decisions made to remedy potential disparate impact are in fact disparate treatment discrimination decisions. Justice Scalia seems to indicate both a willingness and desire to remove disparate impact protection. Although we do not anticipate any such move (based on the Court's current membership), this concurrence may provide support for employers in district and appellate courts as they address lawsuits which invoke the Ricci decision.

Are you ready for the new minimum wage?

On Friday, July 24, 2009, the federal minimum wage will increase to $7.25/hour. Are you ready? Take this simple quiz:

1. Do you have proper posters that detail the new minimum wage for all your work locations? The same poster for all locations may not be sufficient.

2. Are you prepared for the overtime consequences of a mid-week and/or mid-pay period change in hourly rates? Calculating overtime when the hourly rate changes during the relevant period can be difficult. The money you save by not changing the hourly rate at the beginning of the pay period may be insignificant when compared to the cost of administering payroll for that same period.

3. If you have tipped employees subject to the "Tip Credit," do you have sufficient employee notices posted to qualify for the Tip Credit? A failure to post sufficient notices regarding the Tip Credit could make an employer ineligible for the Tip Credit.

4. Are you monitoring state minimum wage increases? Nearly half of all states have a minimum wage increase scheduled for July 2009, including some states whose increase already became effective on July 1, 2009.

If you cannot answer "Yes!" to each of these questions, we suggest you get started because July 24 will be here before you know it.

Coles Corner Winning Wine: June 2009 (Archive)

June 2009: August Briggs' 2006 Charbono is an uncommon grape that is easily accessible. The wine brings the earthiness of a Malbec but delivers without overpowering. The tannins are light and the flavor is bold yet smooth with a hint of smokiness and spice.

Big Win for Employers

On June 18, 2009, the United States Supreme Court issued a decision which gave employers a big win in the employment litigation arena. In Gross v. FBL Financial Services, Inc., No. 08-441, the Supreme Court addressed mixed-motive cases of age discrimination under the Age Discrimination in Employment Act ("ADEA").

Mixed-motive employment cases are cases in which an employee alleges he suffered an adverse employment action because of both permissible and impermissible considerations. In the Gross case, the Plaintiff alleged at trial that he was reassigned and demoted at least in part on his age. The trial court instructed the jury that it must return a verdict for the Plaintiff if the Plaintiff proved that age was a motivating factor in the Defendant's decision to demote the Plaintiff. The jury then found for the Plaintiff. After the Eighth Circuit Court of Appeals reversed the decision (requiring the Plaintiff prove age was the motivating factor), the Supreme Court granted review.

The Supreme Court, in a majority opinion authored by Justice Clarence Thomas and in which Chief Justice John Roberts, Justice Antonin Scalia, Justice Samuel Alito, and Justice Anthony Kennedy joined, vacated the Court of Appeals decision and held a plaintiff bringing an ADEA disparate treatment claim must prove, by a preponderance of the evidence, that age was the "but-for" cause of the challeneged adverse employment action.

You may be asking why the Supreme Court vacated the Court of Appeals decision when it appears the two were in agreement. Why not simply affirm the Court of Appeals decision? The Court of Appeals decision held the trial court incorrectly instructed the jury under the standard established in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989). In a move sharply criticized by Justice John Paul Stevens in his dissent, Justice Thomas' opinion held the Court of Appeals was in error because a Price Waterhouse jury instruction is never proper in an ADEA case.

In the majority opinion, the Supreme Court held interpretation of the ADEA is not governed by Title VII decisions such as Price Waterhouse because Title VII is materially different with respect to the relevant burden of persuasion. Specifically, Justice Thomas stated "[u]nlike Title VII, the ADEA's text does not provide that a plaintiff may establish discrimination by showing that age was simply a motivating factor." Justice Thomas also pointed out Congress never added such a provision to the ADEA when it amended Title VII, "even though [Congress] contemporaneously amended the ADEA in several ways..."

Moving forward, therefore, "[t]o establish a disparate-treatment claim under the plain language of the ADEA...a plaintiff must prove that age was the 'but-for' cause of the employer's adverse decision." Furthermore, "the plaintiff retains the burden of persuasion to establish that age was the 'but-for' cause of the employer's adverse action."

Whatever your belief regarding the soundness of this opinion, employers certainly benefit greatly. This decision also firmly settles the law regarding mixed-motive analysis in ADEA cases (joining the previously-settled law in Title VII cases). The unanswered areas, though, are ADA cases, as well as state discrimination claims and Section 1981 race discrimination and retaliation claims. It looks like we just may be headed to overtime...

Are You Properly Classifying Employees and Independent Contractors?

Recently our Firm has noticed a trend with the Texas Workforce Commission ("TWC") in which the TWC finds employers are improperly classifying employees as independent contractors. In Texas, an employer must pay unemployment tax for each employee. An employer, however, does not pay unemployment tax for any independent contractors associated with the employer. TWC uses a twenty factor test to determine whether a worker is an employee or independent contractor and, therefore, whether employers must pay unemployment taxes associated with the worker.

Whether in response to the economic hardships we currently face or a belief that employers are manipulating the system, TWC appears to be auditing companies and industries with a history of classifying workers as independent contractors. Despite these companies' history of classifying workers as independent contractors, TWC has reversed prior decisions and determined these independent contractors should be classified as employees. The repercussions of TWC's determinations are devastating since employers now must pay several years of unpaid taxes and fines. Looking forward, the repercussions could become more severe as the long-standing business structure of many companies loses viability because of the increased unemployment tax. The real consequence, however, is not the minimal state tax (usually 2.7% in Texas). The real consequence is employers may owe the federal government nearly 15% for the same workers. Typically this amount is split 50-50 between employees and employers; employers who fail to withhold, however, may be forced to pay the entire amount.

What does this mean for you, the employer? If you use independent contractors in your business, even if you have used independent contractors for years, check with an attorney to determine if these workers are properly classified. An audit of your workforce should not take long and can save your company legal issues down the road.

Firm Happenings

Summer has arrived at The Coles Firm, which means we here at the Firm have decided to get out of the office a little.

Food For Thought: In just over two weeks, Food for Thought takes place. Food for Thought is a celebrity chef event hosted by the Dallas Association of Young Lawyers (DAYL) and co-sponsored by The Coles Firm. As a member of DAYL's 2008 Leadership Class, Dustin is one of the organizers on the Food for Thought committee and has been instrumental in the planning and preparation for this fantastic event. The proceeds from the event go to Big Thought, a non-profit creative learning organization striving to make imagination a part of everyday learning for children using arts, culture, and education as tools and catalysts. The event includes several great Dallas chefs, including Lisa Garza of Food Network's The Next Food Network Star, Blythe Beck of Central 214, and Marco Martinez of Matt's Rancho Martinez. Shelly Slater of WFAA Channel 8 will act as the Mistress of Ceremonies for the evening and Rep. Rafael Anchia will present The Gavel of Excellence award to Blockbuster President and CEO Jim Keyes. There is still plenty of time to buy tickets. We look forward to participating in this event and supporting a great cause.

Ties That Bind: This Summer, The Coles Firm also will assist another great DAYL committee, Ties That Bind. Ties That Bind works with local schools and organizations to teach young people the importance of dressing professionally and making positive first impressions. As part of every presentation, young men and women are taught how to tie a necktie or scarf and are provided a necktie or scarf of their own as a gift for their future development. Paul is a leading co-chair on Ties That Bind and is currently preparing several great presentations in the upcoming months. We're very excited to see what Paul has in store for this committee this year.

Teen Leadership Academy: Dustin is also a co-chair for DAYL's Teen Leadership Committee and this July the committee is hosting the inaugural Teen Leadership Academy for high school students entering their senior year next fall. Every high school in Dallas (both public and private) was invited to submit a male and female of their choice to participate and the committee got a great response. Using prominent Dallas leaders, the two-and-a-half day conference will include team building exercises and presentations focusing on leadership, community service, and the future of Dallas. The conference will culminate in a community service project.

DAYL's One to Watch: The Coles Firm also wants to recognize Dustin and Paul for each being named a DAYL "One to Watch." In January, Dustin was recognized by DAYL as "One to Watch" for his active participation and support of DAYL. A few months later, Paul was recognized as the "One to Watch" in May because he personifies the bright young leaders we need in the legal community. The Coles Firm appreciates Dustin's and Paul's enthusiasm and desire to participate in DAYL and further The Coles Firm's mantra, "Committed to Our Community."

As you can see, it's shaping up to be a busy summer. Of course, we wouldn't have it any other way.

Coles Corner Winning Wine: May 2009 (Archive)

Margerum's M5: Add 50% Syrah, 27% Grenache, 9% Mourvedre, 4% Counoise, and 4% Cinsault, and that leaves 6% to creativity. M5 is an amalgamation of 5 grapes from 15 vineyards. The result is a very drinkable and flavorful red wine that satisfies newcomers and connoisseurs alike. The fruit is vibrant and complex but not overwhelming.

Presentation at the Multi-State Conference

Last week The Coles Firm presented "From the Mouths of Babes: Straight Talk About Legal Ethics" at the 27th Annual Multi-State Labor and Employment Law Conference held in San Antonio, Texas. While ethics is extremely important to our profession, presentations on the subject often are dry. To maintain attendees' attention and spark intellectual debate, From the Mouths of Babes tracked lawyers, clients, employees, and ex-employees (all played by child actors) through a typical scenario involving the balancing of client demands and the rules of ethics. Below is a video clip of a scene from the presentation involving the defendant's attorney, Fred Buchanan, and the defendant's CEO, Hank Savage.

We enjoyed the opportunity to present at the conference and engage in insightful conversations with attorneys from across the U.S.

Potential Arbitration Changes in Texas

Arbitration of employment disputes might be in trouble. On March 6, 2009, Representative Dan Gattis (R – Milam, Williamson) introduced House Bill 2696 in the Texas House of Representatives during the 81st Legislative Session. The Bill was co-authored by Representative David McQuade Leibowitz (D – Bexar). The Bill seeks to amend portions of the Civil Practice and Remedies Code related to arbitration proceedings and arbitration agreements.

Specifically, the Bill would amend the Civil Practice and Remedies Code in Texas in the following ways:

1. Arbitration agreements must include a statement, initialed by each party to the agreement, stating the party has chosen to arbitrate a controversy that exists at the time of the agreement (if Subsection (a)(1) of the Civil Practice and Remedies Code applies) or stating each party has chosen to arbitrate any controversy that arises between the parties after the date of the agreement (if Subsection (a)(2) of the Civil Practice and Remedies Code applies);

2. Agreements to arbitrate must be prominently displayed in the document and in 12-point bold type; and

3. A party to a contract may not require any other party to the contract to agree to arbitration as a condition of the contract.

What does this mean? Right now, not a whole lot. The Bill was left pending in committee on April 15, 2009 and no further action has been taken by the Texas House of Representatives. Furthermore, the Texas Legislature adjourns on June 1, 2009 and does not reconvene until 2011 unless the Governor calls a special session. It appears unlikely, therefore, the Texas Legislature will take any additional action on this bill in the next eleven (11) days.

This Bill could signal a change on the horizon, though. If the Bill is re-introduced during the next session and further action is taken, the consequences could be significant. Currently, many employers require their employees to agree to arbitrate any potential employment disputes as a condition of employment. This Bill would prevent such agreements. Arbitration in the employment context could become a thing of the past.

For the time being, nothing is changing but we’ll keep an eye on the next regular legislative session and any special sessions and keep you updated. In the meantime, it is always a good idea to review your arbitration agreements and decide if arbitration is really the best idea for you and your company.

Coles Corner Winning Wine: April 2009 (Archive)

April 2009 - The 2005 Grenache Blanc from Curran Wines can be described best as starting with strong herbal/grassy notes of a Sauvignon Blanc then balanced with light sweetness and a slight hint of carbonation. But this is no dessert wine. The Grenache Blanc is crisp and delivers a lively fresh glass that is perfect for the season.

Employment-Based Immigration: What Every Student Should Know

On April 16, The Coles Firm presented the speech "Employment-Based Immigration: What Every Student Should Know" to a room-full of students at a local Dallas college. The speech primarily focused on employment-based visas including, H-1B, J, L, E, and TN. Also discussed were potential pitfalls with Green Card applications and non-immigrant visas.

Indicative of immigration law constantly changing and evolving, on the day of the presentation, the government extended the deadline for government contractors to enroll in E-Verify. Government contractors have until June 30, 2009 to enroll in E-Verify. This is the third extension of the deadline for government contractors. As discussed during the presentation, E-Verify is an internet based system that allows employers to quickly verify employment eligibility of new hires. Currently, E-Verify is voluntary (except Government Contractors) and free to employers. An employer must be enrolled in E-Verify for a student to be eligible for the STEM OPT extension (29 months work authorization versus standard 12 months).

We thoroughly enjoyed answering questions from the students and hopefully provided a framework for the students as they seek employment after graduation.

New Texas Non-Compete Decision

On April 17, the Texas Supreme Court delivered another opinion on its interpretation and enforcement of non-compete agreements. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding appears to expand, albeit minimally, the Court’s well-known Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson decision. In 2006, the Court in Sheshunoff expanded its prior decisions on non-compete agreements and found a non-compete agreement enforceable where (1) the employer expressly promised to provide the employee confidential information, (2) the employee expressly promised to not disclose the information, and (3) subsequently the employer provided the employee with confidential information.

Mann Frankfort differs from Sheshunoff, however, because the employer in Mann Frankfort made no express promise to provide the employee access to confidential information. Based on this failure to expressly promise to provide confidential information, the Court of Appeals refused to enforce the confidentiality agreement. The Texas Supreme Court, however, reversed the Court of Appeals and held that an implied promise by the employer to provide confidential information satisfies the Sheshunoff requirements.

Is there a possible pitfall with non-compete agreements that rely on an implied promise? The Court in Mann Frankfort, whether or not intentional, appears to limit an implied promise as it relates to non-compete agreements. The Mann Frankfort decision suggests an implied promise exists only “when the nature of the work the employee is hired to perform requires confidential information to be provided for the work to be performed by the employee.” This appears to indicate the Court might find, depending on the nature of the work, an employer did not impliedly promise it would provide confidential information. What type of work would result in an implied promise not being found? It is uncertain, but the Court almost certainly will determine an implied promise exists for CPAs (the position in Mann Frankfort). Beyond a CPA, we must wait to see if the courts extend Mann Frankfort to other professions or jobs.

So what does the prudent employer do? The easiest answer is expressly provide in your non-compete agreement that you (the employer) promise to provide the employee confidential information. There are many other issues with the validity and enforceability of non-compete agreements, but providing this express promise should limit exposure to any pitfalls in the Mann Frankfort decision.

A No-Win Situation

The United States Supreme Court heard arguments yesterday in the case of Ricci v. DeStefano (click here for a transcript of the oral arguments). The case stems from a decision by the city of New Haven, Connecticut to throw out the results of a fire department promotion exam because too few minorities passed. As a result, a group of 20 white firefighters sued the city for race discrimination under Title VII of the Civil Rights Act of 1964.

The importance of this impending decision and its far-reaching effects resulted in coverage by, among other media outlets, MSNBC and CNN.

While the city argues it risked a disparate impact race discrimination suit by the minority firefighters if it carried out the promotions based on the test results, the white firefighters claim the city intentionally discriminated against them by refusing to promote them on the basis of race. To put it bluntly, and as Justice David Souter stated during oral arguments yesterday, the city is left "in a damned if you do, damned if you don't situation."

If the city carried out the promotions, the minority employees could have sued under Title VII for race discrimination alleging the test created a "disparate impact" due to alleged flaws in the tests that caused minorities to score lower on the tests than white employees. However, since the city threw out the test and the promotions because no minorities would be promoted, the white firefighters argue the city made an employment decision based on race (i.e. intentional discrimination). Both sides make a compelling case.

As you can imagine, this case is being closely watched and has garnered interest from numerous advocacy and business groups. These groups, and all of us really, want to know how far the Court will go in allowing race to be used as a consideration in filling jobs.

While a decision is not expected for a few months, it appears there currently is an ideological split on the Court with Justice Anthony Kennedy as the crucial swing vote. Many insiders believe Justice Kennedy will side with the white firefighters, leading to a 5-4 decision in their favor.

So where does that leave employers? For the time being, without an answer. The best hope is clear guidance from the United States Supreme Court this summer. We'll be sure to update you on their decision as soon as it is released and let you know the impact of that decision on your business.

Coles Firm Chosen to Present at HR Southwest

The Coles Firm will present "Candid Camera: Secrets from Plaintiffs' Lawyers" on Wednesday October 14, 2009 at 2:00 p.m. at the Society for Human Resource Management (SHRM) HR Southwest Human Resources Conference and Exposition at the Fort Worth Convention Center in Fort Worth, Texas.

HR Southwest, currently in its 68th year, is the largest regional Human Resources conference in the United States and offers more than 100 certified educational sessions and more than 250 exhibitors.

We look forward to presenting to an amazing collection of Human Resources professionals and we hope you can attend our presentation.

H-1B Update

The End of An Era?

It became a ritual over the last few years. Beginning in February and ending on March 31, immigration lawyers and clients worked against the clock to prepare, package, and file H-1B visa applications. Since 2007, April 1 was (for immigration lawyers and clients) the equivalent of April 15 for CPAs. But unlike CPAs and federal tax-filers across the U.S., immigration lawyers and their clients faced weeks of uncertainty after their filing. When you file your taxes you know you are due a refund or owe for underpayment. For H-1B filers, however, once USCIS received all applications they conducted a lottery to determine whose application would be considered…and whose would be returned to sender.

Apparently that process (and the glut of H-1B filings each April) is no longer. Yesterday, USCIS announced they only received approximately 42,000 applications for the 65,000 visas for the 2009-10 fiscal year. So after submitting our applications for delivery on April 1, and in light of this recent news, here are a few thoughts and observations:

-H-1B applications in the lottery era peaked in 2007, with nearly 200,000 applications filed for 65,000 visas;

-In light of the H-1B lottery, lawyers and clients have used more and more creativity to meet the demand for foreign workers; and

-The recent steep downturn in our economy (combined with the uncertainty of the H-1B lottery system) certainly had a noticeable impact on H-1B applications, cutting filings by 75% from the 2007 peak.

There is a Catch-22 at work here. Just as the Obama administration announced this week that comprehensive immigration reform remained on its agenda, we now see the impact of the economy, which suggests a reduced need for temporary work visas. But do not be misled. The problems with our immigration system primarily derive from the lack of flexibility inherent in our cap-based system. Fixed caps create artificial ceilings that, in most cases, do not reflect current needs. So in 2009, the ceiling may be reached, but the demand changed dramatically from 2007 and 2008. And while we all hope the economy will rebound and recover soon, what does that mean for 2010? The last thing a rebounding business needs in 2010 is increased demand for temporary work visas that returns us to 2007 and 2008. Perhaps a flexible cap tied to national unemployment figures? Or a bifurcated filing season, much like H-2B seasonal visas? There may not be a perfect solution, but our current system needs a healthy dose of realism and pragmatism to avoid past crises.