Texas Supreme Court Hands Employers a Big Win

Defending a sexual harassment lawsuit just got a little easier in some respects for employers in Texas. On June 11, 2010, the Texas Supreme Court issued an opinion in Waffle House, Inc. v. Cathie Williams. The facts of this case (which we will briefly summarize below) gave rise to a typical sexual harassment lawsuit in Texas - a sexual harassment cause of action against the company under Chapter 21 of the Texas Labor Code, an assault cause of action against the offending employee, and a negligent retention and supervision cause of action against the company.

In this case, the Plaintiff Cathie Williams alleged a co-worker, Eddie Davis, regularly sexually harassed her and assaulted her. Specifically, Williams claimed Davis made unwanted sexual comments and gestures and flirted with Williams. Williams also alleged Davis pushed her into counters and the grill, held her arms with his body pressed against her, and rubbed his arm against her breasts. Ultimately, Williams sued Waffle House and Davis for the causes of action we outlined above (she later dismissed the assault claim against Davis).

A jury found in favor of Williams and Waffle House appealed. The 2nd Court of Appeals in Texas upheld the jury's verdict and Waffle House appealed to the Texas Supreme Court. Waffle House contended the negligent supervision and retention cause of action should fail as a matter of law because Chapter 21 of the Texas Labor Code is the exclusive remedy for workplace sexual harassment.

In a 7-2 opinion, the Texas Supreme Court held Chapter 21 of the Texas Labor Code is the exclusive remedy for workplace sexual harassment and, therefore, preempts any negligent retention and supervision cause of action when such a cause of action is "entwined with the complained-of harassment." Essentially, the majority held the assault about which Williams complained (and which supported the negligent supervision and retention cause of action) arose from the "same boorish and objectionable conduct." The majority stated Davis' "conduct was assaultive because of the sexually offensive and provocative nature of his verbal and physical contacts with Williams."

As a result of the Texas Supreme Court's decision, the great majority of negligent supervision and retention claims filed in conjunction with sexual harassment claims will now fail. The Court did point out, however, Chapter 21 of the Texas Labor Code "does not foreclose an assault-based negligence claim arising from independent facts unrelated to sexual harassment," but such claims are rare.

Accordingly, the question moving forward becomes whether or not an alleged assault is independent of the alleged sexual harassment. More succinctly stated, is the assault sexual in nature? As the dissent pointed out in this case, that is often a fine and blurred line. For the time being, though, employers should be pleased with this decision.

Update: U.S. Supreme Court Decides Texting Case

Last week, the United States Supreme Court issued a decision on the texting case we blogged about here and here. We will not recount the facts here, but in a unanimous decision, the Supreme Court upheld a police department's search of a police officer's personal text messages on his department-owned pager. The Supreme Court held the search did not violate his constitutional rights because it said the police department's search was reasonable. Most importantly, the Supreme Court did not outline any rules about privacy of workplace electronic communications. It seems this issue will be a case by case determination moving forward. Was this decision right?

Coles Corner Winning Wine: May 2010 (Archive)

2009 Chukker – Happy Canyon Vineyard’s 2009 Chukker is a delightful blend of cabernet fran, merlot, and cabernet sauvignon. This Summer red has rich fruit flavors, with a spicy finish. With its smoky notes, an excellent wine to bring to your next bar-b-que.

Recent 5th Circuit Decision Sheds More Light on FLSA Requirements

On May 27, 2010, the 5th Circuit Court of Appeals issued a decision interpreting the Fair Labor Standards Act’s (FLSA) differentiation between “regular rate” and “per diem” payments. In Gagnon v. United Technisource Inc; AIS Tech Services Inc., the 5th Circuit determined the employer deliberately violated the FLSA by paying a low hourly rate with an offsetting “per diem.” The employer in Gagnon agreed to pay the employee $5.50 per hour (approximately minimum wage at that time) for “straight time” and $20.00 per hour for overtime. In addition, the employer agreed to pay the employee $12.50 for every hour he worked each week up to 40 hours per week or a maximum of $500. The employer referred to this as “per diem.”

The Court determined that pursuant to the FLSA, the employee's hourly regular rate was $18.00 ($5.50 “straight time” plus $12.50 “per diem”). As such, the employer owed the employee $27.00 per hour for overtime. Particularly important in the Court's finding that the $12.50 per hour “per diem” should be considered regular rate was the fact the “per diem” was an hourly calculation as opposed to a flat rate based on travel expenses, living expenses, etc. The Court also looked at the hourly rate of pay for similar jobs at other companies and found the hourly rate varied from $18.32 to $24.00, well above the $5.50 the employer in Gagnon paid.

Whether the employer deliberately circumvented the FLSA requirements or not, the lesson all employers should learn from Gagnon is the FLSA’s payment requirements are complicated. Many terms we commonly hear such as “salary,” “overtime,” “exempt,” and “non-exempt” have different meanings under the FLSA. A mistake in properly paying employees can cost an employer greatly down the road, especially because the FLSA permits attorney’s fees and doubling the amount the employee is owed in certain circumstances. It is always best to consult with your attorney on any and all pay practices and employee classifications (especially when you have complicated and/or unique pay practices).