UPDATE: Supreme Court Hears Arguments Regarding Workplace Privacy

At the end of last year we asked whether an employee should have an expectation of privacy regarding emails, text messages, etc. that were received and sent on company-owned equipment (previous post). The majority of reader responses favored the employers' right to monitor employees' communication. Luckily we should have an answer to this question from the Supreme Court in June. According to one report, the Justices appear to side with the employer. However, this same report indicated Chief Justice Roberts criticized the employer's decision to look at the text messages. Until June though, we can continue the right of privacy debate.

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.

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.

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.

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.