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.