» Employment Law

Employer’s Failure to Sign Arbitration Agreement Made it Unenforceable Against Employee

Notwithstanding the strong federal and state policies in favor of arbitrating business disputes, employers that manage litigation risk via mandatory arbitration agreements may wish to consider whether the agreements require execution on the company’s part.

After all, employers should expect that any important contract or agreement is going to be closely scrutinized in a court of law if a dispute arrises..

Recently, in Huckaba v. Ref-Chem L.P., the Fifth Circuit held that an arbitration agreement signed by an employee was not enforceable because it was not signed by a representative of the employer. Having gone to the trouble of drafting the arbitration agreement and obtaining the employee’s signature on it, the employer placed the document in the employee’s personnel file and moved on to other business.

The Fifth Circuit said that language in the agreement explicitly required the signature of both parties. For example, the agreement provided that “[by] signing this agreement the parties are giving up any right they may have to sue each other.” Elsewhere the agreement provided that modifications must be “in writing and signed by all parties.” There was also a blank signature line for the employer, though the court said that this was not dispositive.

In view of this language, the court said, the absence of the employer’s signature is fatal to enforcement of the arbitration agreement.

The court rejected the employer’s argument that the employee’s continued employment after signing the arbitration agreement constituted acceptance of the agreement. The contested issue in this case, the court said, is whether the arbitration agreement was properly executed — not whether the employee accepted its terms.

The court also turned back the employer’s reliance on In re Halliburton Co., 80 S.W.3d 566 (Tex. 2002), a case in which the Texas Supreme Court enforced an arbitration agreement that was not signed by either the employee or the employer. In Halliburton, the court noted, the agreement stated that submission to arbitration was a term of employment. In this case, on the other hand, the arbitration agreement merely provided that continued employment was consideration for the agreement.

Along the way, the Fifth Circuit observed that the trial court had erred when it concluded that the federal presumption in favor of arbitration, contained in the Federal Arbitration Act, meant that the party challenging an arbitration agreement has the burden to overcome its presumptive validity.

The Huckaba v. Ref-Chem case was decided a few weeks after the U.S. Supreme Court’s ruling in Epic Systems Corp. v. Lewis, No. 16-285 (U.S., decided May 21, 2018). In Epic Systems, the high court emphasized that federal courts may refuse enforcement of arbitration agreements only on “generally applicable contract defenses” under state law.

The message employers should take from the Huckaba and Epic Systems cases is that federal courts will enforce arbitration agreements, but they will not judicially repair contracts that fail under state contract law. The arbitration agreement in Huckaba might have survived if it had been drafted differently (e.g., omitting language explicitly mentioning the need for the employer’s signature, and tightening up the language regarding the effect of continued employment). However, employers should ensure, for all contracts affecting company operations, that airtight processes are put in place to guarantee that every necessary signature is obtained.

The case is Huckaba v. Ref-Chem L.P., No. 17-50341 (5th Cir., decided June 11, 2018)

County Worker on FMLA Leave Deemed “Unemployed” Under Texas Unemployment Compensation Act

The Texas Supreme Court recently concluded that a county employee on unpaid medical leave was “unemployed” within the meaning of the Texas unemployment compensation statute.

The court’s ruling is surprising, because it appears to create a right to unemployment benefits for workers who are not actually unemployed as most understand the term. However, all unemployed workers are not entitled to unemployment benefits. They must also meet the Unemployment Act’s numerous eligibility criteria. The court was careful to point out that it was not ruling on the separate issue of eligibility.

Employee Sought Benefits During Unpaid Leave
The employee in this case worked for the Wichita County government as an assistant emergency management coordinator. Suffering from anxiety and depression, she took several months’ leave under the Family and Medical Leave Act. When her paid leave ran out, she converted to unpaid leave and subsequently made a claim for unemployment benefits.

The Texas Workforce Commission concluded that the county worker was unemployed while on unpaid leave of absence for a medically verifiable illness and that it could pay unemployment benefits if the worker “met all other requirements.”

Wichita County appealed. The case eventually arrived at the Texas Supreme Court, where the high court agreed with the Texas Workforce Commission. As Justice Debra H. Lehrmann observed in a unanimous opinion, the Texas Unemployment Compensation Act’s definition of “unemployed” does not require that an employee be terminated from employment.

An individual is considered unemployed if the individual meets the act’s definition of “totally unemployed” or “partially unemployed.” Those terms are defined, at §§ 201.091(a) and (b) of the Unemployment Act, by income thresholds: the individual did not earn more than $5 of 25 percent of the benefit amount during the relevant benefit period.
“Pursuant to these provisions, an individual qualifies as ‘unemployed’ so long as her wages are low enough,” Justice Lehrmann wrote. “Nothing in these definitions contemplates a formal severance of the employer–employee relationship.”

The Texas high court rejected both the county’s contention that this reading of the Unemployment Act defied a common-sense understanding of the word “unemployed,” and the Texas Court of Appeals’ somewhat related view that giving the Unemployment Act a plain language interpretation would lead to absurd results.

The Unemployment Act, § 207.021(a)(1)–(5), (8) supplies a long list of criteria to be met before an individual is eligible to obtain unemployment benefits. The individual must:

  • have registered for work at an employment office and continued to report to the office as required by applicable Commission rules;
  • have made a claim for benefits;
  • be able to work;
  • be available for work;
  • be actively seeking work in accordance with Commission rules; and
  • have been “totally or partially unemployed for a waiting period of at least seven consecutive days.”

In order to receive unemployment benefits, an individual must be “unemployed” and “eligible” and not otherwise statutorily excepted or disqualified from receiving benefits. Justice Lehrmann wrote that the court was not deciding whether the county worker met the eligibility criteria. She surmised that it was not likely that a worker could qualify for FMLA leave and also be eligible for unemployment benefits.

Going forward, it will be important for employers in Texas to test the court’s assumptions. Employers should take a hard look at their employment policies to see if there are any loopholes that would allow employees on unpaid leave to meet the Unemployment Act’s eligibility criteria. These should be closed up immediately; otherwise employers could face unforeseen exposure for employment benefits.

The case is Texas Workforce Commission v. Wichita County, No. 17-0130 (Texas, decided May 25, 2018).

Professors alleging discrimination sue University of Houston-Victoria

Three business professors at the University of Houston-Victoria (UHV) are alleging discrimination by their former dean in a lawsuit they filed in March. In their lawsuits, associate professors Luh Yu Ren, Chun-Sheng Yu and Jianjun Du argue UHV officials failed to protect them from discrimination and retaliation from Farhang Niroomand, the former dean of the School of Business Administration.

The plaintiffs, whose are between 59 to 65 years old, are alleging their former boss created a hostile work environment and implemented obstacles preventing them from receiving promotions and pay raises after they complained about Niroomand to the UHV officials about his behavior. Further, the plaintiffs complain the prejudicial treatment they received was due to their ages and Chinese heritage.

Attorneys for UHV argue the men’s lawsuits are without merit, dismissing them as nothing more than common workplace disagreements. “Plaintiff[s] [are] simply complaining about ordinary tribulations of the workplace such as petty slights and minor annoyances,” they argued in court documents. They also claimed the lawsuit fails to meet procedural and jurisdictional requirements.

The embattled former dean resigned in 2017.

The plaintiffs allege they filed suit only after failing to resolve their complaints through the university’s human resources department, the Texas Workforce Commission Civil Rights Division and the Equal Employment Opportunity Commission. While initially complaining UHV failed to respond to their grievances, the plaintiffs since admitted they believed officials did not actually take their complaints seriously.

Eight ex-employees of Texas sanitation company claim racial discrimination

Eight African American employees of a Texas sanitation company have filed a lawsuit claiming discrimination and retaliation.

Dantrell Patterson, Lamonte Young, Demetrius Patterson, Tadarious Dixon, Keithdrick Patterson, Jarvis Hill, Jermaine Bell and Derrick Robert filed the lawsuit against Sanitation Solutions Inc. in the Marshall Division of the Eastern District of Texas on April 20. The plaintiffs claim that the defendant subjected them to acts of intentional discrimination based on race and color.

The lawsuit claims they were surrounded by a “systemic atmosphere of bigotry” at work. They claim Sanitation Solutions management and co-workers used racial slurs and referred to black employees as “boy,” and that a swastika and nooses were displayed at work locations and on trucks. The plaintiffs allege that they were subjected to harassment and discrimination, and retaliated against after they registered complaints about the treatment. The plaintiffs also claim that white workers were paid more than black employees doing the same work, and received lighter discipline than black workers in similar situations, with some of the plaintiffs being discharged. According to the complaint, when the plaintiffs retained counsel and presented management with a written list of grievances, the remaining employees had their employment terminated.

The plaintiffs are seeking damages, front pay, punitive damages, pre- and post-judgment interest, attorney’s fees, an injunction preventing the defendant from engaging in unlawful practices or retaliating against the plaintiffs, reinstatement, and other proper and necessary relief. A jury trial is demanded.

Texas drilling company sued for employment discrimination

A lawsuit has been filed accusing a Texas drilling company of racial discrimination.

Andrew Collins filed the lawsuit in U.S. District Court for the Southern District of Texas, Houston Division, alleging that Noble Drilling violated Title VII of the Civil Rights Act.

Collins, an African American resident of Harris County, claims that he was subjected to harassment, threats, intimidation, discrimination and disparate treatment because of his race, which caused him embarrassment and emotional distress.

According to the lawsuit, Noble Drilling denied Collins the privileges, benefits, terms and conditions of employment. The complaint alleges that the company retaliated against Collins by transferring him to a less desirable offshore facility after he reported racial and sexual harassment. Noble Drilling threatened Collins with disciplinary action and wrongfully terminated his employment, the lawsuit claims.

Collins seeks back pay including lost wages and benefits, compensatory damages, attorney fees and costs, as well as other relief to which he may be entitled. A trial by jury has been demanded.

Noble Drilling, based in Sugar Land, Texas, operates about 30 drilling rigs, including 14 jackups and 16 semi-submersibles. In 2015, revenue from Shell Oil accounted from 49 percent of the company’s income. The company announced mass layoffs in January 2016.

Former Texas Department of Agriculture worker files employment lawsuit claiming race discrimination

A former deputy chief financial officer for the Texas Department of Agriculture has filed a lawsuit against the agency, alleging that she was fired because of her race.

Shelia Latting, who is black, claims that her employment was terminated a year ago, and that she was replaced by two white employees who were less qualified.

The lawsuit, filed in state district court in Travis County, names Texas Agriculture Commissioner Sid Miller as a defendant, in his official capacity. Latting has been a state employee for 21 years. According to the lawsuit, shortly before Miller was sworn into office, he offered Latting the position of chief financial officer, and she accepted. Latting worked on a budget overhaul at Miller’s request, but was not promoted, and was told her job was terminated due to a “reduction of force,” the lawsuit claims.

Latting claims that two white women were hired to positions essentially the same as her former position. The lawsuit alleges that the two women had worked with an individual at the Texas Facilities Commission, and were hired shortly after that individual was appointed as an assistant commissioner at the Department of Agriculture. An internal audit last April found that the Facilities Commission had often hired employees with no competition and awarded promotions that were unsupported by evaluations. The Austin American-Statesman reported in July that the new assistant commissioner brought six former employees to the Department of Agriculture, and some of them were given quick promotions and raises.

Latting’s lawsuit seeks between $200,000 and $1 million in damages, as well as a change in policy to help prevent future discrimination.

Former employee alleges unpaid overtime in Texas employment lawsuit

A former employee of an environmental services company, who claims that the company did not pay him for overtime worked, has filed an employment lawsuit in federal court in Texas.

The collective action lawsuit was filed in U.S. District Court for the Eastern District of Texas, Beaumont Division, by Tommy Breed, individually and for all others similarly situated. Breed alleges that his former employer, Wastewater Specialties, violated the Fair Labor Standards Act by failing to pay him overtime wages.

According to the lawsuit, Wastewater Specialities employed Breed from May 2013 until Sept. 2015. The complaint alleges that Breed and others worked more than 40 hours per week, but were not paid overtime; instead they were paid straight time for what the company called “unbillable” hours.

The lawsuit seeks damages for Breed and others in the class, including compensation for overtime worked, liquidated damages, interest and attorney’s fees and costs.

Wastewater Specialties is an environmental services company that operates in the gulf coast region, with its headquarters in Sulphur, Louisiana, and offices in Texas City and Beaumont.

Certain employees who work more than 40 hours per week are entitled to one and a half times their regular rate of pay, under the federal Fair Labor Standards Act and the Texas Payday Law. Certain executive, professional and administrative employees who make more than a certain amount per week are exempt from the overtime requirements.

Texas employment lawsuit claims company made employees work off the clock

An employee at a Texas call center has filed a lawsuit claiming that she and other employees were not paid for work that they were required to do off the clock.

Elissa Shetzer filed the lawsuit in U.S. District Court for the Eastern District of Texas against her employer, Harte-Hanks Response Management/Austin LP, which manages the call center in Texarkana, Texas. Shetzer claims that employees were not paid for time spent on tasks such as logging in to call systems and performing administrative work at the end of their shifts.

The lawsuit alleges that it took approximately 15 minutes to log into the computer system before the start of a shift, which was required in order to be able to take calls. In addition, the suit claims that employees had to spend about 10 minutes after each shift logging off and shutting down computer programs.

According to the lawsuit, if employees were on a call when their shift ended, they were paid only until the end of the phone call, even if there was additional administrative work related to the call that still needed to be completed before they could leave work. In addition, the suit alleges that workers often had to take a final customer call after their phones had automatically clocked them out.

Shetzer claims violations of the Fair Labor Standards Act and is seeking class-action status for her lawsuit. The suit seeks monetary damages, liquidated damages, interests and costs from the defendants.

Nineteen-year employee of Texas firm files lawsuit over alleged FMLA violation

A Texas worker filed a lawsuit against his employer alleging violations of employment law dating to 2014.

Bradford Thompson brought a complaint in the U.S. District Court for the Southern District of Texas, Houston Division, against Total Petrochemicals and Refining USA Inc. The lawsuit, filed on May 6, claimed violation of the Family and Medical Leave Act (FMLA) in 2014 and 2015.

The lawsuit alleged that Thompson has been employed by Total Petrochemicals for more than 19 years and required extensive medical leave in 2014 due to two separate instances of surgery and hospitalization. Thompson claimed that his need for FMLA leave was clearly communicated to his employer. He first suffered a ruptured appendix and later had complications following cataract surgery.

According to his lawsuit, Thompson did not exceed his allotted FMLA leave. After returning to work in March 2015, Thompson claimed that he was put on notice for unsatisfactory work performance and was given a negative work assessment, most of which he was not allowed to see.

Thompson claims that after he argued that he was being criticized on a pretext and that his employer was retaliating against him, he was denied a raise. Thompson claims loss of wages and benefits, emotional distress and damage to future employment prospects. The lawsuit seeks declaratory relief, back and front pay, other damages and attorney’s fees and costs.

More Texas Workers Are Filing Wage-and-Hour Lawsuits

Lawsuits filed by Texas workers claiming wage-and-hour violations have increased by 42 percent over the past three years and have tripled in the past ten years. According to research by Androvett Legal Media, Texas workers filed at least 922 federal lawsuits in 2014 — compared to 632 cases in 2012 and 280 lawsuits in 2004. In 2013, workers filed 1,128 such cases.

In 2014, the U.S. Department of Labor opened new offices in Austin and Temple in 2014 to handle an increased number of complaints the agency is receiving, as well as the increased litigation.

Lawsuits and complaints have been filed over a variety of issues. In one example, employers have required workers to show up to work at a particular time, but did not start the pay clock until later. Other cases involve employers who have refused to pay when employees work overtime without obtaining pre-approval.

Many of the lawsuits are filed under the Fair Labor Standards Act (FLSA), the 1938 law that created the 40-hour workweek and established overtime pay and the minimum wage.

Legal experts say that a number of factors have contributed to the increase in litigation, including that workers have become more knowledgeable about the law. There has also been growth in small businesses that may not be aware of the law’s requirements. In addition, the statute provides for legal fees, making it relatively easy for workers to obtain legal representation than for other types of cases.

In December 2014, the U.S. Supreme Court ruled on a case involving workers’ pay. In a unanimous decision, the court held that a temp agency did not have to pay Amazon warehouse workers for the time they spent in a security screening checkpoint as they exited their workplace.

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