The Summer 2018 Edition of Professional Liability Defense Quarterly, published by the Professional Liability Defense Federation (PLDF), features an article by Robert G. Chadwick, Jr., entitled “Unconscious Bias In The Workplace.”
By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.
On Thursday, August 16, 2018, San Antonio became the second Texas municipality (Austin) to enact a paid sick time ordinance applicable to private employers. There is no corresponding Texas state law which mandates paid sick time in the private sector.
What Employers Are Covered By The Ordinance?
The ordinance applies to any “person, company, corporation, firm partnership, labor organization, non-profit organization or association that pays an employee to perform work for an employer and exercises control over the employee’s wages, hours and working conditions.” The ordinance does not limit its coverage to employers with a minimum number of employees.
The ordinance does not apply to (1) the United States; (2) a corporation wholly owned by the government of the United States; (3) the state or a state agency; or (4) the City of San Antonio or any other political subdivision of the state, or other agency that cannot legally be regulated by City ordinance.
What Employees Are Covered By The Ordinance?
The ordinance covers any “individual who performs at least 80 hours of work for pay within the City of San Antonio in a year for an employer, including work performed through the services of a temporary or employment agency.” The ordinance does not apply to independent contractors or unpaid interns.
How Much Paid Sick Time Is Mandated By The Ordinance?
An employer must grant one hour of earned sick time for every 30 hours worked for the employer. Earned sick time is available to an employee as soon as it is accrued. Earned sick time accrues only in hourly increments.
The ordinance does not affect employer policies which allow an employee to donate unused accrued sick time to another employee.
Are There Any Caps to Paid Sick Time Mandated By The Ordinance?
An employee of an employer with 15 or fewer employees , excluding family members, can accrue up to 48 hours of earned sick time in a calendar year. An employee of a larger employer can accrue up to 64 hours of earned sick time in a calendar year. All available earned sick time up to the applicable limit shall be carried over to the following year.
An employer is not required to allow use of earned sick time by an employee for more than 8 calendar days in a calendar year.
For What Absences Can Paid Sick Time Be Used By An Employee?
An employee is entitled to available paid sick time if the employee makes a timely request for used of earned sick time before the employee’s scheduled work time. There is an exception for unforeseeable absences.
Available paid sick time can be requested by an employee for an absence caused by:
- the “employee’s physical or mental illness or injury, preventative medical or health care or health condition”;
- the “employee’s need to care for a family member’s physical or mental illness, preventative medical or health care, injury, or health condition”; or
- the “employee’s or their family member’s need to seek medical attention, seek relocation, obtain services of a victim services organization, or participate in legal or court ordered action related to an incident of victimization from domestic abuse, sexual assault, or stalking involving the employee or employee’s family member.”
The term “family member” is defined as an employee’s “spouse, child, parent, or any other individual related by blood or whose close association with the employee is the equivalent of a family relationship.”
Can an Employer Require Verification Before Paying For Sick Time?
It depends. An employer may adopt reasonable verification procedures to establish that an employee’s request for earned sick time for more than three consecutive work days is for a qualifying absence. The ordinance makes no mention of absences of other durations.
How Is Paid Sick Time Calculated?
The employer shall pay earned sick time in an amount equal to what the employee would have earned if the employee had worked the scheduled work time, exclusive of any overtime premium, tips, or commissions, but no less than the state minimum wage.
What Does The Ordinance Proscribe?
An employer may not:
- require “an employee to find a replacement to cover the hours of earned paid sick time as a condition of using earned paid sick time”;
- erase earned paid sick time upon “an employee’s transfer to a different facility, location, division, or job position with the same employer”;
- “transfer, demote, discharge, suspend, reduce hours, or directly threaten these actions against an employee because that employee requests or uses earned sick time, reports or attempts to report a violation of [the ordinance], participates or attempts to participate in an investigation or proceeding under [the ordinance], or otherwise exercises any rights afforded by [the ordinance]; or
- “adopt verification procedures that would require an employee to explain the nature of domestic abuse, sexual assault, stalking, illness, injury, health condition or other health need when making a request for earned paid sick time.
What Records Are Mandated of Employers By The Ordinance?
On at least a monthly basis, an employer must provide electronically or in writing to each employee a statement showing the amount of the employee’s available earned paid sick time.
An employer that provides an employee handbook to its employees must include therein a notice of employee rights and remedies under the ordinance.
Each employer must display a sign in an conspicuous place or places where employee notices are customarily posted.
Does The Ordinance Provide Employees With A Private Right Of Action?
No. For violations, the ordinance only provides for a civil penalty assessed by the City.
How Is The Ordinance Enforced?
The ordinance is enforced by the Director of the San Antonio Metropolitan Health District (“District”). A complaint alleging a violation must be filed with the District by or on behalf of an aggrieved employee within two years from the date of the violation.
What Is The Civil Penalty For Violation Of The Ordinance?
No civil penalty for a substantive violation may be assessed prior to April 1, 2020. Thereafter, an employer which fails to cease a violation by the end of the 10th business day after the employer receives notice of the violation by the District is liability to the City for a civil penalty of up to $500 for that violation.
Civil penalties of $500 per violation for retaliation, however, can be assessed on and after the applicable effective date.
Are Any Affirmative Defenses Available To Employers Under The Ordinance?
The ordinance does not expressly provide any affirmative defense for a failure to pay an employee earned paid sick time. Presumably, however, the District will consider any lawful reason for any adverse employment action taken against an employee who has (1) requested or used earned sick time, (2) reported a violation of the ordinance, or (3) participated in an administrative proceeding under the ordinance.
What is the Effective Date of the Ordinance?
The ordinance is effective January 1, 2019. The anti-retaliation provisions are enforceable on the effective date. For employers with less than six employees, the other provisions of the ordinance are not effective until August 1, 2021. For all other employers, the other provisions of the ordinance are effective on August 1, 2019.
What Must San Antonio Employers Be Doing Now?
Depending on the applicable effective date, San Antonio employers have time to develop policies and procedures to conform to the standards set forth in the ordinance. For planning decisions which must be made long before August 1, 2019, however, larger employers must be cognizant of the unique requirements which will soon be applicable to employees working within the city limits of San Antonio.
By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.
When terminating an employment relationship, a separation agreement can be a prudent strategy for managing the risk of a subsequent lawsuit. Such an agreement typically offers monetary or other consideration in exchange for a waiver or release of all claims, including claims of harassment and discrimination.
A waiver or release, however, generally cannot lawfully discharge future claims, including claims based upon denials of applications for re-employment. To manage this risk, it is common for separation agreements to include “no rehire” clauses. Such a clause can include an agreement by a former employee to (1) refrain from applying for or seeking employment, reemployment or reinstatement, (2) waive any right to such employment, reemployment or reinstatement, or (3) termination of employment if rehired.
Recent developments have nevertheless raised two important questions for employers as to “no rehire” clauses: (1) Are such clauses legal? (2) Should employers include such clauses in separation agreements?
Are “No Rehire” Clauses Legal?
For at least a decade, the Equal Employment Opportunity Commission (“EEOC”) has warned that “no rehire” clauses can be viewed as retaliation against employees who come forward with claims of harassment or discrimination. Despite this warning, federal case law has routinely upheld such clauses. See Jencks v. Modern Woodmen of America, 479 F.23d 1261 (10th Cir. 2007)(employee’s waiver of any right to reemployment or reinstatement was legitimate nondiscriminatory reason for employer’s refusal to subsequently consider former employee for sales position).
Not all states, however, view “no rehire” clauses favorably.
Effective July 1, 2018, a new Vermont law provides: “An agreement to settle a claim of sexual harassment shall not prohibit, prevent, or otherwise restrict the employee from working for the employer or any parent company, subsidiary, division, or affiliate of the employer.” Such a clause is rendered “void and unenforceable” by the new Vermont law.
Section 16600 of California’s Business & Professions Code states, subject to certain exceptions: “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” On July 24, 2018, the Ninth Circuit in Golden v. California Emergency Physicians Medical Group addressed the legality under Section 16600 of a provision of a settlement agreement whereby a physician waived “any and all rights to employment with CEP or at any facility that CEP may own or with which it may contract in the future.” The Court held the clause survived to the extent it prevented the physician from working at facilities owned or operated by CEP, but failed to the extent it (1) prevented the physician from working for employers that have contracts with CEP, or (2) permitted CEP to terminate the physician from existing employment in facilities not owned by CEP.
Section 16600 of California’s Business & Professions Code is not dissimilar to the laws of other states. It is safe to assume, therefore, that other states have taken notice of the broad interpretation by the Ninth Circuit of Section 16600.
Should Employers Include “No Rehire” Clauses in Separation Agreements?
The risk of omitting a “no rehire” clause from a separation agreement is not limited to a single failure to hire claim from a former employee. A disgruntled former employee can conceivably file a new claim as to each open position for which an application is denied.
Certainly, the new Vermont law provides few options for Vermont employers. Otherwise, the risks currently presented under state law, and to a lesser extent federal law, do not yet dictate the abandonment of “no rehire” clauses. What these risks do mandate is that broad and overreaching clauses be avoided in favor of skillfully and carefully drafted clauses.
So, to answer the question presented by this article’s headline, most employers should include “no rehire” clauses in their separation agreements. What form these clauses should take depends upon the advice of experienced legal counsel.