Non-Compete Agreements For Low-Wage Workers Under Fire

By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

According to a University of Michigan Law & Economic Research Paper last revised on January 19, 2019, post-termination non-compete agreements “are more likely to be found in high-skill, high-paying jobs, but they are also common in low-skill, low-paying jobs.”

California is famous for outlawing virtually all covenants not to compete for employees. Historically, most other states have required only that such covenants have reasonable limitations as to time, geographical area and scope of activity to be restrained.

Increasingly, however, states are also limiting the types of jobs that may subject to a non-compete agreement. A Massachusetts law which became effective on October 1, 2018 provides that non-compete agreements cannot be enforced against an employee who is classified as non-exempt under the FLSA. An Illinois law which became effective on January 1, 2017 bans covenants not to compete for low-wage employees whose “earnings do not exceed the greater of (1) … the minimum wage required by … law or (3) $13 per hour.”

Other states, including New Hampshire and New Jersey, are considering similar legislation making non-compete agreements unenforceable against low-wage workers.

At the federal level, legislation limiting jobs subject to a non-compete agreement was first proposed by Democratic Senator Christopher Murphy in 2015. Earlier this month, Marco Rubio became the first Republican Senator to propose such legislation with the introduction of the Freedom to Compete Act. In a January 15, 2019 press release, he proclaimed: ““Non-compete agreements that arbitrarily restrict entry-level, low-wage workers from pursuing better employment opportunities are egregious and outdated in the twenty-first century American economy.”

Senator Rubio’s bill seeks to amend the Fair Labor Standards Act (“FLSA”) to (1) void any non-compete agreement with an employee entered into before enactment, and (2) prohibit any non-compete agreement with an employee after enactment.  The term “non-compete” agreement is broadly defined as an agreement “that restricts [an] employee from performing, after the employment relationship … terminates “[a]ny work for another work for another employer for a specified period of time”, “[a]ny work in a specified geographical area”, or “[a]ny work for another employer that is similar to such employee’s work for the employer that is a party to such agreement.”

As with other provisions of the FLSA, Senator Rubio’s bill states that any employee employed in a bona fide executive, administrative or professional capacity, or in the capacity of outside salesman, would not be protected by the proposed amendment. Also, the proposed legislation clarifies that it does not “preclude an employer from entering into an agreement with an employee to not share any information (including after the employee is not longer employed by the employer) regarding the employer or the employment that is a trade secret, as defined in section 1839 of title 18, United States Code.”

The genesis of the movement to ban non-compete agreements for low-wage workers appears to be an October 15, 2014 Huffington Post article which ridiculed Jimmy Johns for including non-compete agreements in hiring packets for low-wage employees.  The practice ultimately prompted (1) a class action suit, (2) investigations by, and settlements with, the States of Illinois and New York, and (3) legislative initiatives to curb such practices by other employers.

Non-compete agreements for low-wage workers have rarely been a good idea for employers. Non-compete agreements are generally justified as necessary to protect an employer’s good will, trade secrets or specialized training. Typically, only management and sales employees are privy to such information.  Asking low-wage employees to sign non-compete agreements can thus strain the credibility of a claim that their enforcement is necessary as to management and sales employees. That such agreements are now the target of legislative efforts is simply another reason to avoid them.

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Employers Should Be Monitoring “Right to Disconnect” Initiatives

By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

As many employers already know, states and municipalities have recently been at the forefront in enacting legislation to protect the rights of workers. Previous articles on this blog have highlighted new laws governing predictive scheduling, state-specific sexual harassment preventionnon-disclosure agreements, job candidate screening, paid sick time, and other terms and conditions of employment.

So what other legislative initiatives should employers be monitoring? Based upon a bill scheduled this week for hearing by the New York City Council, “right to disconnect” initiatives should certainly be on this list.

Under the proposed New York ordinance, it would be unlawful for a covered private employer “to require an employee to access work-related electronic communications outside of such employee’s work hours, not including overtime, except in cases of emergency.” The term “electronic communications” includes “electronic mail, text messages, or other digital means of conveying data electronically.”

Under the proposed ordinance, a covered employer would face a fine of $250 “for each instance of an employee being required to access work-related electronic communications outside of the standard work hours.” For an employee terminated in violation of the proposed ordinance, available remedies include “reinstatement” and “full compensation including wages and benefits lost.”

The proposed ordinance would take effect a mere 120 days after its enactment.

The New York City initiative comes on the heels of “right to disconnect” laws enacted in 2017 in France and Italy.  India is also currently considering a “right to disconnect” law.

Whether or not New York City enacts the proposed ordinance, it is likely states and other municipalities will take notice of the arguments cited in favor of enactment. These arguments include quality of life away from work, which has already been successfully  cited as a reason for predictive scheduling ordinances. Even if New York City does not pass a “right to disconnect” law, another jurisdiction will likely do so.

As previously advised on this blog, compliance and risk management strategies by employers must adapt to the ever-changing legal landscape, especially at the state and local level.  This landscape can change in months, not years. The price of not being diligent in monitoring this landscape may be liability for fines, damages or worse.

“Take This Job And Shove It”: Emerging Trends In Employee Departures

By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

2018 Bureau of Labor Statistics data proves what many employers already know. More than 3½ million employees quit their job every month.

Two-weeks-notice of a resignation may still be the norm for most of these employees, but anecdotal evidence shows that, in a booming job market, more and more employees are willing to end employment relationships in a more abrupt or even callous manner.

On December 6, 2018, a 17-year old Walmart employee posted a video on Facebook entitled “How I quit my job today.” In the video, the employee records himself reading a prepared statement over a Walmart intercom system. The approximately one-minute video, which now has over 500,000 views, begins with the following line: “Attention all shoppers, associates and management, I would like to say to all of you today that nobody should work here, ever.”

On December 5, 2018, the Federal Reserve noted in its monthly Beige Book that “several Chicago firms have reported that some employees have simply quit – with no notice nor means of contact.” The Beige Book, which tracks employment trends, referred to this manner of quitting as being “ghosted.”

Other employers have reported being notified that an employee had resigned via text from the employee. There are even smartphone apps which assist a user in constructing such a text to an employer.

Abrupt departures may not be a new phenomenon and are often attributable to the demand of a prospective employer. The willingness of more departing employees to “ghost” their employers or shame their employers via social media, however, is a relatively new trend.

So, what can an employer legally do to prevent an employee from leaving it in the lurch? What can an employer legally do to prevent a departing employee from sounding off on social media? The answer is very little.

Employment At Will

There are no federal or state statutes in the United States which require that an employee provide any notice of resignation, much less two-weeks-notice. Absent a contract which provides otherwise, the same laws which allow an employer to terminate an employee without cause or notice provide the same option to an employee.

Withholding Last Pay Check

Under the Fair Labor Standards Act and the laws of most states, an employer must pay an employee for hours worked. Many states have payday or last paycheck laws which also dictate the manner and amount of an employee’s last paycheck. Withholding an employee’s last paycheck as punishment for the manner of resignation thus risks a claim by the employee under such laws.

Forfeiture of Paid Vacation Time

A well-drafted, written policy which provides for the forfeiture of unused paid vacation time upon a resignation without notice can be enforceable in most states. The deterrence value of such a policy, however, depends upon the amount of unused paid vacation time available to the employee at the time of separation. A few states, moreover, have laws expressly outlawing forfeiture of vacation pay under such circumstances.

Contractual Incentives

Amongst the contractual options available to an employer are employment agreements which provide for a resignation notice period incentivized by (1) monetary consideration, or (2) a promise of a similar termination notice period by the employer.  Employment agreements may also encourage retention through (1) stock options and other incentives which vest in yearly increments of continued employment, and/or (2) up-front benefits, such as signing bonuses, relocation reimbursement or training, which an employee must repay upon departure before a prescribed tenure of employment.

Job Reference – Circumstances of Departure

There is no legal impediment to the adoption of a policy warning employees that departure without notice will be noted as the reason for separation in response to any inquiry by a prospective employer. Such a policy, however, may not always deter an employee who leaves for another job.

Job Reference – Not Eligible for Rehire

If an employee resigns in response to alleged discrimination in the workplace, the legal risk of a “not eligible for rehire” response to an inquiry from a prospective employer is a retaliation claim.

The legal risks of such a response otherwise vary by state. Some states regard such a response as evidence of an unlawful blacklist. Other states may regard such a response as protected speech.

Disparagement

State tort laws provide a remedy for false factual statements which result in financial loss to a business. A social media post presented entirely as an unfavorable opinion, however, may not be actionable disparagement.

A non-disparagement clause in an employment agreement, which survives termination of the employment relationship, may also provide a contractual remedy for an employer as to certain statements made by a former employee. Certain statements, however, may be legally protected speech under labor and employment laws even if within the scope of such a non-disparagement clause.

Takeaways

Sound human resources practices are certainly a good starting point for avoiding unscrupulous departures. Even as to a good employer, however, the risk of such a departure remains. As noted above, there may be some legally available options to deter such departures, but they may not always be fool proof.

Like it or not, therefore, “ghosting” and viral social media posts may be new facts of life for employers, at least until the booming job market subsides. Without procedures to account for such phenomena, the damage to an employer can be significant. Consider the hypothetical example of an individual who has surreptitiously quit but still has access to an employer’s access codes and passwords.

If they have not already done so, employers should thus immediately be developing crises management procedures to cope with employees who have opted to burn their bridges. As if human resources was not already a difficult job.

Austin Paid Sick Time Ordinance Ruled Unconstitutional

By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

As noted in an earlier blog post, Austin enacted a paid sick time ordinance on February 16, 2018 applicable to private employers. The ordinance had been scheduled to become effective on October 1, 2018, but had been temporarily enjoined from taking effect in an August 17, 2018 Order by the Third Court of Appeals.

The suit which preceded the August 17th Order was filed by five companies and six business organizations in Travis County District Court seeking a declaratory judgment that the Austin ordinance violated the Texas Constitution. The State of Texas also intervened. Temporary and permanent injunctions were sought prohibiting Austin from enforcing the ordinance. On June 26, 2018, the Travis County District Court denied the application for temporary injunction.

In a November 16, 2018 Opinion, the Third Court of Appeals reversed the Travis County District Court order and held that the paid sick time ordinance “violates the Texas Constitution because it is preempted by the Texas Minimum Wage Act.”

On What Basis Did The Third Court of Appeals Rule the Ordinance Unconstitutional? 

The Texas Constitution prohibits city ordinances from “contain[ing] any provision inconsistent with … the general laws enacted by the Legislature of the State.” Tex.Const. art XI, § 5(a).

In this regard, the Third Court of Appeals noted that the Texas Minimum Wage Act explicitly provides that “the minimum wage provided by [the Act] supersedes a wage established in an ordinance … governing wages in private employment.” Texas Labor Code § 62.0515(a)Texas Labor Code § 62.0515(a).  The Court found the Austin sick time ordinance to be superseded under this language, and therefore violative of the Texas Constitution, because “it establishes the payments a person receives for services rendered.”  The Court cited the following example:

A part-time hourly employee who makes $10 per hour and who works an average of 15 hours a week for 50 weeks (a total of 750 hours) earns $750 for that work. Under the Ordinance, that employee will have earned 25 hours of sick leave over the course of 50 weeks. If that employee uses all of that earned sick leave, she will have earned $250 for time she did not work, making her actual hourly wage $10.33 (total yearly pay with paid sick leave of $7,750 divided by 750 total hours worked). Stated differently, she will receive $250 more than she would have received without the Ordinance for the same hours of work.

Where Does the Case Go From Here?

For now, the case heads back to Travis County District Court for trial.  The Third Court of Appeals, however, has already determined that opponents of the Austin ordinance have “established a probable right to the relief sought on their preemption claim.”

Austin certainly has the right to request rehearing. After all, two of the justices issuing the Opinion, Scott Field and David Puryear, lost their bids for reelection on November 6th to Democratic challengers. Such a request, however, would likely be ruled upon before January 2019, and denied.

Austin may also file a petition for review with the Texas Supreme Court. Since the Texas Supreme Court has the discretion to deny a petition for review and is comprised entirely of Republican justices, this route is problematic for Austin.

What Does the Opinion Mean For the San Antonio Paid Sick Time Ordinance?  

As noted in another post on this blog, San Antonio enacted its own paid sick time ordinance on August 16, 2018. This ordinance has not yet been challenged in court. Moreover, the Third Court of Appeals Opinion is not necessarily binding in San Antonio, which falls within the jurisdiction of the Fourth Court of Appeals. Accordingly, it remains to be seen how the Third Court of Appeals Opinion will impact the San Antonio ordinance.

“Dog Whistle Racism” In The Workplace

By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

In today’s politically and culturally divisive environment, the term “dog whistle” has taken on a new meaning. Traditionally, the term refers to an ultrasonic whistling sound heard by dogs but inaudible to humans. Now, the term is more frequently used to denote code words that are facially innocuous, and are thus understood by many to be neutral or innocent, but are nevertheless understood by others, to whom the words may be targeted, to have a more malevolent meaning.

In the racial context, dog whistling is more than the mere substitution of a seemingly race-neutral term for a slur universally associated with racism, such as the n-word. It also includes statements intentionally calculated by the speaker to stoke fear or prejudice in others. Dog whistling can thus function not only as a mask of racism, but as a catalyst for racism.

As employers already know, employee communications are no longer confined to the walls of the workplace. They take place in social media, texts, electronic mail, and instant messaging. Some social media platforms even allow communications to be anonymous.  The danger of “dog whistle racism” infecting the workplace has thus never been greater.

Employment Discrimination Law

Employment discrimination jurisprudence was slow to recognize the notion that a facially non-discriminatory remark can nevertheless be regarded as racist by certain employees. As late as 2005, the Eleventh Circuit in Ash v. Tyson Foods, Inc., thus refused to acknowledge that the use of the word “boy” in reference to African American employees was probative of racial bias by a plant manager who made hiring decisions. The court opined: “While the use of ‘boy’ when modified by a racial classification like ‘black’ or ‘white’ is evidence of discrimination, the use of ‘boy’ alone is not evidence of discrimination.”

Upon appeal, the U.S. Supreme Court disagreed:

“Although it is true the disputed word will not always be evidence of racial animus, it does not follow that the term, standing alone, is always benign. The speaker’s meaning may depend on various factors including context, inflection, tone of voice, local custom, and historical usage.”

The Court thus rejected the claim that a modifier or qualification was necessary to make the term “boy” potentially racist.

Despite the slow start, U.S. Courts of Appeal now acknowledge that many code words associated with “dog whistle racism” can be probative evidence of racial discrimination and harassment. In Smith v. Fairview Ridges Hosp., an Eighth Circuit opinion, these words were “fried chicken” and “ghetto.” In McGinest v. GTE Service Corp., a Ninth Circuit ruling, the word was “drug dealer.” In Abramson v. William Paterson College of N.J., a Third Circuit decision, the words were “all of you” and “one of them.” In Aman v. Cort Furniture Rental Corp., another Third Circuit determination, the statements were “don’t touch anything” and “don’t steal.”

In the U.S. District Courts, even more racist code words have been recognized. These words have included “welfare queen”, “Aunt Jemima”, “Buckwheat”, “terrorist”, “thug”, “illegal alien” and “slave driver.”

Drawing the line between race-neutral statements and racially charged code words, however, has proven to be difficult for some U.S. District Courts, resulting in seemingly inconsistent results. In Humphries v. City University of New York, for instance, the U.S. District Court for the Southern District of New York found the words “aggressive, agitated, angry, belligerent, disruptive, hands on hip, hostile [and] threatening” to be insufficient to reveal discriminatory animus. Last year, in Wooding v. Winthrop University Hosp., the U.S. District for the Eastern District of New York nevertheless found it plausible that the words “disrespectful” and “overbearing” were code words for racial discrimination.

The Challenge for Employers

To borrow one U.S. District Court’s phrase, it is not always easy for employers to “hear racism sung in the whistle register.” After all, employees may be deliberately using code words to conceal racist concepts from their employer. It is thus possible for employees to expose an employer to potential liability under Title VII of the Civil Rights Act of 1964 and the Civil Rights Act of 1866 even as to words which the employer understands to be non-discriminatory.

The first step to meeting this challenge is the recognition that remarks may have different meanings for different people. Perhaps more important than the substance of words being used by an employee is the intent of the person using the words. As the Supreme Court recognized, “context, inflection, tone of voice, local custom, and historical usage” can be revealing of this intent.

This first step can then be followed up with workplace policies and training which address not only commonly recognized racist slurs, but also communications understood to be racist by only a select group of people. In this regard, employers should not underestimate the value of their own employees in revealing previously unknown code words.

Social media and harassment policies and training must also address the reality that communications amongst employees away from the workplace can nevertheless impact the work environment. Myopic policies confined to the workplace are simply inadequate in the electronic age.

Finally, employers must now be receptive to complaints by employees which not long ago would have been summarily dismissed. They must learn to ask why seemingly race neutral words are offensive. They must also be prepared to investigate social media messages for its employees even if the messages are posted anonymously. As many employers have already learned the hard way in litigation, quick judgments based upon antiquated presumptions can be a costly mistake.

What Lessons Can Employers Learn From The Kavanaugh Hearings?

By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

Last week, millions watched the Senate Judiciary Committee hearings with Dr. Christine Blasely Ford and Supreme Court nominee Brett Kavanaugh. The hearings were reminiscent of the Senate Judiciary Committee hearings in 1991 with Anita Hill and then Supreme Court nominee Clarence Thomas.

To be sure, the Senate hearings were radically different from sexual harassment investigations routinely conducted at workplaces across the country. The challenges presented at the hearings nevertheless provide important lessons for employers. As most employers already know, the stakes in such investigations are (1) employee well-being and productivity, (2) employee turnover, and (3) potential legal exposure under federal, state and local employment laws.

Take All Reports of Sexual Harassment Seriously

Upon receipt by an employer, a report of sexual harassment may immediately appear to be of questionable credibility. Such questionable credibility may be due to (1) the age of the conduct reported, (2) an ulterior motivation by the alleged victim or other employees, (3) memory gaps, or (4) the absence of corroborating witnesses or other evidence.

There are inherent risks for an employer, however, in a rush to judgment as to a questionable report of harassment. First, the report may prove to have more credibility with further investigation. It is more prudent that the employer to conduct such an investigation than a government agency or plaintiff’s counsel.

Second, the report may be part of a greater sexual harassment problem which exists at the employer. An investigation of the report may be the only means of promptly addressing the greater problem, before it becomes worse.

Finally, the manner in which an employer handles a report of sexual harassment can encourage or discourage future reports of harassment by the alleged victim and other employees.  An employee who feels discouraged from reporting harassment may opt to (1) withhold information thereby allowing a bad situation to become worse, (2) quit, or (3) report such harassment in the form of a charge of discrimination or lawsuit.

Mitigation of these risks thus dictates that all reports of sexual harassment be taken seriously.

Take the Time Needed

Since federal and state employment discrimination laws mandate that prompt remedial action be taken by an employer in response to a report of sexual harassment, a sense of urgency must exist in any investigation. The danger of an artificial deadline, at the expense of a more thorough investigation, however, is that the employer will deprived of information necessary to mitigate the risks associated with sexual harassment.

Completeness is thus always a more prudent goal than expediency in any sexual harassment investigation.

Be Thorough

There are certainly times when an investigation presents hurdles for an employer. Such hurdles include (1) less than cooperative witnesses, (2) unreliable memories, and (3) witnesses represented by legal counsel.

Without reasonable efforts to be thorough, however, a sexual harassment investigation is vulnerable to a claims of bias.  The goal of an employer, therefore, should be reasonably diligent efforts to obtain any relevant information regardless of its evidentiary value.

Be Objective During Investigation

At the outset of a sexual harassment investigation, an employer may be predisposed to believe the accuser or the accused. The reasons for such predispositions include (1) prior dealings with the accuser or accused, (2) the relative values to the employer of the accuser and accused, (3) fear of litigation, and (4) the predominant gender of the employer’s leadership.

A less than partial investigation of a report of sexual harassment, however, can undercut rather than support an employer’s defense to a claim of discrimination or retaliation. An employer must thus be proactive in making sure the investigation is objective.  This means taking steps to (1) neutralize any predispositions during the investigation, (2) ensure that the investigation looks for all relevant information regardless of whether the information supports the accuser or accused, (3) evaluate objectively information learned during the investigation, and (4) otherwise preserve the integrity of the investigation.

Be Objective After Investigation

After an impartial investigation is concluded, the employer still risks legal action for discrimination and retaliation by (1) openly commenting on the credibility or motivation of the accuser, (2) openly commenting on the hardship suffered by the accused and the accused’s family, (3) leaking information learned during the investigation, or (4) lamenting the time and resources spent on the investigation.

Prompt remedial action in response to a report of sexual harassment does not mean that the employer must necessarily take a side. Such action need only be limited to remedial steps, which generally do not entail attacks on the accuser or accused.   

What San Antonio Employers Need To Know About New Paid Sick Time Ordinance

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:

  1. the “employee’s physical or mental illness or injury, preventative medical or health care or health condition”;
  2. 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
  3. 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:

  1. 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”;
  2. erase earned paid sick time upon “an employee’s transfer to a different facility, location, division, or job position with the same employer”;
  3. “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
  4. “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.

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Should Employers Include “No Rehire” Clauses In Separation Agreements?

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.

Combating Sexual Harassment In An Open Office Environment

By Robert G. Chadwick, Jr, Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

For the past several years, studies have debated the benefits and detriments of open offices as viable working spaces. One of the benefits touted by open plan proponents is the deterrence of employee misconduct, such as sexual harassment, that privacy often enables.

Even in an open office, however, the risk of sexual harassment persists, albeit in forms unique to the work environment. The absence of walls and barriers may even provide more, not less opportunities for subtle forms of harassment. After all, open floor plans are specifically designed to facilitate close interaction among employees.  

A new study entitled “Doing gender in the ‘new office’” published in the journal Gender, Work and Organization, for instance, shows that open areas may subject female employees to increased leering or staring by male employees, and more comments regarding their personal appearance.

Other risks of an open layout include looming, crowding, brushing and stalking. Seemingly innocuous gestures, words and phrases by employees may actually have sexual connotations.

The formation of employee cliques is also a danger of an open office. Employees huddled together and whispering and giggling may seem innocent to some, but may actually be perceived by others as a form of harassment.

The more open an office environment, moreover, the greater the threat of ostracization of an employee or group of employees. Ostracization can be a powerful form of harassment or retaliation for a complaint of harassment. Fear of ostracization can also deter complaints of harassment.

In some respects, an open office environment may even be more hostile to an employee than a traditional office environment. Without walls or barriers, the employee is constantly sensitive to the surroundings. With no office or cubicle to which the employee can retreat, the affect of harassment can be constant throughout the work day.      

In implementing strategies for combating sexual harassment, employers must thus be mindful of the unique risks presented by an open office. Harassment and retaliation policies and training should address not only overt forms of harassment, but also subtle forms of harassment. Supervisors should be trained to detect and redress subtle forms of harassment. Employees should have private avenues for reporting harassment without fear of retaliation. Without a strategy tailored to an open office environment, the employer risks poor work performance, attrition and legal liability.