10 Major Employment Laws That Every Texas Business Owner Should Know

Building a successful business usually takes a lot of hard work and time.  An ill-timed lawsuit can cause significant damage to the business or even completely ruin it.  Many lawsuits brought by disgruntled employees or rejected job applicants can result in double or triple damages under federal and state employment laws, thousands in attorneys fees, and can cause an irreparable damage to the business’ reputation.  So why risk it?

In this post, I provide a quick reference list of the major Federal and Texas employment laws.  Most of these statutes apply to all private employers, no matter the size or type of business; but some statutes apply only to businesses with a certain number of employees or volume of business.

As a business owner, knowing which laws apply to your company and complying with them can save you a lot of money.

1. Fair Labor & Standard Act (FLSA) 

  • Applies to (1) private employers with at least $500,000 a year in business; (2) hospitals, businesses providing medical or nursing care for residents, schools, preschools and government agencies (federal, state, and local); (3) employees of companies with less than $500,000 a year in business if the employees engage in interstate commerce i.e. commerce between the states.
    • Basically, every business in the USA is covered by the FLSA unless it is a purely local business with less than $500,000  a year in business.
  • Establishes the minimum wage of $7.25 per hour and requires overtime pay at a rate of  not less than one and one-half times the regular rate of pay for any hours worked after 40 hours of work in a workweek by any covered non-exempt employees.
  • Enforced by the Department of Labor (DOL).

2. Texas Minimum Wage Act

  • Applies to all private employers, no matter the size.
  • Establishes a minimum wage for non-exempt employees that is tied to the FLSA’s minimum wage and requires the employers to provide each employee with a written earnings statement about the employee’s pay.
  • Enforced by the Texas Workforce Commission (TWC).

3. The Equal Pay Act (EPA)

4. Title VII of the Civil Rights Act of 1964 (Title 7)

  • Applies to any private businesses with 15 or more employees.
  • Prohibits discrimination based on race, color, religion, national origin, and sex, which includes pregnancy, childbirth, or related medical conditions (see a related post regarding pregnancy discrimination here). This is the law that typically gives rise to sexual harassment claims.
  • Enforced by the EEOC.

5. The Age Discrimination in Employment Act of 1967 (ADEA)

  • Applies to all private businesses with 20 or more employees.
  • Prohibits employment discrimination against persons 40 years of age or older.
  • Enforced by the EEOC.

6. Title I and V of the Americans With Disabilities Act of 1999 (ADA)

  • Applies to all private businesses with 15 or more employees.
  • Prohibits discrimination against qualified individuals with disabilities (physical or mental impairments that substantially limits one or more major life activities) or individuals regarded as having such disabilities.
  • Enforced by the the EEOC.

7. The Immigration Reform and Control Act of 1986 (IRCA)

8. The Family Medical Leave Act (FMLA)

  • Applies to private-sector employers, with at least 50 employees in 20 or more workweeks in the current or preceding calendar year.
  • Only the following employees will qualify: (1) has worked for the employer for at least 12 non-consecutive months; (2) has at least 1,250 hours of service for the employer during the 12 month period immediately preceding the leave; and (3) works at a location where the employer has at least 50 employees within 75 miles.
  • Allows eligible employees to take up to 12 workweeks of leave in a 12-month period for one or more of the following reasons: (1) the birth of a son or daughter or placement of a son or daughter with the employee for adoption or foster care; (3) for a serious health condition that makes the employee unable to perform the essential functions of his or her job; or (4) for any qualifying exigency arising out of the fact that a spouse, son, daughter, or parent is a military member on covered active duty or call to covered duty status.
  • Enforced by the DOL.

9. The Occupational Safety & Health Act (OSHA)

  • Applies to all private employers, no matter the size.
  • Requires that each employer “furnish … a place of employment which [is] free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.”
  • Enforced by the Occupational Safety & Health Administration (OSHA).

10.  The Uniformed Services Employment and Reemployment Act (USERRA)

  • Applies to all private employers, no matter the size
  • Requires employers to reemploy returning service-members in the same position that they would have attained had they not been absent for military service, with the same seniority, status and pay, as well as other rights and benefits determined by seniority.
  • Enforced by the Veterans’ Employment and Training Service (VETS)

Virtually all of the laws on this list also prohibit retaliation against employees who have complained about the violation of these statutes, filed a charge of discrimination, or participated in an employment investigation or lawsuit arising out of the violations.

FLeiza Dolghih is a partner at Lewis Brisbois Bisgaard & Smith LLP in Dallas, Texas and a Co-Chair of the firm’s Trade Secrets and Non-Compete Disputes national practice.  His practice includes commercial, intellectual property and employment litigation.  You can contact her directly at Leiza.Dolghih@LewisBrisbois.com or (214) 722-7108.

Unpaid Internships Are Mainstream, But Are They Legal?

During the last few years of tough economy, many companies have been tempted to save a  penny by offering unpaid internships to the eager hoards of college graduates, who have often been forced to accept unpaid positions because of lack of paid work in their chosen field.  While some of these unpaid positions offered true training and educational experience, others consisted entirely of menial tasks – ranging from stuffing envelopes and picking up dry cleaning to sanitizing door handles and sweeping bathrooms.

A publicized lawsuit by unpaid interns against the company that produced Black Swan and 500 Days of Summer filed in New York in 2011, began a rush of class and collective actions brought by interns under state and federal wage and hour laws.  To avoid being part of this litigation trend, any company that offers unpaid internships in Texas needs to make sure that it complies with both federal and state wage and hour laws.

Federal Law 

The Fair Labor Standard Act (FLSA) requires that an employer pays a minimum wage and overtime wages to anybody classified as its employee.  The Department of Labor issued a Fact Sheet in 2010 describing six factors that are used to determine whether a worker should be qualified as an intern/trainee or an employee under the FLSA.  If an employer offers an unpaid internship, it must make sure that the internship position meets the following criteria:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern and, on occasion, its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Texas Law

Texas does not have separate regulations at the state level regarding unpaid internships. Instead, the Texas Workforce Commission advises employers to adhere to the six-prong test established by the DOL.  Additionally, the Commission has specifically clarified that the key fourth factor on the list – that an employer receive “no immediate advantage from the activities of the intern” – requires that an intern receive more benefits from the work then the employer.

Unpaid Internship Class Actions (examples of what has triggered litigation so far)

1.    Glatt v. Fox Searchlight Pictures  (NYSD, 2013) – interns “performed routine tasks that would otherwise have been performed by regular employees” such as obtaining documents for personnel files, picking up paychecks for coworkers, tracking and reconciling purchase orders and invoices, drafting cover letters, organizing filing cabinets, making photocopies, running errand, assembling office furniture, arranging travel plans, taking out trash, taking lunch orders, answering phones, watermarking scripts, and making deliveries.  (held: the unpaid internship violated the FLSA).

2. Rabenswaay v. Kamali et al. (NYSD, 2013) – interns did photo retouching, photographed products, edited brand books, created visuals, signage, and labels, and other tasks requested by supervisors. The job involved no training (ongoing).

3. Ballinger et al. v. Advance Magazine Publishers (NYSD, 2013) – interns packed and unpacked accessories and jewelry, sorted through and organized accessories and jewelry, ran errands, filled out insurance forms, reviewed submissions, responded to emails, proofread, line-edited and relayed pieces between writers and editors (ongoing).

4. Bickerton v. Charles Rose (NY S. Ct. 2012) – interns performed background research for the show, escorted guests for interviews, assembled press packets, broke down the interview sets, and performed other productive tasks (settled for $250,000).

5. Wang v. Hearst Corporation (SDNY 2012) – interns coordinated pickups and deliveries of samples, provided on-site assistance at magazine photo shoots, managed reimbursement reports, etc. (dismissed due to lack of commonality).

CONCLUSION: In light of the rise of litigation related to unpaid internships, employers should modify their internship programs to comply with the DOL’s requirements described above. Although the above cases deal with the fashion and publishing industries, where unpaid internships have historically been the norm, the FLSA requirements apply to all industries and all businesses need to ensure that they are compliant.

Update (7/19): After running a quick search for unpaid internships on the local Craigslist, I have found a great example of a Marketing & Events Intern position advertisement that appears to violate the DOL requirements.  In contrast, this unpaid internship for a Solutions Consultant seem to comply with the FLSA as long as they actually do offer the described training.

Update (7/25)And here is Dallas Observer advertising an unpaid Marketing Internship position with a description that on its face appears to violate the FLSA’s minimum wage requirements.

Leiza Dolghih is a partner at Lewis Brisbois Bisgaard & Smith LLP in Dallas, Texas and a Co-Chair of the firm’s Trade Secrets and Non-Compete Disputes national practice.  His practice includes commercial, intellectual property and employment litigation.  You can contact her directly at Leiza.Dolghih@LewisBrisbois.com or (214) 722-7108.

The Supreme Court Renders an Important Pro-Employer Decision

In the past two weeks, both the United States Supreme Court and the Fifth Circuit Court of Appeals have rendered decisions that will add roadblocks to certain employee lawsuits.  Last week, the Supreme Court decided Genesis Healthcare v. Symczykwhich I have previously identified as a case to watch in 2013 (here).

In Genesis Healthcare v. Symczyk, the Court held that when an employee brings a collective action under the Fair Labor Standards Act (FLSA) against an employer, and the employer makes an offer of judgment to the employee under Federal Rule of Civil Procedure 68 prior to class certification, if such offer fully settles the employee’s individual claim, the collective action becomes moot as well.

In this case, Symczyk, a nurse, brought a collective action on behalf of herself and “other employees similarly situated” and alleged that the medical center violated the FLSA by automatically deducting 30 minutes of time worked per shift for meal breaks for certain employees, even when the employees performed compensable work during those breaks.  When Genesis Healthcare answered the complaint, they simultaneously served upon Symczyk an offer of judgment under Rule 68.

The District Court found that this offer of $7,500 provided Symczyk a complete relief on her individual damages claim, and, since no other individuals had joined her lawsuit, the case was rendered moot.  The Third Circuit Court of Appeals reversed the District Court and held that while the individual claim had become moot, the collective action had not.  The Court explained that allowing defendant employers to “pick off ” named plaintiffs with strategic Rule 68 offers before class certification, would frustrate the goals of collective action under the FLSA.

The Supreme Court, however, reversed the Third Circuit Court of Appeals and found that where a judgment offer under Rule 68 completely satisfies the named employee’s individual claim, and the class has not yet been certified, both the individual claim and the collective actions are rendered moot.

HOW WILL THIS AFFECT EMPLOYERS AND EMPLOYEES?

Now, anytime an employee brings a collective action under the FLSA against an employer, all the employer has to do to get the collective action dismissed, is to make a Rule 68 judgment offer prior to the class certification, and the collective action will be mooted, if the district court finds that the amount of the judgment offer fully satisfies such employee’s individual claim.  Note, however, that the federal circuit courts are split about the question the Supreme Court did not decide: whether an unaccepted offer of judgment moots the named plaintiff’s FLSA claim (and thus the collective claim). The four dissenting members of the Court said “no.”  The Rule 68 offer strategy will work only in those judicial circuits that find an unaccepted offer of judgment to moot the claim.

The Court’s decision makes it more difficult for employees to bring the FLSA collective actions because they are now forced – prior to class certification – to either identify a sufficient number of class members or claim a sufficiently large amount of damages so that the employer is not willing to make a Rule 68 offer or the employer’s offer is not large enough to satisfy all the individual claims.

The Court specifically pointed out that the judgment offers under Rule 68 might not work in class actions governed by Federal Rule of Civil Procedure 23.  Thus, employees might want to try to bring lawsuits that allege both a collective action under FLSA as well as Rule 23 class actions, or bring only state-law claims as class actions.

It will be interesting to see if, as a result of this decision, the Congress attempts to amend the FLSA to close the loophole created by Rule 68 offers that many employers are now sure to use to dismiss collective actions brought under the FLSA.

Leiza Dolghih is a partner at Lewis Brisbois Bisgaard & Smith LLP in Dallas, Texas and a Co-Chair of the firm’s Trade Secrets and Non-Compete Disputes national practice.  His practice includes commercial, intellectual property and employment litigation.  You can contact her directly at Leiza.Dolghih@LewisBrisbois.com or (214) 722-7108.