The Fifth Circuit Refuses to Extend Title VII to Sexual Orientation or Transgender Status

downloadOver the past two years, the Second, Sixth, and Seventh Circuits have construed Title VII of the Civil Rights Act of 1964 to prohibit employers from discriminating on the basis of either sexual orientation or transgender status.

Last year, the U.S. District Court for the Southern District of Texas, when confronted with the issue, referenced the other circuits and ruled that it assumed that an employee’s “status as a transgender woman place[d] here under the protections of Title VII.”  See Wittmer v. Phillips 66 Co., 304 F. Supp. 3d 627, 634 (S.D. Tex. 2018). This past week, the Fifth Circuit Court of Appeals affirmed the district’s grant of summary judgment against the transgender employee, but clarified that in the Fifth Circuit (which covers Texas, Louisiana and Mississippi), Title VII affords no protections against discrimination by employers on the basis of transgender status or sexual orientation.

Specifically, the Fifth Circuit invoked its own opinion from 1979 stating that it remains the binding  precedent in this circuit.  See Blum v. Gulf Oil Corp., 97 F.2d 936 (5th Cir. 1979) (holding that Title VII does not prohibit discrimination on the basis of sexual orientation).  Furthermore, despite the amicus briefs from the EEOC and the National Center for Lesbian Rights asking the Fifth Circuit to hold that Title VII prohibits discrimination on the basis of transgender status, the court of appeals did not grant their request.

The Fifth Circuit affirmed the grant of summary judgment for Phillips 66 because the employee failed to present sufficient evidence to support a prima facie case of discrimination, and because the employee failed to present a genuine issue of material fact concerning pretext.  The evidence in this cased showed that Wittmer conditional job offer was revoked because the background check showed that she had been terminated by her previous employer, which contradicted her representations to Phillips 66 during her job interview.

BOTTOM LINE: The question of whether Title VII of the 1964 Civil Rights Act covers LGBTQ employees continues to percolate in the courts, and at least three petitions involving this issue are pending in the U.S. Supreme Court.  While the law in this area continues to develop, it may be wise for companies confronted with this issue to take a cue from Phillips 66, which sidestepped the issue of transgender protections under Title VII and instead focused on the lack of evidence that the employee experienced any discrimination in its job application process and that the company had a legitimate non-discriminatory reason to revoke the job offer.

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.  Her practice includes commercial, intellectual property and employment litigation.  You can contact her directly at Leiza.Dolghih@LewisBrisbois.com or (214) 722-7108.

Texas Supreme Court Clarifies When Employers are Responsible for Employees’ Negligence

U5drUHKezGhrZZC7zuRZG27Dz7miJyK_1680x8400When are employers liable for negligence of their employees? For example, when an employee is driving a company vehicle and gets in a car accident, when can his/her employer be held liable for the injuries caused by the employee? The legal standard – vicarious liability – has been around for a long time, but last week the Texas Supreme Court added a much-needed clarity to it. 

In Texas, before an employer can be held liable for its employees’ negligence, the following two questions must be answered:

  1. At the time of the negligent act, was the worker an employee (as opposed to an independent contractor) of the employer?
  2. At the time of the negligent act, was the worker acting in the course and scope of his or her employment?

If the answer to both of these questions is “yes,” then the employer can be held liable for that employee’s negligent conduct.   

The “Control” QuestionThe answer to the first question depends on whether an employer has the right to control the details and progress of the worker’s job. The Supreme Court clarified that the “control” question is not evaluated on a task-by-task basis, but is a question of general control over the worker.  If an employer does not dispute that a particular worker is its employee, then the question of control becomes irrelevant and the party seeking vicarious liability can skip to the second question in the analysis. 

In Painter, et al. v. Amerimex Drilling, I., Ltd., the employer conceded that the driller that got into a car accident injuring several people was an employee.  Nevertheless, it argued that because it exercised no control over the details of the driller’s driving at the time of the accident, i.e., the particular task during which the incident occurred, it could not be vicariously liable.  The Texas Supreme Court rejected this argument and stated that once the employer-employee relationship was established, the only remaining question was whether at the at the time of the accident the driller was acting in the scope and course of his employment. 

The “Scope and Course of Employment” Question This question seeks to determine whether an employee committed a negligent act while performing his duties for the employer or while he was doing something unrelated.  A classic law school example would be a driver, who is still “on the clock” taking a detour to run a personal errand and getting into an accident while doing so.  In that situation, his employer would not be vicariously liable because the employee was acting outside the course and scope of the employment. 

In Painter, et al., the driller got into a car accident while he was driving the drilling crew from the drilling site to the campsite provided by the employer. Normally, driving to and from work would not be considered to be within the course and scope of employment.  However, in this case, the driller received $50 bonus from his employer for driving the crew between the drilling site and the campsite, the employer was contractually required to pay such a bonus, and there was evidence that the driller was providing the driving services as part of his assigned job duties.  Therefore, when the driller got into an accident while driving the drilling crew from the drill site to their campsite, the Court concluded that he could have been acting within the course and scope of his employment and the employer was not entitled to a summary judgment on this issue.* 

BOTTOM LINE: Texas employers can be held liable for their employees’ negligence as long as the negligent act occurred when the employee was performing his or her duties for the employer.  Where the employer-employee relationship is not disputed, the only question that stands between the employer and the vicarious liability for employee’s actions is whether, at the time of the accident, the employee acted within the course and scope of his employment or whether he deviated from his/her duties.  

Therefore, Texas employers must carefully consider how they structure employment relationships, contractual obligations and risk-shifting provisions, and how they describe and define employees’ duties.  In facing the question of vicarious liability in litigation, employers should carefully analyze the situation using the Painter framework. 

*Justices Green and Brown penned a dissenting opinion arguing that the proper standard for “control” analysis in vicarious liability cases should be on a task-by-task basis. 

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 Her practice includes commercial, intellectual property and employment litigation.  You can contact her directly at Leiza.Dolghih@LewisBrisbois.com or (214) 722-7108 or fill out the form below.

 

Can You Fire an Employee for Participating in Racist Behavior or Speech Off-the-Clock?

imagesFollowing the events in Charlottesville, Virginia involving a “Unite the Right” rally organized by white nationalist groups protesting the removal of a statue of Robert E. Lee, several participants in the rally were fired by their employers.

Immediately, the media and internet went abuzz with discussions about employees’ freedom of speech and the right to express their opinions, however repulsive they might be to the society, contrasted with the employers’ right to fire employees who damage the company’s reputation and destroy its goodwill.

Business or moral dilemmas aside, as a general rule, employers can fire employees for off-the-clock conduct or speech. While employees have the right to express their opinions under the First Amendment, their employers have the right to fire them for expressing such opinions. In other words, the freedom of speech, when it comes to employment matters, is a myth!

As with any area of the law, there are several exceptions to this rule:

  1. California, Colorado, North Dakota and New York have off-duty conduct laws that protect employees from being fired for legal activities in which they engage on their own time;
  2. California also prohibits employers from firing employees for political activities;
  3. Some off-the-clock speech may be protected under the National Labor Relations Act, which protects employees’ right to discuss their employment conditions;
  4. Public employees may have more (but not much more) freedom of speech rights;
  5. Employment contracts that have “for cause” termination provisions may affect the employer’s right to fire an employee for off-the-clock statements or behavior.

BOTTOM LINE: The above exceptions are limited, so the general rule that employees have no free speech rights applies in most circumstances, including those where an employee participates in a pro-Nazi march or some other racist activity or speech that brings negative media attention to the company and damages its customer goodwill.  

Leiza litigates non-compete and trade secrets lawsuits in a variety of industries in federal and state courts. For a consultation regarding a dispute involving a noncompete agreement or misappropriation of trade secrets, contact Leiza at Leiza.Dolghih@lewisbrisbois.com or (214) 722-7108 or fill out the form below.

Texas Supreme Court Nixes Employee’s Defamation Claim, Reinforces At-Will Employment Doctrine

Historically, Texas employers have been able to avoid defamation claims from terminated employees by keeping mum about the cause of termination when asked to provide references. However,  some employees were able to bring defamation claims anyway by alleging that because they had to disclose the reason for their termination to potential employers, they were compelled to defame themselves – a so-called theory of compelled self-defamation.  Over the years, several Texas courts of appeals bought into this doctrine, creating a heartburn for many employers.  

However, last week, the Texas Supreme Court closed the loophole created by the doctrine of compelled self-defamation and expressly and unequivocally ruled that such doctrine was not recognized under Texas law.  In Exxon Mobil Corp, et al. v. Rincones, an employee terminated for alleged drug use, brought a defamation claim against Exxon and other parties and alleged the doctrine of compelled self-defamation on the grounds that each time he applied for a new job, he had to repeat his employer’s defamatory statements about himself, i.e. that he used drugs, to others.  The Supreme Court ruled that: 

“We expressly decline to recognize a theory of compelled self-defamation in Texas. In rejecting it, we join an emerging majority of state courts that have considered the issue, including those in Connecticut, Massachusetts, Hawaii, Tennessee, Iowa, Pennsylvania, and New York.”

The court explained that if it were to recognize compelled self-defamation, it would risk discouraging plaintiff employees from mitigating damages to their own reputations and encouraging them to publish defamatory statements just to increase the damages associated with their claim. Furthermore, allowing a claim based on compelled self-defamation would impinge on the at-will employment doctrine, which allows employers to terminate employees for any lawful reason, however unreasonable or careless that reason might be. Allowing these types of claims to proceed, would impose a burden on employers to conduct investigations and make accurate findings before taking any action against an employee or risk being sued for defamation.    

BOTTOM LINE: The Rincones decision reinforces the at-will employment doctrine in Texas and serves as a reminder that employers in Texas may terminate at-will employees for any lawful reason.  Employers, however, should continue to be cautious about disclosing the reasons for termination to third parties such as potential employers looking for references.

Leiza represents companies in business and employment litigation.  If you need assistance with a business or employment dispute contact Leiza for a confidential consultation at Leiza.Dolghih@lewisbrisbois.com or (214) 722-7108.

Why the Appointment of Jeff Sessions as the New Attorney General May Lead to More Trade Secrets Litigation

jeff-sessions-827pngOn Friday, President-elect Donald Trump named Alabama Sen. Jeff Sessions as his pick for the next Attorney General. Sessions is a former U.S. attorney and current senator with lengthy experience with the Justice Department. He is also known as a pro-business conservative, who on numerous occasions has expressed a favorable view of corporate indictments of executives marred in white-collar crimes. 

Sessions co-sponsored the Federal Defend Trade Secrets Act, which became the law this year. The statute allows civil lawsuits to prevent or redress theft of trade secrets in addition to already-existing criminal penalties under 18 U.S.C. § 1832.  His previous publicly expressed views suggest that he will not shy away from indicting big companies and individuals for white-collar crimes, which include theft of trade secrets.  

For example, in 2010, during a confirmation hearing for the U.S. deputy general, Sessions questioned the candidate about the “dangerous” philosophy of not charging companies criminally because of concerns regarding the effect of such charges on employees and shareholders and stated that he “was taught that if they violate a law, you charge them.” 

Trade secret theft indictments have been on the rise over the past several years, prompting an almost unanimous passage of the Federal Defend Trade Secrets Act in the beginning of this year. The uptick in criminal litigation has been accompanied by a blooming civil litigation of trade secrets theft on state and federal level as well.  

Given Sessions’ prior remarks regarding his preference for corporate indictments in lieu of settlements or payment of penalties, as well as his expressed support towards protection of trade secrets, we can expect a rise in corporate indictments arising out of theft of sensitive information (especially when it is shared with foreign companies or states). This will put the spotlight on the rise of trade secrets theft in the country, will garner more publicity for such acts, and will in turn educate the US companies and business owners as to legal remedies available to them in the civil court to remedy trade secret theft.  

In short, Sessions’ expected tough stance on corporate crime, including trade secrets theft and the accompanying publicity will likely result in an increase in civil litigation in that arena as well. 

Leiza litigates unfair competition, non-compete and trade secrets lawsuits on behalf of companies and employees, and has advised hundreds of clients regarding non-compete and trade secret issues. If you need assistance with a non-compete or a trade secret misappropriation situation, contact Leiza for a confidential consultation at Leiza.Dolghih@lewisbrisbois.com or (214) 722-7108.

The Fifth Circuit Reminds that the Interactive Process Under ADA Is a Two-Way Street

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The Fifth Circuit recently found in favor of the City of Austin for firing a disabled employee because he did not attempt to perform his new lighter-duty job in good faith.  After the employee was injured on the job, the city offered him an administrative position as an accommodation because he could not perform manual labor required by his prior job.  

The employee accepted the new job, but began missing work, played computer games and surfed internet, slept on the job, made personal phone calls and applied for other positions within the city while at work.  He also refused to participate in any training that would have helped him perform his new job.  

After he was fired, he sued the city alleging discrimination based on disability and failure to provide him with reasonable accommodation. The Fifth Circuit found no discrimination and emphasized that “terminating an employee whose performance is unsatisfactory according to management’s business judgment is legitimate and nondiscriminatory as a matter of law.”  It further explained the boundaries of the interactive process between an employer and an employee who requests an accommodation for his disability.

Once an employee requests an accommodation based on a disability, the employer and employee must work together in good faith, back and forth, to find a reasonable accommodation. The process does not end with the first offer of accommodation but continues when the employee asks for a different accommodation or where the employer is aware that the initial accommodation is failing and further accommodation is needed. Thus, the process is a two-way street.  In this case, once the employee accepted an administrative position, he had to make an honest effort to learn and carry out the duties of his new job with the help of the training that his employer had offered to him. He certainly had an obligation not to engage in misconduct at work.   Once he had shown no desire to try to succeed in that position, the city had no duty to offer him another job. After all, the ADA provides a right to reasonable accommodation, not the employee’s preferred accommodation.

Takeaway: When an employee requests a reasonable accommodation due to disability, the employer must engage in an interactive process with that employee to determine what reasonable accommodation will help the employee perform his or her duties. Employers should always document the process so that they have proof of engaging in it in good faith.  Employees should also engage in the process in good faith, which means that if an accommodation is granted to them, they should try to take advantage of it. At the end of the day, an employer is required to provide reasonable accommodation, but not necessarily the accommodation requested by the employee.

Leiza is a business and employment attorney in Dallas, Texas. If you need assistance with a business or employment dispute contact Leiza for a confidential consultation at Leiza.Dolghih@lewisbrisbois.com or (214) 722-7108.

 

Breaking News: Texas and 20 States Sue the Department of Labor Over the Overtime Rules


TexasBarToday_TopTen_Badge_VectorGraphicA group of 21 states, including Texas, filed a lawsuit today in the
Eastern District of Texas challenging the U.S. Department of Labor’s new overtime exemption rules that are supposed to go into effect on December 1, 2016, arguing the agency unconstitutionally overstepped its authority to establish a federal minimum salary level for white collar workers.

Back in May, the White House announced that the new overtime rules would go into effect on December 1, 2016.  As I have previously written, the new rules would raise the threshold salary requirements for administrative, professional and executive exemptions from $23,660 to $47,476 annually. They would also raise the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test from $100,000 to $134,004.  Needless to say, many businesses have opposed such a drastic change.  It appears that the states have a problem with it as well.

In the lawsuit, the States argued that they employ many employees who are currently classified as exempt and who would have to be reclassified under the new DOL rules because their salaries do not meet the new DOL salary threshold of $913 per week. Thus, the federal government “could deliberately exhaust State budgets [] through the enforcement of the overtime rules.” 

Raising the question of states rights under the U.S. Constitution, the States argue that the federal government cannot “dragoon and, ultimately, reduce the States to mere vassals of federal prerogative” and that the new overtime rules would do just that by forcing the States to shift resources from other important priorities to increased payroll for certain employees and “effectively impose the [federal government’s] policy wishes on State and local governments.” 

Specifically, the States seek: (1) a declaratory judgment declaring the new overtime rules unlawful and arbitrary and capricious; (2) a temporary injunction preventing the DOL from enforcing or implement the new overtime rules; and (2) a permanent injunction preventing the DOL from enforcing or implement the new overtime rules. 

If the District Court grants the states a temporary injunction prior to December 1, 2016, the DOL might not be allowed to start the enforcement of the new overtime rules on that date.  However, employers should continue to prepare for the new overtime rules as if they are still going into effect on December 1, 2016.  Stay tuned for updates regarding this case . . . 

Leiza is a business and employment litigation attorney in Dallas, Texas. If you need assistance with a business or employment dispute contact Leiza for a confidential consultation at Leiza.Dolghih@lewisbrisbois.com or (214) 722-7108.

At-Will Employment in Texas – What Does it Mean?

kkIn Texas, employment is presumed to be at-will. This means that, absent a specific agreement to the contrary, employment may be terminated by the employer or the employee for any reason at any time. An employer may modify at-will employment but only if it does so expressly and unequivocally.

A Houston Court of Appeals in Queen et al. v. RBG USA recently reaffirmed this long-standing Texas doctrine, stating that the burden is on the employee to “prove that the employer expressly, clearly, and specifically agreed to modify the employee’s at-will employment status.”

Employees will often attempt to bring a wrongful termination claim because they relied on an employer’s promise to keep them employed for a certain period of time or because they understood or believed that they would not be terminated without good cause. However, because of the at-will doctrine, such claims often fail where an employer’s promises are found to be too ambiguous, implied instead of express, or simply unclear.  

For example, oral assurances that an employee whose work is satisfactory will not be terminated without good cause have been previously found to be too indefinite to constitute oral employment agreement. Similarly, general statements about working conditions, disciplinary procedures, or termination rights are not sufficient to change the at-will employment relationship; rather, the employer must expressly, clearly, and specifically agree to modify the employee’s at-will status.

Takeway for Employers: If you intend to have an at-will employment relationship with an employee, i.e., be able to fire him or her at any time for any legal reason, you should include “at-will” language in employment agreements.  This will help ward off any arguments by employees that they were promised a definite-term employment. Consult with an employment attorney to make sure that you structure your employment relationships correctly under the Texas law and that your on-boarding documents consistently reflect that structure. 

Takeway for Employees: If your employment agreement states that your employment is at-will, oral assurances from the employer regarding the length or conditions of employment might not be sufficient to modify the written employment relationship. Consult with an employment attorney when in doubt about your employment status.

Leiza Dolghih frequently litigates employment disputes, advises employers on how to handle troublesome employees, and assists with responding to EEOC charges and investigations. For additional information, contact Leiza at Leiza.Dolghih@lewisbrisbois.com or (214) 722-7108.

Timing Isn’t Everything in a Pregnancy Discrimination Claim

pregnant-worker-375x250The Fifth Circuit Court of Appeals recently joined the Second, Sixth, and Tenth Circuits in holding that where an employer shows that it had legitimate non-discriminatory reasons for firing a pregnant employee (e.g., non-performance), a mere fact that the employee was fired shortly after telling her employer that she was pregnant, doesn’t defeat employer’s stated reasons for termination.

In this case, the employee had a documented history of poor work performance and multiple write ups. Two months after she told her supervisor  she was pregnant, she was terminated for poor performance.  The employee argued that poor performance was just a pretext, but that she was really fired for being pregnant. The employer argued that pregnancy had nothing to do with it and that it had legitimate non-discriminatory for firing the employee.  The employee claimed that another management-employee told her during a social lunch that she was fired for being pregnant, but the court excluded this evidence as hearsay.  So, the only evidence of pregnancy discrimination that the employee could point to was the timing of her termination, which happened shortly after she told the employer she was pregnant.  The Fifth Circuit found that this fact alone was not enough to establish that the employer’s stated reasons for termination were just a pretext. Thus, theemployee must have other additional evidence to support its pregnancy discrimination claim.

TAKEAWAY: Where an employer shows it had legitimate non-discriminatory reasons for firing a pregnant employee, the fact that the employee was fired shortly after telling her employer she was pregnant, without more, won’t be sufficient to establish that employer’s stated reasons for termination were a pretext.

Leiza Dolghih represents both COMPANIES and EMPLOYEES in employment litigation and arbitration proceedings.  If you are facing an actual or a potential employment dispute, contact Ms. Dolghih for a confidential consultation at Leiza.Dolghih@lewisbrisbois.com or (214) 722-7108.

 

9 Basic Steps For Minizing Trade Secrets Theft From Your Company

ArtCaption_DataExplosionLawsuits involving trade secrets theft have become an almost weekly occurrence. In 2015, Fitbit, Nike, Angie’s List, and Oculus Rift became entangled in high-profile legal battles arising out of former employees and competitors allegedly stealing the companies’ trade secrets such as customer lists, software codes, and design patterns. 

Considering the technological progress, with each passing year, more confidential information is stored, shared, and transmitted electronically.  At the same time, the number of devices that employees can use to easily and quickly copy and transmit such information is also increasing every year.  Given these parallel trends, those companies who have not taken stock of their trade secrets and implemented measures to protect them, are extremely vulnerable to having such secrets stolen by disgruntled employees or aggressive competitors, resulting in an irreversible loss of competitive advantage. 

There are simple steps that any business – small or large – can take to minimize the risk of trade secret theft. Here is short list of basic precautions that any company should be undertaking. 

  1. Figure out what trade secrets your business has. What gives you a competitive advantage? Is it a list of repeat customers? Pricing formula? Design patterns? Procedures that your company follows? Business plans? Product development plans? If this information is not publicly available, it most likely qualifies as a trade secret. 
  2. Who has access to your trade secrets? Can all of your employees access the information or is access limited only to key employees or on a “need to know” basis? The less people have access to your trade secrets, the better. 
  3. What systems do you have in place to limit access to trade secrets? Is the information password-protected? Do you have a way of keeping track of who accessed it, when, and for what purpose? Can you lock people out if you discover a security breach? Do you have alarms set for when somebody downloads a large amount of information or uses a personal device to access it?  Do you limit physical access via locked doors, thumb-print access or other security measures? 
  4. Do you have a confidentiality policy? Does your employment handbook include a confidentiality policy? Do all of your employees sign the policy? 
  5. Do you provide confidentiality training? If you have a large company, make confidentiality training part of your on-boarding process. If you run a smaller business, explain to employees what you consider confidential business information and how your expect them to treat it. 
  6. Do your employees sign non-disclosure agreements? If not, 2016 should be the year when all of your employees who work with confidential information sign enforceable Non-Disclosure Agreements (NDA).
  7. Do your vendors, suppliers, joint venture partners, etc., sign non-disclosure agreements?  Anybody – and I mean anybody – with whom your company either does business or plans on doing business – who gets access to your company’s confidential information, should  be signing a NDA before such information is shared with them. 
  8. When employees leave, do they sign a document stating they’ve complied with the NDA? All key employees should have an exit interview, during which they should reaffirm that they are aware of the NDA obligations and they have complied and intend to comply with them.  If an employee refuses to sign such a document, a forensic analysis of his or her devices might be necessary. 
  9. Do you back up devices of the key employees after they leave?  For key employees, before recycling their laptops, blackberries, etc. to be used by others, image those devices so that any evidence of confidential information being copied, transmitted or emailed outside the company is preserved for future investigation and, if necessary, litigation. 

Make 2016 the year that you proof your business against trade secret theft and ensure that it doesn’t fall victim to unscrupulous employees or unfair competition practices from business rivals.

Leiza litigates non-compete and trade secrets lawsuits on behalf of COMPANIES and EMPLOYEES in a variety of industries, and knows how such disputes typically play out for both parties. If you need assistance with a non-compete or a trade secret misappropriation situation, contact Leiza for a confidential consultation at Leiza.Dolghih@lewisbrisbois.com or (214) 722-7108.