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  The evidence in this cased showed that Wittmer conditional job offer was revoked because the background check showed that she had been terminated by her previous employer, which contradicted her representations to Phillips 66 during her job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.

 

Buc-ee’s Repayment Provision in the Employment Agreement Is Declared Unlawful, Likened to Indentured Servitude

Buc-ees 2Last month  I wrote about how Texas employers can require employees to repay the employers’ training expenses related to those employees, even if that means repaying an equivalent of 1/3 of an employee’s salary.   I culminated my article cautioning the companies to make sure that their repayment requirements in the employment agreements do not violate the Texas Free Enterprise and Antitrust Act of 1983. 

Later the same week, the Houston Court of Appeals found that Buc-ee’s did just that by requiring its assistant manager to repay more than $66,000 in salary for leaving her at-will job to go work for another company, which was not even a competitor of Buc-ee’s. 

Here’s a quick look at what Buc-ee’s did, what the Court of Appeals thought of it, and the lessons that Texas employers can take away from this case.

Buc-ee’s’ Employment Agreements

In 2009, Rieves came to work as an assistant manager for Buc-ee’s. The wages arrangement was such that 70% of her salary would be paid on hourly basis and 30% would be paid in flat fee, translating into $14 an hour and a fixed monthly bonus of $1,528.67 (the “Additional Compensation”).

This 2009 Employment Agreement specifically said that Rieves was an “at-will employee” but also stated that she was “required to work” for Buc-ee’s a minimum of five years and had to provide the employer with a 6-month written separation notice.  If she failed to meet these two requirements, regardless of the reason, she had to repay all of the Additional Compensation.

In 2010, Rieves entered into a new employment agreement with Buc-ee’s that contained similar requirements (4 year term and 6-month separation notice) and stated that if Rieves left before 2014, she had to repay a portion of her salary under the 2010 Employment Agreement and the Additional Compensation under the 2009 Employment Agreement. Thus, under the 2010 Employment Agreement, the longer Rieves worked for Buc-ee’s, the more of  her salary she would have had to pay back. 

The Court of Appeals’ Analysis

In looking at the employment agreements, the Court first and foremost noted that Rieves was an “at-will employee,” which, under the long-standing doctrine in Texas, meant that her employment could be terminated by her or Buc-ee’s for good cause, bad cause, or no cause at all. 

Furthermore, the repayment provisions in Rieves’s employment agreements imposed a severe economic penalty on her if she exercised her right as an at-will employee to leave Buc-ee’s.  Therefore, these provisions had to comply with the Texas Covenants not to Compete Act in order to be enforceable.  They did not.

The repayment provisions penalized Rieves even if Buc-ee’s fired her without a cause and they were not related to Buc-ee’s legitimate business interest because they penalized Rieves even if she went to work for a company that was not Buc-ee’s competitor.  Therefore, the repayment provisions were an unfair restraint of trade in violation of the Texas Free Enterprise and Antitrust Act and were not enforceable.

The Lessons for Texas Employers

TexasBarToday_TopTen_Badge_VectorGraphicWhile Texas recognizes the freedom of parties to contract, employers cannot enter into contracts that are illegal.  Under the Texas Free Enterprise and Antitrust Act, “every contract, combination, or conspiracy in restraint of trade or commerce is unlawful.”  Non-competition agreements that are reasonable and are designed to protect a legitimate business interest are an exception to the rule.  Any other restraint in an employment agreement that prohibits an at-will employee from leaving his or her current employer or restricts such employee’s ability to sell his or her skills in the marketplace is likely to violate the Texas Free Enterprise and Antitrust Act.

Leiza litigates non-compete and trade secrets lawsuits in a variety of industries. If you are a party to a dispute involving a noncompete agreement in Texas, contact Leiza at Leiza.Dolghih@lewisbrisbois.com or (214) 722-7108 or fill out the form below.

Breaking News: President Obama Signs Trade Secrets Bill Into Law

Today, President Obama signed into law S. 1890, which will allow companies to sue entities in federal court over allegations of trade secrets theft. Previously, the Senate passed the bill 87-0 on April 4, and the House cleared it by 410-2 on April 27.

“Enacting the Defend Trade Secrets Act is the most significant intellectual property development in years, and it demonstrates that Republicans and Democrats can work across the aisle in seeking to advance important public policies that will benefit the American people and boost our nation’s economy,” Utah Sen. Orrin Hatch (R), the bill’s sponsor, said today in a statement. 

The federal trade secrets statute imposes certain new requirements on  all employers who use non-disclosure agreements with their employees. To make sure that your business is compliant, contact an attorney knowledgeable in this area. 

Leiza litigates non-compete and trade secrets lawsuits on behalf of COMPANIES and EMPLOYEES in a variety of industries, 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.

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.

Is Sales Commission Part of an Employment Agreement? Make it Clear and Put it in Writing. This Goes for Employers and Employees.

moneyA recent case from the Houston Court of Appeals demonstrates how failing to document the exact terms of a sales commission arrangement can result in a loss of such commission for an employee and a costly legal dispute for an employer.

In Colter v. Amkin Technologies, the company hired Colter as a sales director to sell portable drilling rigs. His offer letter stated that he would get $4,000 a month salary and a commission, the structure of which would be determined at a later time.  The parties never drafted or executed a written agreement detailing the terms of the commission structure.

After Amkin terminated Colter’s employment citing his lack of productivity, Colter sued the company for breach of contract claiming that after he was hired, Amkin’s president orally agreed to pay Colter 3% commission on each sale he made.   Not surprisingly, the president denied making such a promise and testified that based on the commission arrangements made with other sales directors, he would have never offered Colter a guaranteed 3% commission.  Furthermore, the history of commission payments to Colter showed that he got 3% on some sales, but less than 3% or nothing on others.

At trial, the jury was presented with employer’s president’s testimony, employee’s testimony, and documents showing that the employee did not consistently receive 3% commission on each sale he made at Amkin. Based on this evidence, and lack of a written agreement, the jury found that Amkin never agreed to pay Colter 3% commission on each sale.

Colter appealed, claiming that the jury got it wrong and that their finding was not supported by the evidence, but the Court of Appeals affirmed the original judgment stating that the jury was fully within its rights to find Amkin’s president’s testimony more credible than Colter’s testimony that the parties had an oral agreement regarding the commission structure.

TAKEAWAY FOR EMPLOYEES: When entering into an employment agreement, make sure that all parts of your compensation are clearly spelled out in the agreement. Otherwise, you might end up in a situation where it’s your word against the word of your employer, and a jury of your peers will be deciding on who they believe more.  Furthermore, if you believe that you have an agreement, insist on employer complying with its terms.  Failure to insist that the employer pays you what you believe you are owed, can result in a waiver of your rights and significantly hurt your case down the road if you decide to take it to court.

TAKEAWAY FOR EMPLOYERS: Employers also have a direct interest in writing down the precise terms of the compensation. If Amkin here had a written agreement that stated that Colter’s commission was discretionary, Amkin could have probably avoided the lawsuit.  While it might be tempting to rely on an oral agreement when a working relationship is new and going well, remember that when things go sour between an employer and an employee, their memory of what the terms of the oral agreement are, may diverge significantly.

Leiza Dolghih litigates employment and business disputes. She advises employers and employees on how to minimize the risk of litigation before it occurs and pursues and defends their rights in courts and arbitration.  For more information, contact Ms. Dolghih for a confidential consultation at Leiza.Dolghih@lewisbrisbois.com or (214) 722-7108.