Currently, 23 states and the District of Columbia have medical marijuana laws which allow a lawful level of marijuana use. One question which comes up often in such states is whether an employer can lawfully terminate an employee who fails a drug test. Until now, the answer appeared to be “yes” since an employer has a right to establish its own work rules, and can generally fire an employee for any reason absent a statutory restriction. Even if the employees had a right to use marijuana, they would not have a right to be under the influence at work, which could pose a safety risk or detract from performance.
A recent case out of Michigan, however, has upset this convention wisdom. A Michigan appeals court ruled last week that workers fired for failing a drug test were qualified for unemployment benefits because the medical marijuana law preempted the unemployment law. The appeals court reversed the Michigan Compensation Appellate Commission’s denial of unemployment benefits for three workers, holding that a provision in the state’s medical marijuana law prohibits penalties “in any manner” for those who are legally allowed to use marijuana. In this case, the employees were fired only for failure of a drug test and not for performance reasons or because they were acting intoxicated while on the job.
This decision is expected to be appealed to the Michigan Supreme Court and could very well be reversed. That said, the takeaway from this decision is that these state medical marijuana laws are relatively new and the law in this area is evolving. In some of the more liberal states, there is an increasing tendency for the courts to interpret the laws broadly to protect employees who lawfully use marijuana. Some states have already interpreted their state marijuana laws to not protect employees from termination (e.g., Washington State), while the question is still open in other states. Employers should also be aware of employees using other state laws to bootstrap protections for marijuana users. For example, some states have laws which make it unlawful to terminate an employee who engages in lawful conduct outside the workplace. These laws were originally intended to protect smokers from discrimination, but could easily be construed as providing similar protections to those who engage in lawful marijuana use. The next time you face a termination decision involving a medical marijuana user, it might make sense to consult with legal counsel and double-check the state law. The answer to this question might not be as easy as it looks.
Tomorrow, the Houston office of Cozen O’Connor will be sponsoring an informative seminar, which will include guest speaker Joe Bontke from the EEOC. Joe is the Outreach Manager and Ombudsman for the Houston EEOC office and is an excellent speaker. If you have not signed up, please click on the link below, which has all of the details. Guests can also register at the door.
Joining Joe will be Leila Clewis and Norasha L. Williams of Cozen O’Connor for this seminar being held from 8:30 to 11 a.m. at the Crowne Plaza Houston River Oaks, 2712 Southwest Freeway, Houston, TX 77098. Attending this event will earn you 2.0 hours of CLE – State Bar of Texas and 2.0 hours of CLE – SHRM. There is $40.00 registration fee, which includes valet parking.
The number of discrimination charges filed with the U.S. Equal Employment Opportunity Commission each year has steadily increased over time. And, for some employers, those charges have resulted in EEOC enforcement suits, including both direct lawsuits filed by the EEOC and intervention actions where the Agency joins in the litigation. This briefing will identify the most common and emerging issues that have received particular focus and interest by the EEOC, and will also explore ways in which employers can effectively respond to and defend against charges of discrimination or other EEOC actions. Employers can learn about:
- EEOC’s “Hot Button Issues”
- Developments in the EEOC’s Strategic Plan
- How to Effectively Defend Against an EEOC Claim
- Recent Litigation Trends Involving the EEOC
To register for this event, click HERE.
In many industries, it is common to pay incentives in the form of restricted stock options payable in the future if certain conditions are satisfied. In Exxon-Mobil v. Drennen, decided on August 29, 2014, the Texas Supreme Court reviewed the question of whether a clause in an incentive plan, which allowed the company to declare a forfeiture if the employee left and went to work for a competitor, constitutes a non-compete or just a loyalty bonus. The Texas Supreme Court concluded: “There is a distinction between a covenant not to compete and a forfeiture provision in a non-contributory profit-sharing plan because such plans do not restrict the employee’s right to future employment; rather, these plans force the employee to choose between competing with the former employer without restraint from the former employer and accepting benefits of the retirement plan to which the employee contributed nothing.” The employee, who left Exxon to work for rival Hess Corporation, ended up losing 57,200 shares of Exxon stock.
Notably, the Supreme Court also chose to honor a choice of law provision in the agreement which selected New York law. This choice of law provision was respected notwithstanding the fact that the employee worked in Texas and Exxon is headquartered in Texas. The Court instead relied heavily on the fact that New York has well-developed law in the area of stock and securities because the stock exchanges are located in New York, and Exxon’s stated desire to have uniformity in how its employee incentive agreement are interpreted. Although the Court’s decision was ostensibly rendered under New York law, it appears likely the Supreme Court would have no problem reaching the same result under Texas law as the opinion states “the enforcement of these provisions does not contravene any public policy in Texas” and concludes that loyalty agreements are distinct from non-competes under Texas law.
The takeaway from this case is that employers now have another tool in their tool kit in terms of drafting appropriate agreements to discourage key employees from leaving to work for a competitor. One option is the stick – the non-compete – which will be subject to a rigorous review for reasonableness under Texas law. The carrot option – loyalty bonus – will not be subject to the same strict review for enforceability and can be used either alone or in conjunction with a non-compete. Moreover, for any company that is publicly traded on a stock exchange in New York, the Exxon case lays out the roadmap for ensuring the enforceability of such loyalty agreements by bypassing Texas law altogether.
It has been a busy year for executive orders, especially if you are a federal contractor. Although the President cannot unilaterally implement new employment laws affecting private employers, there has been no shortage of new labor requirements for those doing business with the federal government. Cozen O’Connor just issues an alert entitled “Obama Issues Executive Order Scrutinizing Labor Practices of Federal Contractors,” which can be found here.
This latest executive order, issued July 31, 2014 is entitled the “Fair Pay and Safe Workplaces Executive Order” and contains three parts: (1) requires disclosure to the federal government of all labor law violations over the 3 years preceding the contract; (2) requires written disclosure of certain pay information to employees, including their exemption or independent contractor status; and (3) prohibits pre-dispute arbitration agreements covering claims under Title VII or state law claims related to harassment or sexual assault. The most concerning part of this new executive order is the requirement to disclose labor law violations (which will supposedly be defined by upcoming regulations from the Dept. of Labor). This provision opens up the potential for abuse by unions who target a federal contractor and use the threat of lawsuits and unfair labor practice charges as a means to pressure the company into surrender to avoid losing a lucrative federal contract.
This latest executive order also comes on top of prior orders this year barring employers from discriminating on the basis of sexual orientation or sexual identity, requiring contractors to provide compensation data broken down by gender and race, and also from retaliating against employees who disclose pay information.
Employees at a Chicago plant are picketing over a new employer policy to time unscheduled bathroom breaks and discipline employees who exceed what the company deems as a reasonable amount of time. The company even went so far as to install swipe card systems on the bathroom so that it can track the entry and exit times for all employees. An article providing details of the company policy can be found here.
This case raises the question as to how far an employer can go in punishing employees who would prefer to be in the bathroom than at their work station, and the legal risks associated with such a policy. In this case, the employees chose to exercise their rights to collectively complain about the policy through a union, and this case serves as a good example of how policies which look like they will save money on paper may result in far more expense in the long run. Also, some employers have asked why not just dock the employees’ pay for bathroom breaks? The answer is that federal law (and some states) prohibit deductions for break periods less than 20 minutes where the employee is not completely relieved of work duties (i.e. can leave the facility and use the free time as desired). Short bathroom breaks therefore must be paid.
Another legal pitfall in disciplining employees for excessive bathroom breaks is the risk for discrimination claims. It is not hard to imagine that a pregnant employee or one with a bowel disorder might reasonably require an accommodation in this area. Treating everyone the same might seem like a good idea, but there will likely be the legal need to make exceptions in some cases.
The takeaway from this post is that employee bathroom time can be a risky area to regulate. A better approach is to discipline based on productivity (or lack thereof) as employees who are in the bathroom likely won’t be meeting measurable work requirements.
Today, the Supreme Court issued a long-awaited decision addressing the question of whether three recess appointees to the NLRB passed Constitutional muster. These three NLRB members were appointed by President Obama during a three-day recess in the middle of a Senate term, while it was still in a “pro forma” session. For all practical purposes, the recess appointments occurred over a long weekend. The Supreme Court found this to be an abuse of a procedure that was intended to be used in the rare circumstance where the Senate is out of session and the President needs to quickly appoint an executive branch employee in a position that cannot wait for the Senate to return to work. Notably, the Supreme Court did not decide exactly how long a Senate recess must be to qualify as a “legitimate” recess, but made clear that three days won’t cut it.
The result of this decision is that any NLRB Order issued during the tenure of these three recess appointees will be instantly called into question and potentially invalidated. That is a great “get out of jail free” card to the losing party in any Board litigation, and will likely keep lawyers busy for years sorting out the mess.
For more details, Cozen O’Connor’s Labor & Employment Alert on the decision can be found here.
Working on the Gulf Coast means the annual preparation for the possibility of a hurricane hitting your home or business. For employers, this means preparing a contingency plan for a disaster, and taking proactive measures to address not only the business interruption issues, but also the human resources concerns associated with a storm. Some of the commonly asked questions include:
1) Can an employer require an employee to work during a mandatory evacuation? What if the employee does not come back and turns the evacuation into a vacation?
2) Is an employer required to pay employees who miss work because of weather events like a hurricane? Does it matter if they are exempt or non-exempt ?
3) Can an employer require employees to use accrued vacation time if the business is closed for a hurricane?
All of these questions, and more, are answered in Cozen O’Connor’s “HR Guide for Hurricane and Disaster Preparation”, which is linked here. It is important to note that this guide is primarily aimed at Texas employers. If your business operates in multiple states along the Gulf Coast, you should seek legal advice regarding the specific laws in each state which may apply.
The City of Houston recently joined a number of cities that have passed their own anti-discrimination ordinances in an attempt to add coverage for sexual orientation and trans-gender discrimination, which are not explicitly covered under Texas or federal law. The attached FAQ answers the most common questions about this law, including coverage thresholds, penalties, and the procedure for filing complaints. It is a must-read for Houston employers.
One important thing to keep in mind is that, although federal and state law does not explicitly outlaw discrimination on the basis of sexual orientation or trans-gender status, there have been many courts who have read such protections into the longstanding prohibition of “sex” or “gender” discrimination. Although Houston’s new city ordinance adds a new layer of workplace regulation, perhaps the most important takeaway is that this ordinance will spotlight the new protected classifications and could prompt increased litigation generally in this area of the law.
By Shaan A. Rizvi — The New York Times ran a fascinating article about the proliferation of non-competition clauses in employment agreements throughout the country. As the article correctly notes, non-competition agreements, or non-competes, were traditionally used most often in technology related professions, where employers feared that employees might walk away with company trade secrets and use them for a benefit of a competitor. More recently, however, all kinds of employers – including summer camps, lawn control companies and hair styling salons – have been using them (the summer camp claims its “intellectual property is the training and fostering of [its] counselors”). The increasing proliferation of non-competes has, predictably, led to all kinds of backlash from employees, including a proposal in Massachusetts (already signed by Governor Patrick Deval) to ban them outright except in very limited circumstances. Critics of non-competes argue they stunt innovation and competition, whereas proponents argue that they actually spur economic growth by encouraging companies to invest in their employees.
The full text of the article can be found here.
The debate isn’t likely to end anytime soon, but non-competes are safe for the time being in Texas. The Texas Business and Commerce Code states generally that non-competes are enforceable if they contain limitations as to time, geographical area, and scope of activity to be restrained that are (1) reasonable and (2) do not impose a greater restraint than necessary to protect the employer’s goodwill and business interests. Given the broad legal language, as well as the increasing proliferation of non-competes, savvy employers may want to make it a regular practice to question new hires about whether they’re under a non-compete. Such a move up-front reduces the likelihood of an employer being dragged into unnecessary litigation by an employee’s former employer who claims the employee is violating his or her employment agreement.