San Antonio Employment Law Blog : San Antonio Employment Lawyer & Attorney : Thomas Crane Law Firm : South Texas, Bexar County TX Wage & Discrimination Issues

A frequent question arises regarding when an employee is an independent contractor and when is he just a regular employee.  Many employers have moved to using independent contractors instead of employees.  The status of independent contractor can save the employer significant amounts of money in employment taxes, social security payments, etc.

But, the IRS understands that employers have an incentive to stretch the truth regarding an employee's status.  Department of Labor understands this and the courts understand this.  So, every entity has some test to determine whether an employee is truly independent.  Kevin Christensen has written a nice summary of the different tests to determine whether an employee might be considered an independent contractor at his California Employment Blog.  You can also look at a helpful summary provided by the DOL.  

Among the most important factors is 1) the degree and nature of control of the work by the supervisor.  If the supervisor simply asks that a wall outlet be installed, then that employee performing the work may be a true independent contractor.  But, if the same supervisor instructs the employee to use 220 gauge Romex, specifies where and how to tie into existing wiring and provides the Romex wire and tools, then that so-called independent contractor may actually be an employee.  

Another important factor is 2) how integral is the work to the business.  If the business is a bakery, then it seems unlikely they would also be in the business of installing new wall outlets.  A baker is more likely to let the electrician decide how he wants to install a new wall outlet. 

Another important factor is 3) the extent to which the employer provides the equipment and materials of the purported independent contractor.  If a stationery supplier hires truck drivers via a third party, but provides the truck, then it is less likely that the third party is the true employer.  That is, if a) ABC Stationery Supplies provides the truck, b) XYZ Trucking Co. claims to be the true employer but does nothing other than issue a pay check, then it appears that the truck driver is actually employed by ABC Stationery.  As the DOL notes, context is everything.  These tests depend a great deal on individual facts.  

Perhaps the least relevant factor is how is the alleged employee paid.  Obviously, a true independent contractor would be paid by the project, not by the hour.  But, the courts recognize that employers have incentive to "fudge" paychecks. 

The independent contractor distinction is very important. if an employer mis-classifies an employee as an independent contractor, then that employer could become liable for unpaid overtime for a time period of years. 

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In a recent opinion, the Texas Supreme Court clarified one key aspect of whistle blower complaints.  The Texas Whistleblower statute applies to government employees only.  See Tex. Govt.C. Sec. 554.001, et seq.  The statute protects an employee who reports a possible violation of law.  The report or question must be to an "appropriate law enforcement authority."  Tex. Govt. C. Sec. 554.002.  Some court decisions have allowed reports to the employer in certain situations, such as if the employer has an office that is responsible for internal enforcement of the law in question.

But, now, according to the Texas Supreme Court, "appropriate law enforcement authority" means the entity that actually "promulgates regulations" or "enforces" the law in question or "pursues criminal violations."  In Texas A&M Kingsville v. Moreno, the employee reported a violation of the law regarding tuition waivers to the President of the University, and to the Texas Higher Education Coordinating Board.  Her supervisor, Dr. Saban, was claiming a tuition waiver for his daughter, to which he was not entitled.  Dr. Saban became angry, and accused Ms. Moreno of butting into his personal business.  But, the school required the supervisor to pay back the school the amount of the discounted tuition.  TAMU-K essentially agreed with Ms. Moreno. 

Twenty-one days later, Dr. Saban personally terminated Ms. Moreno.  She filed suit.  The employer moved for summary judgment, which was granted.  On appeal, the summary judgment was reversed.  TAMU-K appealed. 

The president has the authority to enforce the law within the university, noted the Supreme Court. The Supreme Court addressed her report to the HECB in a footnote.  In that footnote, the Court found that Ms. Moreno did not report a violation of law.  She merely asked questions about whether what Dr. Saban was doing satisfied the requirements of the tuition waiver law.  According to the Supreme Court, she did not mention the name of Dr. Saban or otherwise indicate her supervisor was violating the law. Yet, in her brief, the employee said the opposite, that she reported Dr. Saban's apparent improper use of tuition waiver to an official with the HECB. 

In resolving a motion for summary judgment, the court is supposed to accept the employee's version of the facts.  The Texas Supreme Court seems to have ignored that fundamental principle.   See decision here.  The Court appears to agree that the HECB would constitute the appropriate law enforcement authority for purposes of tuition waivers.  

But, disregarding the non-movant's version of the facts is a significant error.  The employee has evidence that Dr. Saban prevaricated.  Dr. Saban claimed that the A&M Chancellor, Mike McKinney, told him to terminate Ms. Moreno.  But, Mr. McKinney denied telling him to do so and said he would not do that.  Ignoring the non-movant's version of facts when the employee impeaches the key witness for the employer is an egregious error by the Court.  Indeed, to obtain the tuition waver, Dr. Saban completed a form in which he falsely claimed to be teaching more than part-time.  He had to know this representation was false when he made it. 

On several levels, the Supreme Court committed error in this decision.  Worse, these are the sort of errors that should have been apparent to the Court.  The Court issued this decision without oral argument,  a step usually reserved for cases in which the answer seems apparent.  This is not such a case.  The facts and the legal issues are complicated.  The Court devoted less attention to this suit than it deserved.  

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The nonpartisan Government Accountability Office looked into the Wage and Hour Division.  Wage and Hour is the division of  the Department of Labor that investigates violations of the Fair Labor Standards Act.  When your employer fails to pay you your wages, you can file a claim with Wage and Hour Division.  Unofrtumnately, GAO found wage and Hour provides very poor service.

GAO had fictitious employers and employees call Wage and Hour with various questions.  They found Wage and Hour provides inaccurate information, it discourages wage claimants from filing a claim and even ignored a fictitious report of child labor at a meat packing plant.  See the complete GAO report here.  Read Chris McKinney's take on the report here.  As Chris says, you may be better off filing a lawsuit with an employment lawyer than relying on Wage and Hour Division.  

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Many times an employer's stated reasons for an unlawful discharge will change over time.  The first occasion an employer offers its reasons is when it fires the employee.  But, often, a supervisor will not provide any reasons at the termination.  Or, there may not be an actual face-to-face meeting when the employee is terminated. The next time an employer would have to explain its reasons for the termination is the "position statement" to the EEOC.  When a complainant files a charge of discrimination, the EEOC requires the employer to explain the circumstances of the termination.  This explanation is known as the "position statement."  

In a large corporation, the position statement is typically prepared by a Human Resources representative or the general counsel.  It is important to get the facts straight, because that position statement is part of the file forever.  It can be used to impeach the employer.  That is what occurred in Miller v. Raytheon, No. 11-10586 (5th Cir. 5/2/13).  In this case, Mr. Miller worked for Raytheon or a predecessor company for almost 30 years.  Under a new boss, he received a poor evaluation in 2007.  Mr. Miller was included in a RIF in 2008 under questionable circumstances.  He was then reviewed for other positions at Raytheon.  He was offered no other positions, even though he was qualified for several.  At a meeting with HR, he was told Raytheon could not offer him any position due to the one poor job evaluation. 

On his own, Mr. Miller applied for four positions at Raytheon but was not selected.  Mr. Miller filed a charge of discrimination with the EEOC based on age.  The employer provided a position statement to the EEOC which claimed Raytheon had a policy in which it would "search every corner of the earth" and "exhaust all opportunities to place" an individual before releasing him in a RIF.  The letter erroneously said Mr. Miller had not applied for any positions at Raytheon after he was laid off.  

Even though the position statement was sent after the layoff, the employee was allowed to use this letter at trial.  The jury found in favor of Mr. Miller and awarded him some $17 million. 

The employer moved for judgment as a matter of law seeking to overturn the jury verdict.  But, in the opinion, the Fifth Circuit said the letter presented circumstantial evidence of pretext and cited caselaw finding that evidence of dissembling alone can show discrimination.  The court noted the discrepancies in the letter.  At trial, the employee also provided evidence that two younger employees were eligible for the RIF but were not laid off.  "In totality," said the Court, this was sufficient evidence on which the jury could choose not to believe the employer's explanation.  

The Court agreed with the employer that each piece of evidence in isolation might not support the jury verdict.  But based on the accumulation of evidence and the credibility determinations of the jury, this was sufficient evidence.  See decision here. 

It is rare enough that the Fifth Circuit affirms a jury verdict.  It is even more rare when the evidence is largely circumstantial.  The Court made the right call for the right reasons.  The court should indeed look at the "totality" of the evidence.  In fact, in most cases, the employer tries very hard to look at each piece of evidence in isolation.  But, terminations do not happen in a vacuum.  At least this time, the Fifth Circuit agrees. 

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To Kill a Mockingbird is a book about a lawyer doing the right thing.  But, it seems the author's agent did the wrong thing.  Harper Lee has sued her agent, Samuel Pinkus, for allegedly tricking her into signing away her rights to the book with no compensation.  Mr. Pnkus is the son-in-law of Ms. Lee's long-time agent, Eugene Winick.  Harper Lee, now 87, says Mr. Pinkus took advantage of her failing eye sight nd hearing to transfer the rights to the book to him in 2007. 

Ms. Lee has filed suit in New York City.  Mr. Pinkus took over her account when Mr. Winick became ill a few years ago.  The reclusive author says she has no memory of signing away her rights to the book.  See Manchester Guardian report. 

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Yes, there is still a war on.  A son of the City Manager for Olmos Park died from his injuries in a bomb blast.  SSGT Michael H. Simpson died from injuries from an IED while riding an ATV.  SSGT Simpson was the son of Michael W. Simpson, the City Manager for Olmos Park, Texas.  Michael W. Simpson is retired from the U.S. Army.  SSGT Simpson had a wife and two young sons and was posted to Ft. Lewis, Washington.  He had only been in the war zone two weeks when he was injured.  See San Antonio Express news report. 

It has been several months since I mentioned the name of a deceased soldier with a connection to San Antonio.  But, yes, the war still continues and Americans are still risking their lives for us here at home. 

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A jury awarded $240 million to 32 men with mental disabilities in Iowa. Their employer was Henry's Turkey Service, which had been previously assessed $1.76 million for underpaying men with disabilities.  See my prior blog post about that jury trial.  The $240 million awarded in Iowa includes $2 million in punitive damages for each of the 32 men, plus $5.5 million in compensatory damages (i.e., emotional suffering damages) for each of the 32 men.  See Des Moines Register report.  There are caps on the amounts that can be awarded under the Americans with Disabilities Act, so, I am sure, these amounts will be reduced.  

These men were shipped to Iowa from Texas to work at the iowa plant.  For 40 years, the employer shipped men with disabilities from Texas to the Iowa labor camp.  They were paid .41 cents per hour.  But, the court limited the jury award to the last two years of the camp's operation.  

Robert Canino, the chief EEOC lawyer in Dallas, was the lead attorney representing the 32 men.  The suit charged Henry's Turkey Service with violations of the Americans with Disabilities Act.  The 2011 lawsuit was based on the Fair Labor Standards Act and alleged wage violations. 

The men were not afforded the services usually provided to persons with disabilities.  They were not enrolled in Medicaid or allowed other services.  They were kept as property, said Mr. Canino.  They lived in an old schoolhouse converted into a bunkhouse.  

The company president, Kenneth Henry, of Proctor, Texas, testified he was not aware of any abuse other than two incidents.  He said that over 45 years, he had sent 1500 men with mental disabilities to labor camps in various states.  Evidence showed some men were handcuffed to their bunk at night.  

What a way to treat persons with mental disabilities.  Good for the jury that held the employer accountable. 

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Federal employees who are members of a union have the right to have a union representative present during an interview with management when the employee believes he will be subject to discipline.  That is an invaluable right when you are "under the gun" and feel like your job is in jeopardy.  Most states that have addressed the issue also allow Weingarten rights to members of public sector unions.  But, now, we know that public sector employees do not have that right.

In the decision of City of Round Rock v. Rodriguez, the Texas Supreme Court found that Texas Labor Code 101.001 does not include that right.  Chief Justice Jefferson and others dissented.  Texas is in the minority of states regarding this important union protection.  See the opinion here.  Prior lower court decisions affirmed Weingarten rights.  Texas law already forbids strikes by public sector unions.  Now, the protection from over-bearing supervisors is diminished. 

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The Federal False Claims Act, also known as qui tam lawsuits, have been around since the Civil War.  In Fact, the False Claims Act was passed to deal with the many fraudulent government purchases during the Civil War.  The Federal government was defrauded many times by contractors during the Civil War.  The act allows a person who first reports fraud on the government to receive 30% of any money recovered.  The trick, so I am told, is to get the U.S. Attorney to join in the lawsuit.  One can expect the U.S. Attorney or the Department of Justice to join only the strongest qui tam lawsuits. 

Department of Justice has indeed joined in Floyd Landis' lawsuit for fraud against Lance Armstrong for defrauding the Postal Service. The suit alleges that Mr. Armstrong defrauded the government when he accepted payments for riding on their cycle team.  According to the DOJ Complaint, team officials assured the Postal Service for years that the cycle team was not doping.  

The Postal Service paid $40 million to be the sponsor and paid Lance Armstrong $17 million.  But, under the False Claims Act, the government and Floyd Landis must also show that the government was harmed.  According to the Armstrong response to the lawsuit, the Postal Service gained some $139 million due to the Armstrong brand.  The defense cites the Postal Service's own internal study.  See CBS news report. 

So, the extent of the harm to the U.S. government could be a problem.  But, yes, when you get the US Attorney involved, the lawsuit has truly begun. 

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