Most large employers have employee handbooks, those set of policies that explain things like vacation and sick leave, discipline, etc. Employers will often describe how they are “binding” and must be followed. But, legally, they are not binding, at all. They look thorough and professional and provide some comfort to employees in an uncertain world.

They are generally not binding on the employer. They are nothing more than a guideline.  If the employer included a phrase providing they are not contractual, then they will not be binding. And, most, perhaps all employers do include non-binding type language in the handbook.

A non-compete clause for physicians requires adherence to certain criteria to be effective in Texas. Texas has a state law applicable to physician noncompete agreements.

  •  A physician noncompete must not impinge on a doctor’s access to a list of his/her patients upon his/her departure
  • The departing doctor must have access to the patients’ records when authorized by the patient
  • The physician must not be prevented from providing treatment to an acutely ill patient
  • The agreement must provide for a “reasonable” amount for a buy-out clause, or allow an arbitrator to make a decision on a reasonable amount

See Texas Business & Commerce Code Sec. 15.50 for additional information.

Non-competition agreements have been around for a long time. They have usually been used for saelsmen who have access to cloesly guarded customer lists and to doctors. But, now, they have been uased for hourly employees at a sandwich chain. Jimmy John’s has been sued because it requires employees to agree they will not work for another sandwich chain for two years after leaving Jimmy John’s. The agreements apply to all of the Jimmy John’s 2000 locations. See San Antonio Express News report.

That would significantly affect the ability of a worker to find new employment making sandwiches. For some folks, who live paycheck to paycheck, that is a huge burden. All I can say is some employers have no conscience. 

The folks at Public Justice have written a bog post about the pernicious use of mandatory arbitration by American Apparel, a major U.S. clothing manufacturer. Based on an article in the New York Times, the post recounts the story of Dov Charney, long-time CEO of American Apparel. Mr. Charney was known for such witticisms as "Masturbation in front of women is underrated." He was profiled in Jane magazine in 2004. See article. Indeed, he masturbated in front of the reporter during the interview. How compelling. 

American Apparel required mandatory arbitration agreements for all employees and models. There were at least five claims of sexual harassment by American Apparel employees and one claim that he kept a "sex slave." These women sued in court trying to break the arbitration agreement. But, each time, the court upheld the agreement. No one knows how many claims in total were paid or brought in some secret arbitration proceeding. All this was kept from investors, customers, employees and the public for years. The dirty secret about arbitration is that it is not open court. Whatever happens in arbitration stays in arbitration. 

See Public Justice blog post

Under the Texas Payday Statute, terminated employees are not entitled to their vacation pay when they leave their job.  So explains Russ Cawyer in this post. The same statutory provision applies to sick leave or severance pay.  Such benefits are owed to the employee only if the departing employee has a valid contract providing for those benefits.  You can view the Texas Payday statute here.  


A couple of years ago, Ron Cain was demanding severance pay.  See my prior blog post.  Now, Ronnie Cain and his brother, Gary Cain are facing efforts by the City of Windcrest to seize the office condo they purchased.  Windcrest alleges they purchased the condo with money stolen from the city.  See San Antonio Express News report

The brothers have gone into bankruptcy.  Windcrest is seeking title to the condo, valued at $274,000.  The two brothers have been accused of embezzling $2.8 million given to the city by Rackspace  to upgrade infrastructure.  Ronnie Cain was indicted in 2010, sometime after he"demanded" his severance pay.  I thought it was a "nervy" request then, only more so now. 

My friend, Chris McKinney has written a helpful post about severance agreements.  He answers the question, Should I ask a lawyer to review a severance agreement before I sign it?  Yes, we all should have a lawyer review such an agreement.  Chris lists several good reasons, but he biggest reason is to ascertain whether you have a valid claim or not.  Even if you do not wish to file suit against your employer, you should still understand what bargaining leverage you might have.  Most people do not wish to file suit of any sort.  But, they should still understand what rights they may be releasing in a severance agreement.  Every severance agreement will contain some clause releasing claims against the company.  See Chris’ post

As Chris mentions, you would need a lawyer who specializes in employment law or small business issues. 

An employer can modify the at-will relationship.  An employer can agree to terminate an employee only for "just cause."  Many employers agree to do so so for key employees.  But, how does an employer modify the at-will status of an employee?  in Crystal City v. Palacios, 2012 WL 1431354 (Tex.App. San Antonio 201012) (not for pubication), the employer made "just cause" one of its policies.  The just cause policy appeared to apply to all employees.  The policy provided that an employee would only be fired for just cause.  The San Antonio Court of Appeals, found that language was not binding on the employer.  The policy was too general, said the court.  The court relied on another decision, Montgomery County Hosp. Dist. v. Brown, 965 S.W.2d 501, 502 (Tex. 1998).  But, the Brown decision was different.  In Brown, the Texas Supreme Court found that an oral promise to terminate for just cause could not modify the at-will doctrine.  In the Palacios decision, the policy is in writing. 

Indeed, the Palacios decision conflicts directly with County of Dallas v. Wiland, 216 S.W.3d 344 (Tex. 2007), where the Texas Supreme Court found that a written policy of Just cause would modify the at-will status of an employee. 

The San Antonio Court of Appeals designated its decision as not for publication.  That designation is supposed to mean the court believes the decision only applies to this one specific fact situation and should not apply to other situations.  The decision will not appear in the official reporter of court decisions.  But, in these days of ready access to Westlaw, not appearing in Southwestern Reporter does not mean much.  See the Palacios decision here

I often tell clients or potential clients that in an at-will state, like Texas, your employer can fire you for anything.  They can, for example, fire because you wear a blue shirt to work.  Well, the law firm of Elizabeth R. Wellborn, P.A. in Ft. Lauderdale did just that . . . almost.  They fired 14 employees for wearing orange shirts to work.  See Ft. Lauderdale Sun-Sentinel report.  

According to four workers, they were wearing orange on Fridays simply because they would go to happy hour after work and wanted to easily find each other.  But, an executive called 14 workers into a conference room last Friday and said he understood they were wearing orange as part of some protest.  The executive asked if anyone had an innocent reason for wearing orange.  A worker then mentioned the happy hour plan.  The executive conferred outside with other managers.  He came back in the room and said they were all fired. 

Later, one woman complained she was a single mom with four kids at home and she just got fired for wearing orange to work. Other workers were quoted as saying they wore the orange for the happy hour.  They were not aware of any protest.  There was no company policy regarding orange. The workers were not issued any warnings before the firing about wearing orange.  

It is ironic, because if the employees were wearing orange as some sort of protest, then their conduct might be covered by the National Labor Relations Act which allows workers to discuss conditions at work.  But, regardless of their motivation, I think the law firm of Elizabeth R. Wellborn, P.A. is not a happy place to work. 


I first wrote about this case here.  An arbitrator failed to disclose his relationship with the attorney for one of the parties.  The arbitrator, Robert Faulkner, a former US Magistrate, had long standing ties with the lawyer for one of the parties, Brett Johnson.  The arbitration went well for Mr. Johnson of Fish and Richardson in Dallas.  Arbitrator Faulkner awarded $22 million to Mr. Johnson’s client and $6 million in attorney fees.  

The Fifth Court of Appeals in Dallas overturned the award last June, finding that Mr. Faulkner failed to disclose his prior relationship to Mr. Johnson and that Mr. Johnson deliberately concealed his prior relationship to the former Magistrate.  The court noted that at the outset of the arbitration hearing, both Faulkner and Johnson pretended to be meeting each other for the first time. 

Now, the losers in the arbitration have sued Fish and Richardson, Brett Johnson and the former opposing party for fraud.  See Texas Lawyer report.  The suit appears to be based on a Rule 11 agreement entered into by the parties early in the arbitration process.  In the Rule 11 agreement, Brett Johnson’s client, Jonathan Cooke agreed to arbitrate his dispute and to take the dispute to a neutral arbitrator with JAMS.  A Rule 11 agreement simply describes an agreement between opposing parties which is filed or capable of being filed withe the district clerk. 

As I have stated before, the problem with arbitration is the web of connections between all lawyers and law firms.  In the arbitration world, those connections are not apparent.  If the matter remained in a court of law, where it belongs, there is much greater transparency.  How many more connections are out there of which consumers and employees have no knowledge?  Yet, those same consumers and employees are forced into arbitrations everyday.  Arbitration is premised on the arbitrator and the parties disclosing all prior contacts.  But, if they choose not to disclose, who will know otherwise?