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2024 Employment Law Update

Multistate employers face the daunting task of keeping up with a patchwork of employment laws on the federal, state, and local levels. Jurisdictional variances in remote work, leaves, wage payment and various other regulations continue to present challenges. This article focuses on key employee handbook updates to consider in 2024, a summary of the current minimum wage laws in each state, and state law maps on issues such as pay equity, marijuana, and paid leave.
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Employment Issues in Franchising

In the three years since the California Supreme Court started to apply the infamous “ABC” employment test to California, the franchise business model has been disrupted by the threat that courts may now identify franchise relationships as employment relationships. Adoption of the ABC test in California has influenced potential federalization of the test, under the Protect the Right to Organize Act (“PRO Act”). The PRO Act is legislation passed by the House of Representatives, but not the Senate, in March 2021 that seeks to reclassify independent contractors as employees under the ABC test, and to expand the standard for determining the existence of a co-employment relationship. If the PRO Act becomes law, each of these components could have a substantial and negative effect on franchising. The PRO Act passed the House with bipartisan support; however, it is unlikely the Act will pass through the Senate without Democrats first eliminating the filibuster, which requires 60 votes to invoke cloture on legislative matters and prevents parties with a small majority from voting partisan bills into action. The PRO Act has two principal components, adoption of a federal ABC test to determine if workers are employees rather than independent contractors and adoption of a federal joint employer standard that could render franchisors the joint employers of their franchisees and their franchisees’ employees. The ABC test assumes every worker is an employee rather than an independent contractor, unless the hiring company can prove: (A) the worker will be free from the control and direction of the hiring entity in the performance of the work, both under the contract for the performance of the work and in fact; (B) the worker will perform work that is outside the usual course of the hiring entity’s business; and (C) the worker will be customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed. A franchise relationship might not satisfy the “A” test and a franchisee could be deemed an employee of a franchisor rather than an independent contractor if the franchisor exercised a type or degree of actual control over the franchisee or the franchisee’s employees not customarily exercised by a franchisor to protect the franchisor’s trademarks, service marks and/or trade dress. The current joint employer standard provides that a business will be deemed a joint employer only if it possesses and exercises substantial, direct and immediate control that meaningfully affects matters relating to the employment relationship. The PRO Act conversely provides that joint employment can exist if the purported joint employer has direct or indirect control over the essential terms and conditions of employment, or reserved authority to control those terms and conditions. Some franchisors’ systems policies and procedures indirectly control franchisees’ employees’ activities and as a result, franchisors could once again be sued for the employment practices and policies of their franchisees notwithstanding the fact that the franchisees control the hiring, firing, discipline, wages and when and where work will be performed. This paper addresses the manner in which courts had previously conceptualized the franchise relationship; recent cases that have considered the application of the ABC test to franchise relationships, and whether the analysis of franchise vicarious liability cases is relevant to franchise misclassification claims, before addressing potential avenues for the practitioner to consider should the ABC test become law on a national level.
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2022 Employment Law Update

There have been many noteworthy employment law changes this year from the Biden administration as various agencies are now more or less fully transitioned from Republican to Democrat control. In addition to the shift in the White House, the Supreme Court issued several decisions this year that affected employment law. Despite these changes, one thing has certainly stayed the same, and that is the long-standing impact of the Covid pandemic. Covid has impacted the day-to-day of many, and unfortunately for businesses, it has continued to impact the business operations. Staying abreast of changes in employment law is important for businesses to ensure they remain up-to-date on all legal requirements.
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Employment Law Damages

As the laws governing claims under state law in the Texas Commission on Human Rights Act (“TCHRA”) and related federal statutes under Title VII, ADA, and ADEA are similar, this paper will also be a helpful source for determining employment damages under state law. It will also address some important differences between federal and state law. This paper will discuss the different categories of damages including: (1) economic relief; (2) compensatory and punitive damages; (3) equitable relief; and (4) attorney’s fees. This paper will also identify defenses available to employers for damages.
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The Basics of Discrimination and Retaliation: The Five Ws (and One H) of Workplace Discrimination Law

Fundamentally, to “discriminate” means to treat people, things, or ideas differently, or less favorably, for some reason. Society “discriminates” in that basic sense all the time, and this includes businesses when it comes to employees. Qualification, educational, and experience-based requirements differentiate desirable candidates eligible for a position from those disqualified. But the type of “discrimination” that the laws are concerned with is the unfair and unjustified differential treatment of people on the basis of actual or perceived characteristics. Workplace discrimination statutes define those protected classes.
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2009: A Layoff Odyssey Layoffs and Reductions in Force

The current economic climate has forced many employers to take a hard look at their workforce. Does every job classification contribute value? Can separate positions be combined into one? Are there underperforming employees? Are there areas where reducing force will lead to real cost savings? The answers to these questions often point to a reduction-in-force (“RIF”) which, if implemented, has the potential to save an employer significant labor costs or sink the employer in a mountain of legal fees and liability. Savvy employers will engage experienced labor and employment counsel to examine and analyze the host of legal issues that accompany RIFs, and carefully plan the RIF to avoid claims arising from the various federal and state laws whose acronyms an employer would prefer to see in a bowl of alphabet soup and not in a lawsuit filed against the company.
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Equity Incentive Compensation in Limited Liability Companies

One key difference between equity compensation in alternative entities and in corporations derives from the fundamental difference between the tax consequences of issuing equity in exchange for services in each form of entity. Receipt of stock from a corporation in exchange for services is generally taxable, absent use of an incentive stock option plan, while receipt of interests in an LLC or partnership may be non-taxable if the interests issued are profits interests.
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The Litigation Front in Employment Law

This paper discusses some of the recent developments in employment litigation from the business law perspective. Rather than giving a primer on employment law, this paper covers the areas most frequently litigated within the last year. It will also briefly discuss why cases go to trial and how to best present the cases from an employer’s perspective.
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Changes in the Employment Law Landscape Under the New Administration

During the last year of his tenure, President Obama’s administration released a flurry of rule updates, regulatory changes, and enforcement guidances that significantly impacted numerous areas of employment law. Many of those changes were challenged in courts, and many of those challenges resulted in injunctions and further uncertainty. Fanning those flames of uncertainty, the Trump Administration halted some of those challenges in the court system and reversed course on other regulatory changes and guidances. The Trump Administration’s actions have already brought significant changes to the federal government’s approach to employment issues. In addition to his theme of de-regulation, the Trump Administration is also reversing course on several Obama-era initiatives and guidances. One thing is certain—the area of employment law is ever-changing and fluid with the new administration. This paper highlights some of the more important developments to date, and those that are likely to occur in the future.
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Compensation Strategies for the LLC

An LLC taxed as a partnership is one of the most flexible entity forms available today for allocating ownership interests. Unlike the cor porate model, where profits are allocated strictly pro-rata on the basis of the number of shares owned, management and owners of an LLC have virtually complete freedom to allocate profits among members so long as the allocation has "substantial economic effect" under IRC Sec. 704(b).
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Risk Management: Fundamentals of Wage and Hour Law

This paper’s focus is on federal wage and hour law as codified in the Fair Labor Standards Act (“FLSA”), which establishes a minimum wage and an overtime standard for hours worked in excess of 40 for covered employees. Employers should also be advised that companies engaged in federally financed construction, supplying goods or materials to the federal government, and providing services to the federal government are subjected to various other federal wage and hour laws including the Walsh-Healey Act, the Davis-Bacon Act, and the Service Contract Labor Standards Act. In addition, some states (and even some cities) have their own wage and hour laws, which may impose a higher minimum wage and/or additional wage requirements including provisions for breaks at regular intervals and additional overtime regulations. Because federal wage and hour laws do not generally preempt state law, employers must comply with each applicable law, and where applicable, the law most favorable to the employee will control. As a result, employers with multi-state operations must consider which laws apply to which employees and structure pay policies accordingly.
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Hot Topics in Employment Law

There have been several interesting developments with respect to federal employment laws in 2015. For example, the National Labor Relations Board’s (NLRB) Office of the General Counsel issued guidance regarding employer rules and policies. The NLRB also issued a decision setting a new and broad standard for joint employer liability. This paper provides a brief summary of some of the recent NLRB developments, wage and hour developments, and discrimination developments in 2015.
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Covenants to Not to Compete and Injunctive Relief

Almost every case involving non-competes and trade secrets deals in some fashion with injunctive relief. In fact, these cases are typically won or lost at the temporary injunction stage. For example, from the employee’s perspective, a former employer seeking injunctive relief will inevitably claim that damages are impossible to calculate in an effort to buttress its claim of irreparable harm—a necessary component of obtaining injunctive relief. If the injunction is denied, however, the former employer is left with the herculean task of quantifying these otherwise “impossible to calculate” damages. Thus, if an employee can successfully rebuff efforts by his or her former employer to either enforce a non-compete covenant or obtain the substantive equivalent through a temporary injunction preventing him from working for a competitor, that employee has essentially gutted his former employer’s ability to get any relief at all. Similarly, if an employer can obtain injunctive relief, an ultimate ruling on the non-compete may be unnecessary given the amount of time it takes to get to trial. Understanding both the substantive and procedural requirements for obtaining a TRO/TI—as well as their practical application—is, therefore, critical in either obtaining or defeating an injunction.
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The Bad and the Ugly: Wage and Hour Law and Litigation

The Fair Labor Standards Act ("FLSA") was enacted June 15, 1938 with the stated purpose of improving "labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency and general well-being of workers." 29 U.S.C. § 202. It is the most comprehensive U.S. legislation governing the payment of wages to employees. 29 U.S.C. §§ 201 et seq. The FLSA: (1) requires payment of a minimum wage; (2) requires payment of overtime wages to covered employees for hours worked in excess of 40 per week; (3) mandates equal pay for males and females doing equal work; (4) restricts employment of child labor; and (5) requires certain recordkeeping with respect to wages and hours. The FLSA is administered and enforced by the Wage and Hour Division ("WHD") of the United States Department of Labor ("DOL"). The Texas Business Organizations Code (the "TBOC" or the "Code") was a substantive codification of the prior Texas statutes governing non-profit and for-profit, private-sector entities. Those statutes consisted of the Texas Business Corporation Act ("TBCA"), Texas Miscellaneous Corporation Laws Act ("TMCLA"), Texas Limited Liability Company Act ("TLLCA"), Texas Revised Limited Partnership Act ("TRLPA"), Texas Revised Partnership Act ("TRPA"), Texas Non- Profit Corporation Act ("TNPCA"), Texas Real Estate Investment Trust Act ("TREITA"), Texas Uniform Unincorporated Nonprofit Associations Act ("TUUNAA"), Texas Professional Corporation Act ("TPCA"), Texas Professional Associations Act ("TPAA"), Cooperative Associations Act ("CAA") and other pre-existing provisions of Texas statutes governing private entities.
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An Overview of the Arbitration of Employee Disputes In Texas

Arbitration is here to stay. Driven by what parties perceive as deficiencies of the formal judicial system, including expense, protracted length, gamesmanship, belligerency and wastefulness, arbitration has grown exponentially in the last ten years. Because of its confidentiality, empirical statistics are difficult to come by. Nonetheless, the American Arbitration Association, probably the largest administrator in the world, notes a 46% increase in total case filings 2007 to 2012 — i.e., from 127,729 to 187,596 cases per year (including commercial, employment, labor, construction and nofault issues). The Financial Industry Regulatory Authority (“FINRA”), where arbitration is mandated in agreements with securities brokers, notes an average caseload of 6,822 case per year. See www.finra.org/ArbitrationandMediation/FINRADisput eResolution/AdditionalResources/Statistics/index.html. Courts and legislatures, both federal and state, continue to sanction this trend. Given the $200 to $300 billion annual cost of civil litigation, arbitration’s dramatic increase must be viewed as a seismic shift in the notions of justice in this America. Formal studies also confirm general public acceptance of the process. See, e.g., Business-to-Business Arbitration in the United States: Perceptions of Corporate Counsel, Rand Institute for Civil Justice (2011), www.rand.org/content/dam/rand/pubs/technical_report s/2011/RAND_TR781.pdf; Dispute-Wise Management: Improving Economic and Non-Economic Outcomes in Managing Business Conflicts American Arbitration Association (2003)
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