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June 2010 Archives

Does Your Employer Owe You Commissions?

The Great Recession seems to have spawned an increase in commission disputes.  This could be because money is tight and employers are looking for reasons not to pay their employees, or it may be that more people are out of work and can now assert such claims without fear of losing their jobs.  Whatever the reason, I thought it might be helpful to give an overview of the law in Texas as a it relates to the payment of commissions for employees-at-will, i.e., those employees who do not have a contract of employment for a specific term. Commission agreements can be verbal. Contracts for the payment of commissions do not have to be in writing to be enforceable.  The issue is almost always, "What was the agreement of the parties?"  If you were told by your employer you would receive a commission of 10% of gross sales, that is your agreement.  Legally, it doesn't matter that it's not in writing, although it may matter when it comes to proving the terms of the agreement. When a commission is owed. An recurring issue in commission cases is the issue of when the commission is owed.  Is the commission owed when the sale is made, when the customer is invoiced or when the customer pays, or at some other time?  This issue is resolved by ascertaining the agreement of parties.  If the terms of the commission agreement are in writing, and clearly state when the the commission is owed, and the course of conduct between the parties is consistent with the writing, there should be little dispute.  You would be surprised, however, how often employers fail to put their commission plans in writing. When an agreement can be changed. Unless you have a written agreement to the contrary, if you are an employee-at-will, your employer, after notice to you, can change the terms of your commission agreement at any time and by remaining employed you impliedly agree to those new terms.  There are two exceptions however.  First, an employer cannot change the terms of your agreement retroactively, only prospectively.  If you have already closed a sale, you are entitled to the commission upon which you previously agreed.  Second, if your employer terminates you immediately before a sale to keep from paying you a commission, you are likely to be able to recover part or all of the commission you would have been due but for the termination. I hope this helps clarify this issue for you.  Small employers can take a big step toward avoiding litigation on these issues by simply putting in writing the terms of the commission plan, ensuring their employees receive the plan and, of course, complying with their obligations to their employees under the plan.  GSF

Salaried Employees Can Be Entitled To Overtime

"Am I entitled to overtime if I'm a salaried employee?"   I get this question a lot.  The question arises from an understandable misunderstanding of wage and hour laws, principally the Fair Labor Standards Act ("FLSA"). How your employer classifies you is irrelevant. That your employer has classified you as salaried does not mean you are not entitled to overtime.   The issue is whether your job duties entitle you to overtime under the FLSA. Everyone is entitled to overtime except those who are exempt. The FLSA, with some qualification, starts from an assumption that every employee who works more than 40 hours in a workweek is entitled to overtime.  The law then sets forth a number of exemptions.  If your job duties (not job title) fall within one of those exemptions, you are probably not entitled to overtime (I say "probably" because of one other consideration I address below).  Some exemptions include administrative employees, executives, professionals, outside salespersons, computer professionals (earning above a certain amount), movie theater employees and employees delivering newspapers.  These are only a few of the exemptions. Even if your job duties exempt you from overtime, you still may be owed for overtime. Even if you are otherwise exempt, your employer can lose the benefit of the exemption by failing to pay you a true salary.  For example, if when you are late to work or miss a few hours here or there and your employer deducts from your salary that week, the exemption may be lost.  A salary generally means you are entitled to the same amount of pay each week regardless of how much you work.  If your employer wants to pay you the same for 60 hours of work as for 40, then he must also pay you the same for 30 hours.  This is subject to some exceptions.  An employer need not pay you for any week in which you perform no work, and deductions from pay may be made when you are absent from work for one or more full days for personal reasons.  There are other exceptions as well, and outside salespersons need not be paid a salary to be exempt. So, if you think you may be entitled to overtime, the issues are 1) whether or not your job duties fall into one of the exemptions; and/or 2), whether your employer has unlawfully deducted from your pay and therefore lost the benefit of the exemption.  GSF

What Makes A Sexual Harassment Case

What makes a "good" sexual harassment?  Obviously, no sexual harassment is good, but when it comes time for an attorney to decide whether to gamble his time and money on a case, some cases are better bets than others. What makes a good sexual harassment case is not necessarily intuitive.  Sexual harassment law, while based on statute, has been developed by judges trying to balance the interests of victims against those of companies with rogue managers who violate the company's sexual harassment policy. Consequently, I thought it might be helpful to identify what make a case more easily winnable than others. Here's some to of the things we look for and why. 1. A big company. This is an important consideration because the federal and Texas statutes governing sexual harassment claims limit the amount of damages a victim of sexual harassment can recover for mental anguish and punitive damages combined based on the number of employees in the company. The limits are: 15-100 employees ($50,000); 101-200 ($100,000); 201-500 ($200,000); 501+ ($300,000). Because sexual harassment cases are often more about mental anguish than lost wages, the size of the company becomes an important consideration. 2. Sexual harassment by a manger. The higher level the manager the better, and if the sexual harasser is the president or CEO, even better. This is because companies will generally be responsible for the conduct of its managers. If the sexual harasser was a coworker of the victim rather than a manager, the victim may have to show she reported the sexual harassment and it continued or that the company knew or should have known of the sexual harassment and failed to prevent it. 3. Touching or groping. For hostile work environment sexual harassment claims, a victim must show conduct of a sexual nature so severe or pervasive that it altered the terms and conditions of employment and created a hostile or abusive work environment. Courts grapple with line drawing in sexual harassment cases. They don't want a company having to defend a lawsuit because a boorish manager made one or two sexual remarks, but neither do they want to leave victims of sexual harassment without recourse. If a sexual harassment claim consists of only a few sexual jokes or remarks, it is more difficult to show severity or pervasiveness. Touching and groping is obviously more severe and more likely to pass muster. 4. Other victims. By the time someone calls my office to complain about a sexual harasser, it's likely she is not his first victim. We almost always look for other victims and often find them. The truth is the more aggressive the sexual harasser is, the more likely it is he's gotten away with it in the past and has been emboldened by the lack of consequences to his actions. Finding other victims helps prove the conduct complained-of actually occurred and that the company was lax in not preventing it. It also frees up juries to award the victim the full amount of her damages. Just because you don't have all these factors in your case doesn't mean you don't have a case. We've done very well in the past for victims who didn't. But if you have all these factors, you shouldn't be afraid to call a lawyer because it's likely you have a good case and by asserting a claim you could protect others from becoming victims. GSF

What The Family & Medical Leave Act Means For You

The Family & Medical Leave Act ("FMLA") provides important protections for employees. Here is a general overview of what the FMLA means for you as an employee, but keep in mind the FMLA is considerably more detailed than what I've given you here. Employer coverage. The FMLA only applies to employers with 50 or more employees for each working day during each of 20 or more calendar weeks in the current or preceding year. Employee eligibility. An employee is only eligible for FMLA leave if employed for at least 12 months with the employer and having worked at least 1250 hours during that period. However, if the worksite where the employee is employed employs less than 50 employees and the total number of employees employed by that employer within 75 miles of that worksite is less than 50, the employee is not eligible for FMLA leave. Leave. An eligible employee may take up to 12 workweeks of leave during any 12-month period of time for one or more of the following reasons:

Protection For Employees Participating In The Judicial System

Employment law is not always rational.  For example, in Texas, except in limited circumstances, an employee can be terminated for reporting illegal conduct.  Ridiculous I know, but our legal system is not designed to provide a remedy for every wrong, only those Congress or the State legislature has chosen to address. One area where Texas got it right is in protecting employees who participate in the judicial system.  It would be an odd system that required citizens to respond to subpoenas and juror summons but allowed their employers to terminate them for doing so.  Under Texas law, you are protected for participating in the legal system in three different capacities. 1.  As a juror.   A private employer may not terminate an employee because the employee serves as a juror.  "[S]erves as a juror" has been interpreted as including showing up to claim a statutory exemption.  So, one need not be actually picked as a juror to be protected from termination.  Juror retaliation cases are somewhat rare.  However, I've handled a few, and they tend to be strong cases.  The statute provides for reinstatement and not less than one and not more than five year's lost wages, as well as attorney's fees. 2.  As a subpoenaed witness.  An employer may not "discharge, discipline, or penalize in any manner" an employee for complying with a subpoena to appear in a "civil, criminal, legislature, or administrative proceeding."  An employee who is the victim of this type of discrimination is entitled to reinstatement, up to six months of lost wages and attorney's fees.  3.  As a party or witness in a discrimination case.  An employer may not discharge, fail to hire, promote or discriminate in any manner against a party or witness in an employment discrimination case (regardless of whether that witness is subpoenaed).  An employee of this type of discrimination may seek reinstatement, economic damages, as well as non-economic damages and punitive damages (subject to a statutory damage cap) and attorney's fees. Federal law also prohibits retaliation against jurors and witnesses.  In fact, under federal law a party who is discriminated against because of juror service may be able to have an attorney appointed and paid for by the government if he can't afford one.  So, if you are summoned to jury service, subpoenaed as a witness, or asked to testify in a employment discrimination case, you should do so.  You are protected against retaliation at your place of employment, and you never know when you may need someone to testify in a case you in which you are involved.  GSF

How To Win An Unemployment Claim Hearing

The Texas Unemployment Compensation Act provides benefits for qualified individuals in Texas who lose their jobs.  When an individual files an unemployment claim with the Texas Workforce Commission, the TWC will obtain a response from the company and make a preliminary determination.  If the company or individual is unhappy with that decision, the case will then be set for a telephone hearing where the parties can ask questions and present evidence.  Even though the system is designed to function without attorneys, I see individuals making mistakes in telephone hearings that often compromise their chance of obtaining their unemployment benefits.  There are three things to remember when preparing for an unemployment compensation hearing in Texas. 1.  Know the standard.  In Texas an individual is generally entitled to unemployment benefits (assuming he worked the requisite time for his previous employer) unless he was terminated for misconduct or resigned without good cause.  Consequently, if you are terminated for poor performance, laid off or resign for medical reasons you will usually be entitled to benefits.  2.  Stick to the point.  The biggest mistake employees make in these hearings is trying to offer evidence or give testimony about issues that don't matter.  The hearing officer doesn't care that you were a good performer.  She is only interested in whether you were discharged for misconduct or quit without good cause, and she listens all day to employees wasting her time trying to offer irrelevant information instead of giving her the information she needs to make a decision.  Know the standard (see point #1) and make sure your testimony, documentary evidence and any questions you have for the company witnesses are narrowly tailored to show you didn't commit misconduct or resign without good cause, as the case may be. 3.   Learn from the hearing officer's questions.   Listen to the questions the hearing officer asks the company representatives and you will see what is important to her in making her decision.  If she is asking questions about company policies and whether you were given written warnings before termination be prepared to answer those questions when she questions you.  When she questions you, just answer the questions she asks you.  You will be tempted to data dump and just download your whole story on her.  This will only hurt your case and frustrate the hearing officer.  She's asking you a certain question because that information is important to her decision.  Give it to her directly and succinctly. I hope this helps you if you should ever find yourself fighting for your unemployment benefits.  GSF

Why The Lilly Ledbetter Fair Pay Act Is Important

On January 29, 2009, the Lilly Ledbetter Fair Pay Act ("LLFPA") became law.  There was much publicity about it.  Businesses fought it.  Civil rights groups fought for it.  Here's what it means and why it's important.  It all started with a questionable Supreme Court decision. The Supreme Court decision.  In 2007, the United States Supreme Court, in a case called Ledbetter v. Goodyear Tire & Rubber Co., ruled a discriminatory pay claim arose when the discriminatory decision was originally made, not when the employee actually received the pay.  While this may not seem like a big deal, it was actually a devastating ruling for victims of compensation discrimination. What it meant.  The Ledbetter decision meant a company could make a discriminatory decision to pay a female employee less than its male employees and the deadline to file the claim would start running on the day of the decision was made rather than each time the female employee received a paycheck.   So, even though she felt the effects of the discrimination every time she received a paycheck, the company would be off the hook 180 days (or whatever the applicable statute of limitation was) after the original discriminatory decision was made.  Why it was a problem.  Because discriminatory motives are hidden in the heart and mind of the decision-maker, it's not readily apparent to victims of discrimination when they have been the victims of discrimination.  Additionally, because of the short statute of limitations applicable to many civil rights claims (sometimes as short as 180 days), the Ledbetter decision put victims of discrimination in the unenviable position of making a claim against the company they were still working for and risking their job in the process. How the Ledbetter Law solved the problem.  The LLFPA amended federal laws prohibiting discrimination based on age, disability, race, color, national origin, gender, religion and retaliation by clarifying that an unlawful practice occurs every time an employee receives a paycheck resulting from a discriminatory decision, not when the decision was originally made.  This makes sense.  If I decide to punch you in the face weekly beginning on January 1, 2008 and continue to punch you in the face every week after that, I should not be able to hit you with impunity just because you didn't sue me after the first time I hit you.  Effective immediately and applicable to pending cases.  The LLFPA became effective immediately, applies to cases pending on or after May 28, 2007 , and allows a victim who files timely to recover lost wages going back up to two years, if the discriminatory practice had continued for that long.  GSF

Are You Protected From Age Discrimination?

The federal law protecting individuals from age discrimination in employment (the Age Discrimination in Employment Act or "ADEA") does not apply to all employers, and even if your employer is covered you may not be.  Here's the parameters. First, the ADEA only applies to employers with 20 or more employees.  I'll spare you the details about how you determine whether someone is an employee and how long they have to be on the payroll to be counted.  What you should know is that courts will look at whether there were twenty or more employees in the current or preceding calendar year.  So, an employer with 20 employees in 2009 and accused of age discrimination in 2010 cannot escape liability under the ADEA by having a layoff in 2010.   Also, even if the employer does not have 20 employees but that employer is part of a larger enterprise along with a sister, parent or subsidiary company, the law may permit the court to include the employees from the company for determining the coverage issue. Second, the ADEA only prohibits age discrimination against individuals who are over 40 years of age.  I sometimes get calls from people in their twenties who feel they've been discriminated against because they are young.  I have to tell them I'm sorry but that that is not illegal, at least not under the ADEA and not under Texas law.  The good news for individuals is there is no upper limit of protection under the ADEA.  If you are 90 years old and are terminated or turned down for a job because of your age you have a remedy under the ADEA.  The ADEA used to have an upper limit of 70 years, but Congress amended the ADEA and removed it. Texas law (the Texas Commission on Human Rights Act) essentially tracks the ADEA on the parameters of the protection provided, except that only 15 employees are necessary to subject an employer to coverage.  So, bottom line:  if you are over 40 years of age and work for a company with 20 or more employees, you are protected from age discrimination in employment.  That doesn't mean you can't be fired for legitimate non-discriminatory reasons; you can.  It just means you can't be fired because of your age.  GSF

Must Summer Interns Be Paid?

Summer is almost here, and with summer will come interns and the recurring question, "Do I have to pay an intern?"  The short answer is, "It depends." The Department of Labor has derived six criteria from a Supreme Court decision, Walling v. Portland Terminal Co., 330 U.S. 148 (1947), to determine whether the intern (" trainee") is exempt from the Fair Labor Standards Act ("FLSA").  If an individual is subject to the FLSA he/she must be paid at least minimum wage.  The six criteria to determine whether an employer is exempt from paying an intern are:

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