Fiddler & Associates, P.C.
Contact Today
281-653-8377
1004 Congress, 3rd Floor - Houston, TX

July 2010 Archives

Employment Law Provisions Of Dodd-Frank Wall Street Reform And Consumer Protection Act

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act ("WSRCPA").  I have addressed here in previous posts the employment law provisions of the WSRCPA.  For easier reference I have summarized those provisions here with links to the posts. 1.  Amendments to the Commodity Exchange Act. Section 748 of the WSRCPA amends the Commodity Exchange Act by providing a financial award for whistleblowers and protecting them from retaliation. 2.  Amendments to the Securities Exchange Act. Section 922 of the WSRCPA amends the Securities Exchange Act by providing a financial award for whistleblowers and protection from retaliation. 3.  Amendments to the Sarbanes-Oxley Act. Section 929A of the WSRCPA amends the Sarbanes-Oxley Act of 2002 ("SOX") by prohibiting retaliation against those employed by subsidiary and affiliates of publicly traded companies, extending the statute of limitations on SOX retaliation claims from 90 to 180 days, providing for a jury trial and making pre-dispute SOX claim waivers and arbitration agreements unenforceable. 4.  The Consumer Financial Protection Act of 2010. The WSRCPA includes the new Consumer Financial Protection Act of 2010 ("CFPA").  The CFPA creates a Bureau of Consumer Financial Protection that regulates the consumer financial products and services industry. Section 1057 of the WSRCPA is the anti-retaliation provision of the CFPA that protects whistleblowers in the financial products and services industry and provides them with a private cause of action. 5.  Amendments to the False Claims Act. Section 1079A of the WSRCPA amends the False Claims Act to broaden the protections afforded whistleblowers involved in qui tam actions to include those "associated with" the whistleblower.  It also adds a three year statute of limitations. The WSRCPA is consistent in its attempts to protect whistleblowers with more favorable procedures, broader protections and damages and a disdain for employer-mandated arbitration.  GSF

Dodd-Frank Wall Street Reform And Consumer Protection Act (Part V)

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act ("WSRCPA"). This post is the fifth in a five-part series on the employment law provisions of the WSRCPA. This post examines Section 1079A of the WSRCPA, which amends the False Claims Act. The False Claims Act. The False Claims Act ("FCA") permits whistleblowers to bring a lawsuit ("a qui tam action") on behalf of the federal government against federal contractors who have committed fraud against the federal government. Whistleblower Reward Under The FCA. The whistleblower can recover between 15% and 25% of the monies collected by the government as a result of the qui tam action. Popular targets for FCA lawsuits have been defense contractors and those involved in healthcare fraud. FCA Protects Whistleblowers. The FCA protects employees, contractors and agents from threats, harassment, discrimination, demotion, suspension and discharge resulting from their attempts to stop violations of the FCA. Amendments To The FCA. Section 1079A of the WSRCPA amends the FCA to broaden the protections afforded whistleblowers involved in qui tam actions to include those "associated with" the whistleblower.  It also adds a three year statute of limitations. The Takeaway. Section 1079 is consistent with the other employment provisions of the WSRCPA which strengthen the protections of whistleblowers in the workplace.  GSF

Dodd-Frank Wall Street Reform And Consumer Protection Act (Part IV)

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act ("WSRCPA"). This post is the fourth in a five-part series on the employment law provisions of the WSRCPA. This post examines employment-related provisions Section 1057 of the WSRCPA, which is part of the new Consumer Financial Protection Act of 2010 ("CFPA").  The CFPA creates a Bureau of Consumer Financial Protection ("Bureau") that regulates the consumer financial products and services industry. Which Employers Are Affected. The CFPA prohibits a "covered person or service provider" (anyone that offers or provides a "consumer financial product or service") from engaging in certain types of discrimination against employees.  The definition of "financial product or service" found in Section 1002(15) of the WSRCPA is key because it determines who is a covered person or service provider.  This definition is long--too long to list here--and the coverage is broad. Who Is Protected. "Covered employee[s]" are protected.  A covered employee is any individual performing tasks related to the offering or provision of a consumer financial product or service.  This apparently includes anyone from the receptionist to the CEO of the institution. What Is Protected. Covered employees are protected against discrimination or termination on the basis of: (1) having provided, or been about to provide, information to the employer, the Bureau, or any other government authority or law enforcement agency relating to any act or omission the employee reasonably believes is a violation of the CFPA or any conduct prescribed by the Bureau;  (2) participating in a Bureau proceeding; (3) instituting a proceeding under any Federal consumer financial law; or (4) having objected to, or refused to participate in, any activity reasonably believed to be in violation of any law, regulation or standard of or under the jurisdiction of the Bureau. Procedure. Unfortunately the procedure set up for adjudicating these claims is a Byzantine combination of an administrative review by the Department of Labor ("DOL"), with an appeal to the local circuit Court of Appeals, or, if the DOL does not act in a timely fashion in adjudicating the claim, a jury trial in a federal district court.  A claim must be filed with the DOL within 180 days of the violation. Remedies. The remedies available to a claimant include reinstatement, back pay with interest, compensatory damages, costs and attorney's fees.  Like the other employment laws in the WSRCPA, pre-dispute waivers and arbitration agreements are not enforceable. GSF

Dodd-Frank Wall Street Reform And Consumer Protection Act (Part III)

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act ("WSRCPA"). This post is the third in a five-part series on the employment law provisions of the WSRCPA. Sarbanes-Oxley Amendments. This post examines those provisions of the WSRCPA which amend the Sarbanes-Oxley Act of 2002 ("SOX"). SOX Failed To Protect Whistleblowers. In terms of protecting whistleblowers from retaliation, SOX has been a big disappointment.  SOX cost American businesses a lot of money and created lots of work for accounting firms, but it fell well short of protecting employees who valued obedience to law and conscience over a paycheck. The SOX Numbers. Since SOX became law, the United States Department of Labor ("DOL"), who investigates SOX whistleblower claims, has found in favor of whistleblowers only 25 times out of the 1,066 claims filed through June 30, 2010. If you like percentages, that means the DOL finds in favor of whistleblowers only 2% of the time. Why SOX Claims Fail. The reasons whistleblowers don't prevail in SOX claims are essentially three.  First, the DOL is, like most government agencies, understaffed.  They don't have the manpower to thoroughly investigate claims.  Second, retaliation is a matter of intent and DOL investigators don't like resolving cases over issues of intent.  Juries are much better at determining questions of intent. Third, the combination of a ridiculously short statute of limitations (90 days), narrow reading of the law defining protected conduct and who is protected led to the DOL dismissing many cases as a matter of law before even reaching the question of whether there was any retaliation. The WSRCPA takes serious steps toward addressing some of these deficiencies. The Amendments. The WSRCPA amends SOX by changing the statute of limitations from 90 days to 180 days after the employee became aware of the violation. The WSRCPA also extends the anti-retaliation protections to employees of any subsidiary or affiliate whose financial information is included in the consolidated financial statements of a publicly traded company. Lastly, the WSRCPA provides for a trial by jury of SOX claim appealed from the DOL and makes any pre-dispute arbitration or waiver agreement of a SOX claim unenforceable. The Takeaway. The WSRCPA takes some major steps toward helping SOX fulfill one of its major goals of protecting whistleblowers. GSF

Dodd-Frank Wall Street Reform And Consumer Protection Act (Part II)

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act ("WSRCPA"). This post is the second in a five-part series on the employment law provisions of the WSRCPA. This post examines Section 922 of the WSRCPA, which amends the Securities Exchange Act by providing a financial award for whistleblowers and protection from retaliation. Whistleblower award. Section 922 provides an award for whistleblowers who voluntarily provide original information to the Securities and Exchange Commission ("Commission") that leads to the successful enforcement of an action brought by the Commission and results in monetary sanctions of more than $1,000,000.  The amount of the award to the whistleblower will range between 10% and 30% of the monetary sanctions collected by the Commission. The award is not available to, among others, a person convicted of a crime related to the unlawful action made the basis of the whistleblower report, employees of a self-regulatory agency, the Department of Justice or other law enforcement organization.  An applicant for an award has 30 days to appeal a determination made by the Commission, and the appeal must be filed in the appropriate court of appeals of the United States. There is also a confidentiality provision in Section 922 designed to protect the identity of the whistleblower during the investigation. Anti-Retaliation Provision. No employer may threaten, harass, discriminate against or discharge a whistleblower for having provided information to the Commission or for assisting in an investigation or proceeding initiated by the Commission related to such information.  An aggrieved whistleblower must file a lawsuit in federal district court within three years of when he knew or should have known of the facts "material to the cause of action" but not more than six years after the violation occurred.  The remedies available to a prevailing whistleblower include reinstatement with bridged seniority, two times the amount of back pay and interest owed to the whistleblower, and including attorney's fees, costs and expert witness fees. The Commission is given authority to prohibit by regulation the enforceability of pre-dispute arbitration agreements for such claims, and there is a provision prohibiting the preemption of other claims the whistleblower has under state or federal law. The takeaway. Section 922's amendments to the Securities Exchange Act are almost identical to Section 748's amendments to the Commodity Exchange Act previously discussed here, with a few exceptions.  The remedies under Section 922 include double back pay and the statute of limitations are longer than those under Section 748.  However, agreements for pre-dispute arbitration are not prohibited under Section 922, although the Commission has the authority to prohibit them in the future.  GSF

Dodd-Frank Wall Street Reform And Consumer Protection Act (Part I)

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act ("WSRCPA"). This post is the first in a five-part series on the employment law provisions of the WSRCPA. This post examines Section 748 of the WSRCPA, which amends the Commodity Exchange Act by providing a financial award for whistleblowers and protecting them from retaliation. Whistleblower award. Section 748 provides an award for whistleblowers who voluntarily provide original information to the Commodities Future Trading Commission ("Commission") that leads to the successful enforcement of an action brought by the Commission and results in monetary sanctions of more than $1,000,000.  The amount of the award to the whistleblower will range between 10% and 30% of the monetary sanctions collected by the Commission. The award is not available to, among others, a person convicted of a crime related to the unlawful action made the basis of the whistleblower report, employees of an appropriate regulatory agency, futures association, the Department of Justice or other law enforcement organization.  An applicant for an award has 30 days to appeal a determination made by the Commission, and the appeal must be filed in the appropriate court of appeals of the United States. There is also a confidentiality provision in Section 748 designed to protect the identity of the whistleblower during the investigation. Anti-Retaliation Provision. No employer may threaten, harass, discriminate against or discharge a whistleblower for having provided information to the Commission or for assisting in an investigation or proceeding initiated by the Commission related to such information.  An aggrieved whistleblower must file a lawsuit in federal district court within two years of the wrongful act (although federal employees must follow a separate administrative procedure).  The remedies available to a prevailing whistleblower include reinstatement with bridged seniority, back pay and interest, and any other special damages, including attorney's fees, costs and expert witness fees.   Two other provisions are of note.  One makes pre-dispute arbitration agreements covering such claims unenforceable.  Another provision prevents the preemption of other claims the whistleblower has under state or federal law. The takeaway. The confluence of a potential financial award plus protection against retaliation should help loosen fear's grip on those reluctant to reveal incriminating information, though I suspect the $1,000,000 requirement will make the award something better known in the promise than reality.  GSF

What Constitutes An Enforceable Employment Contract?

The general rule in Texas. The general rule in Texas is, absent an employment contract for a term or limiting an employer's right to terminate, an employment-at-will exists, meaning an employee can be terminated for a good reason, a bad reason or no reason at all, so long as it is not an unlawful reason.  In a previous post, I explained the doctrine of employment-at-will. The issue then is, "What constitutes an enforceable employment contract?" The right question. The way employment attorneys phrase the question is, "What is necessary to modify the employment-at-will relationship?"  If you have a written contract stating you will be employed for a term (1 year, 2 years, etc.) and that you cannot be terminated except for good cause, you are not an employee-at-will and you are protected from arbitrary or unjust termination.  That's easy. The more difficult question is what to do in the situation where the employer gives verbal assurances of continued employment. Texas courts are clear on what it takes to modify employment-at-will. In Texas, the courts have been pretty strict in prohibiting verbal modifications to the employment-at-will relationship.  What they have been clear on is that if the employer agrees to specific conditions under which the employee will not be terminated, an enforceable contract exists. How we prevailed using this little-known exception to employment-at-will. We were able to use this little-known exception to employment-at-will in a case where our client alleged he had been promised he would not be terminated for ensuring the bus company he worked for complied with federal safety regulations.  We were able to prove to a jury he was terminated for doing just that. A rare but proper jury verdict. As a result, we obtained a substantial jury verdict which was upheld on appeal.  It is discussed in more detail at another place on this website. It is one of the few published opinions in Texas where a verbal employment contract limiting termination has been recognized.  The rarity of such cases is not because this fact situation is rare, but because attorneys are not familiar enough with this area of employment law. Applying this principle in the workplace. This same principal can be applied with regard to employee policy manuals that promise employees if they report wrongdoing they will not be terminated.  In Texas, such a promise creates an enforceable contract that alters the employment-at-will doctrine.  GSF

Whistleblower Protection For Credit Union Employees

Federal employment law is a patchwork. Our federal employment laws are a patchwork of prohibitions and requirements enacted in fits and spurts in response to pressing perceived problems. Perhaps if, like Justinian, a former president had commissioned the best and brightest to recommend a comprehensive set of employment laws,  our current law would be more rational and consistent. Bizarre inconsistencies. As it is we are left wondering why credit union employees have 2 years to file a claim of retaliation, while those who make OSHA complaints are only given 30 days.  Are we to conclude embezzlement is a more immediate and serious problem than a plant explosion? Good news for credit union employees. If you are a credit union employee you needn't pine over these jurisprudential curiosities, just be thankful.  Federal law protects credit union employees who become whistleblowers from retaliation in employment.  The main provisions of the law are as follows. Who is covered. Employees of insured credit unions and the National Credit Union Administration are covered by the law. What is covered. Neither the National Credit Union Administration ("Administration") or an insured credit union may discharge or discriminate against an employee because the employee made a report of a possible violation of law or regulation to the National Credit Union Administration Board ("Board") or the Attorney General.  The Board also offers rewards to those who come forward with information that leads to the recovery of civil penalties. Enforcement procedure. A whistleblower who has suffered discrimination under this law may bring a lawsuit in federal district court within 2 years from the date of the adverse employment action. Remedies. A victim of retaliation under this law may recover compensatory damages (lost wages and emotional damages), be reinstated and/or obtain injunctive relief (an order from the court directing the employer to do or stop certain conduct). So, if you are a credit union or Administration employee, count yourself lucky because the law protects you.  GSF

Salespersons Can Be Entitled To Overtime

The most violated employment law. It has been said the Fair Labor Standards Act ("FLSA")--the federal wage and hour law--is the most violated employment law in the country, and I believe it.  It is a law that we as employment lawyers see even the largest, most well-informed companies routinely violating. Good intentions not enough. The reason?  The FLSA is far from intuitive and seemingly makes distinctions about who is entitled to overtime based on which industry had the best lobbyists in Washington when the FLSA was passed.  Or maybe there is a good reason employees engaged in the processing of maple sap into sugar (but not refined sugar) or syrup are not entitled to overtime, but nothing comes immediately to mind. The distinction between inside and outside salespeople. One of the wage and hour problem areas that trips up employers concerns salespeople.  The FLSA makes a distinction between inside salespeople and what it refers to as the "outside salesman."   It's an important distinction because inside salespeople are entitled to overtime and outside salespeople are not.  Insides salespeople must be paid at least the minimum wage; outside salespeople do not. Telling the difference. Here's how you can know the difference.  An outside salesperson is someone whose primary duty is making sales and who is regularly engaged away from the employer's place of business, i.e., out in the field, making sales.  Resolution of these cases often comes down to determining whether outside sales is the employee's primary duty. Determining primary job duty. For example, a salesperson may spend some of her time cold calling and fielding calls from potential customers while at the employer's place of business and part of her time out in the field.  Which is her primary job duty?  Generally, courts will look at where the salesperson spends more than 50% of her time.  If it's out in the field, she will usually be considered an outside salesperson and will not be entitled to overtime. Other factors to be considered. Other factors a court will look at will be the relative freedom from direct supervision the salesperson has (less supervision weighs in favor of a finding the employee is an outside salesperson), the relative importance of the outside sales duties as compared with the inside job duties (the more relative importance of the outside duties, the more likely the employee is a an outside salesperson) and the relationship between the salesperson's compensation and that paid to the employees performing the same non-outside sales duties as the salesperson (if the salesperson's pay is substantially higher it is more likely she will be found to be an outside salesperson). So, if you are in sales, you may be entitled to overtime.  If you are an employer, it is good idea to check your salespeople's primary job duties and ensure they are being properly compensated.  GSF

Scott Fiddler Named A Houston 'Top Lawyer' 2010

G. Scott Fiddler was recently named to H Texas Magazine's "Top Lawyers" list for 2010 in the field of Employment Litigation.  H Texas Magazine describes the Top Lawyers recognition as reserved for the "top 2% of lawyers that have been voted and recognized as the best in Houston."  This is the third year in row Mr. Fiddler has been named to the H Texas Magazine list. The 2010 list appears in the June 2010 issue of the magazine.

Protection For Hospital Whistleblowers

People are usually shocked to learn how little protection there is for whistleblowers in the workplace.  There is protection, however, for whistleblowers working for hospitals, mental health facilities and any other treatment facilities in Texas.  Who is protected.  Employees and persons who are not employees (such as physicians with privileges, though it is not limited to them) are covered.  This would include physicians, nurses, technicians, cooks, janitors, volunteers and anyone else who performs work in a hospital or treatment center. What is protected.  Employees and non-employees are protected from termination, discipline or discrimination resulting from their report of a violation of law, which includes a violation of the Texas Health & Safety Code or a rule adopted by the Texas Board of Mental Health and Retardation, the Texas Board of Health or Texas Commission on Alcohol and Drug Abuse.  The report must be made to one's supervisor, an administrator of the facility, a state regulatory agency or a law enforcement agency.  One need not prove that the conduct about which they complained was illegal, so long as one believes in good faith that the conduct is illegal. Proving retaliation.  If the termination or discrimination by the hospital or treatment center occurs within 60 days of the whistleblower report, the law presumes such action was retaliatory and unlawful, unless that presumption is rebutted by the hospital or treatment center.  Even if the termination or discrimination happens more than 60 days after the whistleblower report, the individual can still prove a case.  Proof usually centers on showing the reason alleged by the hospital for the termination or adverse action is not credible. Remedies.  A plaintiff who prevails in a whistleblower lawsuit against a hospital or treatment center can recover his actual damages, which could include lost wages and benefits in the past and future and damages for mental anguish, emotional distress, humiliation, inconvenience and other monetary and non-monetary damages in the past and which, in reasonably probability, can be expected to incur in the future.  A  plaintiff can also recover punitive damages, reasonable attorney's fees, interest and can request reinstatement. This law protects not only individual whistleblowers but the public as well because it encourages persons to report unlawful conduct rules violations that could adversely affect the treatment a patient receives at a hospital, mental health facility or treatment center.  I've enjoyed representing the physicians and employees who have asserted claims under this law because I feel we are serving a greater good that goes beyond just the best interests of our client.  GSF

  • Google Plus
  • Linkedin
  • Twitter
  • Follow Me On Facebook
  • Super Lawyers
  • Board Certified Texas Board of Legal Specialization
  • Nela National Employment Lawyers Association
  • Houston's Top Lawyers
  • Best Employment Lawyers in Houston
Back To Top