The Weekend File - February 10, 2018

Trump Seeks to Undo Protections for Tipped Employees

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Under the Obama administration’s 2011 regulations, tips, according to the Fair Labor Standard Act, are considered the “property of the employee,” specifically service-facing employees such as waiters, bussers and bartenders. Tips can be shared in a valid tip pool only among those employees but not with dishwashers, cooks, chefs and janitors, who are paid at least the federal minimum wage ($7.25 an hour) and therefore aren’t customarily tipped.

As it stands in Texas and most states, employers may take a “tip credit,” allowing them to pay their tipped service-facing staff less than the minimum wage, at $2.13 an hour, as long as workers' tips will bring that hourly pay up to $7.25. For some servers, a busy night could yield well more than that.

The Trump administration’s proposal would allow restaurants to keep tips for themselves or force waitstaff to share them with untipped workers such as cooks, dishwashers and other back-of-house employees.

Read the entire article at the Dallas Observer

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Union Membership Plummets in Most Right-To-Work States

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Terry Potter has an article out this past week on the insidious effect of so-called “Right to Work” laws on unionization across the country. As anticipated, the nationwide trend of enacting “right-to-work” (RTW) legislation has continued to grow – in the past few years alone, Indiana, Michigan, Wisconsin, West Virginia, and Kentucky have joined the growing list of RTW states. In these states, and the approximately twenty others that have adopted RTW legislation, employers are prohibited from requiring employees to join a union or pay union dues as a condition of employment. This has caused dramatic drops in union membership over time.


If you had to pick only one reason for the vanishing middle class and the increasing gap between rich and poor in America, this would be it. Sadly, most workers don’t understand that they are voting against their own interests when they vote for “Right to Work” legislation or the politicians who push for such laws.

Visit Labor Relations Law Insider for the rest of the article.

Buc-ee’s Loses Texas Retention Agreement Case

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A year after a trial court ordered that a former employee pay Buc-ee’s close to $100,000 in alleged damages and attorneys fees for breaching an employee “Retention Agreement”, a Texas court of appeals reversed that decision, ordering that Buc-ee’s take nothing on its claims against its former employee and also ordered that it pay for her legal fees as well. (Read my previous coverage of this case here.)

The employee in question, Kelly Rieves, was hired by the store as an assistant manager in Cypress, Texas for total compensation of about $55,000. She was hired as an at-will employee, meaning that the company could fire her for any reason at any time. But Buc-ee’s required her to sign an employment contract that is uncommon in the convenience store industry. It's called a "retention agreement".  

The contract Rieves signed divided her pay into two categories, regular pay and “retention pay." The amount allocated to "retention pay" accounted for approximately one-third of her total compensation. The contract allowed the store to recoup the retention pay should she fail to remain employed for a full 48-month term. The contract also required Rieves to give six months' notice before leaving. This is despite the fact that the company maintained the right to terminate Rieves prior to the end of the period. (The contract may or may not have contained notice provisions in favor of the employee that I am not privy to but it would not be required to have such provisions under Texas law.)

Three years later, Rieves decided to leave her job a year or so before her contract expired. We don't know her reasons but we do know she tried to work it out with the company first but her boss refused to let her out from under the contract. So she quit.

In response, Buc-ee’s sued her for the full amount of the retention pay she earned during her three years with the company -- an amount over $67,000.00. The trial court found against Rieves and awarded the company nearly $100,000.00 in damages and attorney’s fees.

Last week the court of appeals took that verdict back, ordering that Buc-ee’s take nothing on its claims against Rieves and that it pay for her legal fees as well. The court reasoned that the requirement that Rieves pay back such a large sum of money should she leave the company acted as a restraint of free trade and violated Texas’ employment-at-will doctrine. As a result, it could only be valid if it met the requirements of an actual noncompete agreement, which in Texas is controlled by statute. Because this agreement did not meet those requirements, it was not enforceable. 

Download a copy of the opinion.

 Buc-ee’s will now have to decide whether to appeal the matter further.

Jury Awards $1.1 Million to Transgender Professor in Discrimination Case

The Case

Rachel Tudor, a transgender professor whose tenure and promotion was denied at Southeastern Oklahoma State University, was awarded $1.1 million by a federal jury on Monday in a landmark Title VII case.

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Tudor was hired by the university in 2004 as a tenure-track assistant professor in the English department and presented as male at the time. She began transitioning in 2007, becoming the university's first openly transgender professor.

According to the lawsuit, after notifying the university that she would be presenting as a woman at work for the 2007-2008 academic year, Tudor received a phone call from an unnamed human resources staffer who told her the school's vice president for academic affairs, Douglas McMillan, had inquired about firing her because her identity as a transgender woman offended his religious beliefs.

The lawsuit also states the director of the university's counseling center, Jane McMillan, Douglas McMillan's sister, told Tudor to take safety precautions, because some people were openly hostile to transgender people. She also reiterated to Tudor that her brother considered transgender people to be a "grave offense to his [religious] sensibilities."

In October 2009, Tudor applied for tenure and a promotion to an associate professor position. Her application was denied, while the application of a similarly qualified male coworker was approved, the lawsuit claims. After Tudor asked for an explanation as to why her application was rejected, according to the suit, Douglas McMillan and another dean refused to provide her with one. Tudor then filed a federal discrimination complaint in 2010.

In March 2015, the Justice Department, then under the Obama administration, sued the university, with former Attorney General Eric Holder declaring that federal prohibitions against sex discrimination include protections based on gender identity.

On Monday, an eight-person jury voted in favor of Tudor on three counts: that she was "denied tenure in 2009-10 because of her gender," that she was denied "the opportunity to apply for tenure in the 2010-11 cycle ... because of her gender" and that the university retaliated against her after she complained about workplace discrimination. The jury then awarded her $1.165 million in damages.

Why Is This Case Important

This case is important because it is one of the first times that a federal court has explicitly found that a plaintiff whose gender identity is transgender is a protected class under federal anti-discrimination laws. In the past, many courts have held that gender identities are not protected in and of themselves. Plaintiffs could only seek protection of federal anti-discrimination laws by arguing they were covered under traditional sexual discrimination statutes because they were mistreated due to application of a sexual stereotype. This argument has worked with varying degrees of success across the country but it is more convoluted and difficult to apply than it should be. 

The issue will certainly have to be decided by the US Supreme Court eventually but this court decision is a good start.

Ready to take the next step?

Need to learn more about sexual harassment or discrimination? If you or someone you care about is dealing with these issues, please visit our website to learn more

The Saturday File - Person of the Year 2017: #MeToo

A weekly update on employment law developments and related news stories from The McKinney Law Firm.

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The Top Story

Time Person of the Year 2017: The Silence Breakers
Discussions of sexual harassment in polite company tend to rely on euphemisms: harassment becomes "inappropriate behavior," assault becomes "misconduct," rape becomes "abuse." We're accustomed to hearing those softened words, which downplay the pain of the experience. 

It wasn't so long ago that the boss chasing his secretary around the desk was a comic trope, a staple from vaudeville to prime-time sitcoms. There wasn't even a name for sexual harassment until just over 40 years ago; the term was coined in 1975 by a group of women at Cornell University after an employee there, Carmita Wood, filed for unemployment benefits after she had resigned because a supervisor touched her. The university denied her claim, arguing that she left the job for "personal reasons."

In 1980 the Equal Employment Opportunity Commission (EEOC), the federal agency tasked with enforcing civil rights laws in the workplace, issued guidelines declaring sexual harassment a violation of Title VII of the Civil Rights Act. It was a victory, but with caveats: even after sexual harassment became explicitly illegal, it remained difficult to lodge a complaint that stuck—in part because acts of harassment are often difficult to define. What separates an illegal act of sexual harassment from a merely annoying interaction between a boss and his subordinate? When does a boss stop just being a jerk and become a criminal? Because the Civil Rights Act offered no solid legal definition, interpretation has evolved slowly, shaped by judges and the EEOC over the past 37 years.

And then...2017 and #MeToo happened. Read Time Magazine's Cover Article Here

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