Defining Appropriate Law Enforcement Authority

Sarbanes-Oxley's criminal retaliation statute requires a report to a law enforcement official, an undefined term. The Texas Whistleblower statute has somewhat similar language (although it requires that it be an appropriate authority), but provides a detailed definition in §554.002. Even with a definition you can see the kind of issues that it leads to. The Texas Supreme Court took a narrow view in Texas Dept. of Transportation v. Needham which required an en banc reversal of a panel decision by the 14th Court of Appeals. City of Houston v. Kallina (Tex. App. - Houston [14th]) (11/21/02).

No ERISA Loophole for the Ban on Waiver of Unemployment Benefits

Texas, like all 49 other states and the District of Columbia, prohibits the waiver of claims for unemployment compensation. The plaintiffs in this case accepted a voluntary package, which included a waiver of all claims against the company. When they filed for unemployment for the time period between and beginning of the retirment pay, the company asked them to withdraw the claims, citing the waiver. When they didn't, the Company challenged the mandatory non-waiver under state law saying it was pre-empted by ERISA. The 5th Circuit reversed the trial court holding it was not preempted under the federal savings clause. It noted the requirement that a state ban waiver was necessary for a state's employers to get a lower unemployment tax rate. Mitchell Energy & Development Corp. v. Fain (5th Cir. 11/19/02) [pdf]. Even though the federal mandate is technically voluntary, the Court didn't think that was enough to take it out of the federal savings clause which excludes preempting any law or regulation under federal law. Bottom line, no waiver of unemployment benefits, regardless.

A New Board and Why It Matters

For the first time since August 2000, the NLRB has its full five member complement. And for the first time ever, they were nominated and approved as a package deal. The members and their terms of service are as follows:



Robert J. Battista, designated chairman. December 2007, fomer management labor lawyer with considerable experience in NLRA.



Peter C. Schaumber, August 2005, labor arbitrator, active in Presidential campaign for Bush, not a tremendous amount of NLRA work experience.



R. Alex Acosta, August 2003, young lawyer currently at DOJ, member of the Federalist Society.



Wilma R. Liebman, August 2006, the only current Board member before the approval of the package.



Dennis P. Walsh, December 2004, returning to the Board. Formerly served a one year term as a recess appointment of Clinton until December, 2001.



The first three are Republicans, the second two Democrats. The Detroit Free Press, the hometown paper for the new Chairman, has a story about him in their on-line publication.



Although unclear whether it is a trend, union issues may be more of a factor in these tough economic times. On December 6th the NLRB will hold an election for the 70 banquet workers at the Westin La Cantera according to a story in the San Antonio Express News. If it is successful it will be the first unionized hotel in San Antonio.

Class Action Denied in Wal-mart Oral Contract Claim

The Court of Appeals reverses the trial court's certification of a class of as many as 350,000 employees. The plaintiffs' claim was a "common oral contractual obligation to provide rest and meal breaks and to pay hourly employees for all work performed' and a breach of that contract. The Court held that the individual formation and breach of each contract would predominate over any common issues. In addition, the court rejected the novel attempt of the plaintiffs to use the 'pattern or practice' method of proving their claim of working off the clock. Allowing it would have permitted the plaintiffs to prove the claim on a 'class' basis based on statistics and surveys resulting in a presumption of liability for each individual. The court found that such a method which has been used for Title VII discrimination cases was not appropriate in a contract case. Finally, the court found that the plaintiffs did not show that a class action was the superior method for adjudication of the controversy. Instead, the court noted the availability of the Texas Payday Act for such claims. Wal-mart Stores, Inc. v. Lopez (Ct. App. - 14th 11/14/02).

Arbitration is Supposed to Be Simple

But there are endless ways that it can end up being complicated. For example: when does a party arbitrator become a neutral and need to make appropriate disclosures to the other side? Apparently, when there is an unequivocal declaration that the party arbitrators are now neutrals, or at least that's the view of one Texas Court of Appeals. J.D. Edwards v. Estes, Inc. (Ct. App - Fort Worth)(11/14/02) [pdf]. Even before that, the court had to deal with an interesting jurisdictional issue, finding they had jurisdiction because the lower court set aside an arbitration award, but didn't order a new hearing. The Court found it had jurisdiction, affirmed throwing out the award because of the failure of a party, turned neutral, arbitrator to make proper disclosures. The court didn't order a new arbitration hearing, so what happens next? Stay tuned I suppose.

Administrative Actions under Sarbanes-Oxley

The Department of Labor has begun to take steps to implement Sarbanes-Oxley. The Secretary of Labor has issued an order designating OSHA as the agency responsible for handling claims under the civil Whistleblower Act created by Sarbanes-Oxley. The DOL has also published interim regulations for handling of notices and other procedures for the trading blackouts on 401(k)'s. The regulations were published in the Federal Register of 10/21/02.



I will be talking about these developments as well as the law itself at the UH CLE program Employer-Side Employment Law on December 5-6 in Houston and repeated in Dallas on December 12-13.

Alabama Supreme Court Knocks Out Arbitration Agreement Because No Class Actions Permitted

One of the greatest dangers to arbitration programs being established by employers is reaction to use of arbitration clauses in consumer agreements. If there is ever Congressional action it is apt to be because the two issues, employment and consumer transactions, are linked. The Alabama Supreme Court has just shown their unhappiness with arbitration in what they deemed 'a contract of adhesion' for termite services. The plaintiffs argument, adopted by the Court, was that because of the cost of arbitration and the relatively small amount of the individual claim, heightened by a clause limiting the type of damages they could recover, the only meaningful way to pursue the claim was small claims court or a class action. Since both avenues were foreclosed by arbitration, the Court found the agreement unconscionable and refused to enforce it. Leonard v. Terminix (Ala. 10/18/02). Although the same logic is not likely to extend to most employment claims, the underlying principle and the potential linkage arbitration in consumer transactions and arbitration in employment, should remain a concern to those who support arbitration in the employment area.