Steps to Take Before Searching an Employee’s Work Area or Property

When expensive company property goes missing or an employee reports that a new wallet was stolen from his desk while he briefly left his office, you will want to immediately search for the missing item. However, you can quickly encounter legal problems if your employees have not already consented to such workplace searches.

The best way to remedy this situation is to update your current employee handbook, adding a policy addressing this topic. If you do not have a handbook, it would be wise to draft one now, carefully including a provision about searches, including a statement that they will only be conducted when valid reasons make them necessary. (You should always conduct searches with at least one other supervisor with you – to help document that it was handled properly).

What follows is a brief review of search standards that may apply to different types of employees, the most common items employers often look for during searches – and the importance of never inappropriately touching any employee during a workplace search. You must also avoid detaining an employee in a manner that could be considered “false imprisonment.”

Search standards can vary, based on the employment status of the workers involved

The Texas Work Commission addresses this topic on its website, in an article titled: “Searches at Work – Legal Issues to Consider.”

           1. Legal standards that apply to state and federal government employees. Federal and state constitutional provisions prohibit subjecting these workers to any “unreasonable searches and seizures.” This prohibition is set forth in the Fourth Amendment to the U. S. Constitution, made applicable to the states through the due process clause of the Fourteenth Amendment (under the incorporation doctrine). The nature of this type of violation is discussed further below.

            2.  Standards that apply to private company employees. While the strict standards, statutes and governing case law may sound less strict for these workers, private businesses must still conduct their searches cautiously – or become vulnerable to lawsuits based on one or more of the following claims.

  • Assault and battery. This would likely involve the searched employee claiming that you wrongfully – without obtaining prior consent (or in keeping with known company policy – touched him/her wrongfully.
  • False imprisonment. You detained the worker in a manner that exceeded your rights under the circumstances.
  • Wrongful termination. You cannot fire someone when you do not find the contraband or stolen items you thought you might find. Be sure to have a clear policy in your employment handbook that outlines how many warnings an employee must be given prior to being let go. (However, if the worker is an “at-will” employee, you can terminate that person at any time, without having to state a reason or explain your actions).
  • Negligent or intentional infliction of emotional distress. Always handle search matters in a private setting – where you are not putting the employee’s reputation on the line or subjecting the person to embarrassment in front of others.  When conducting an actual search, always ask all workers in the area to take a work break and wait 15 minutes before returning to their cubicles, offices or nearby work areas.

It is also wise when conducting a search (or disciplining an employee), to have another management official present who can vouch for how everything was handled – prior to writing up a report documenting the events. You may also want to ask the employee to voluntarily sign and date the statement you write up, indicating what took place. Be sure to note that either you acted under the authority of a known workplace search policy – or that you obtained the employee’s advance permission before conducting the search.

What items are employers often looking for during a locker or work area search?

  1. Stolen property. This may belong to the company or to another employee.
  2. Drugs or alcohol
  3. Any type of dangerous weapon, including certain knives. Be sure to address all the types of weapons that employees can never bring to work in your employee handbook.

What might constitute an unreasonable search and seizure?

  1. Searching an employee’s work area or locker without attempting to provide advance notice. However, if this is a right you reserved for the company in the employee handbook, advance notice may not be required. Be sure to note that even if an employee secures his/her locker with a personal lock, you must still be given access to the contents.
  2. Conducting the search in front of the employee’s co-workers. This should always be avoided, even if the other employees must be asked to take a work break or go gather in a nearby conference room until you invite them to return.
  3. Physically touching an employee or yelling while interacting with the person. Be polite and treat the person as you would want to be treated. After all, it may be up to a court to later determine if your company owes the employee any monetary damages.

Can you ever, in any permissible way – physically search a worker’s body/clothing?

This should always be avoided at all costs. However, you can – with another management employee present in a private office – ask the employee to voluntarily empty his or her pockets. You can also ask the worker to empty out the contents of a briefcase, purse or wallet. If the person refuses to do as you ask – and you have no stated company policy in place about searches, you cannot insist that the employee do as you ask.

If you fear some serious theft has occurred, you should inform the employee of your concerns and contact the police. Should the police visit your office, you can allow them to conduct the physical search – if they determine that one is immediately necessary.

While this overview is not intended to be comprehensive, it should provide you with a basic understanding of why all workplace searches must be handled with great care.

Please feel free to contact one of our Murray Lobb attorneys to discuss this specific employment law problem – or any other — at your convenience. We are also available to help you with your general business and estate planning needs. And we can readily draft the contracts and documents that you regularly need.

The Key Terms That Should Be Included in Every Job Offer

When making job offers to new employees, it’s important to provide clear terms so you can easily onboard the new workers and give them a strong chance to succeed. While many of the terms you need to cover are quite basic, it’s necessary to include them since leaving any of them out can complicate your relationship with the new employees.

As the terms set forth below should indicate, most of them should be easy to understand. However, if you think the prospective employee may have any questions, be sure to provide the name and phone number of someone who can provide timely answers.

The following information is presented in the form of two lists. The first one provides the types of information often needed during the first week on the job – and the second list addresses more detailed employment concerns.

Always choose the most accurate words possible for these basic job offer terms

  • Job title or name of the position. Chances for promotions in your company and future starting salaries elsewhere in the future will often hinge on assigned job titles. Try to choose one that emphasizes the new worker’s level of experience or key skills.
  • Full- or part-time job. After noting this status, be sure to state whether the new person will just be working morning, afternoon or evening shifts. If the new employee must work a flexible schedule, always note that fact.
  • Exempt or non-exempt job status. This classification is very important since it determines how employees must be treated regarding overtime pay and other issues. An exempt employee does not get paid for overtime hours.
  • Supervisor’s name and job title. Often, this employee will handle or oversee all initial training that’s required and periodic job evaluations.
  • Basic duties assigned to the new hire. Although it’s best to name some of the key daily tasks the new employee must handle on a regular basis, any list of duties should always end with a statement that the list is not comprehensive – and is subject to change, based on the employer’s needs.
  • At-will employment status. This is commonly assigned to most hourly workers. Be sure to note that this means the worker can be dismissed without any advance notice or any stated reason. Employees can also leave at any time, without giving notice.
  • Base salary. This should be clearly stated, along with information about whether the person is being paid bi-weekly or monthly. You may also want to note that by accepting the position, the new hire has agreed to direct deposit – or whatever other form of payment you have told the employee is standard for the position.
  • Start date. After providing this information, you may also want to note if there will be a training or orientation session on the first day. If the job is a temporary one, you may or may not want to state when you believe it may end.
  • Current contingencies related to job offer. Whenever possible, try to complete all background criminal and reference checks before an employee’s first day. The same holds true for determining the person’s immigration status. However, since there may still be some work left to do, include a paragraph in the job offer noting that it’s contingent on all these checks producing satisfactory results. You also should make sure that they understand the offer is contingent upon signing a confidentiality agreement and/or non-compete agreement or intellectual property rights agreement if applicable.
  • Uniforms or special equipment that may be required and provided by the employer. It’s important to note if uniforms will be provided and if there’s any special equipment that the employee will be given during the first week – that must be returned upon his/her departure from the company.

Job terms related to employee benefits, company stock and other matters

  • General employee benefits. Clearly indicate how soon the new hire will be entitled to receive paid sick leave (if any) and vacation time during the first six months or year. Also, indicate when any company medical insurance coverage may begin – and how much money will be subtracted from each employee paycheck to cover it.
  • Stock shares. State the number of company stock shares, if any, that may be awarded, after a certain probationary period has been successfully completed. You can then indicate how and when additional shares can be earned.
  • Employee handbook and company standards. You should note that all disciplinary matters are based on the contents of the provided employee handbook. Any general or specific company policies or procedures unrelated to discipline should also be set forth in the handbook. It’s often wise to have new employees sign a form indicating that they have received copies of the handbook – or have been informed where to find it online.
  • State your company policy about the unauthorized use of confidential information. Be sure to tell your employees that they are not allowed to use confidential information they’ve been given by any third parties or prior employers while working for you.
  • Bonuses and commissions. It may be wise to have your attorney draw up a separate plan governing these terms – or to at least review the one you wish to give to your employees. Care must be taken to be sure all workers are treated the same regarding their chances of receiving these types of important work incentives.
  • Specific terms related to non-disclosure of any of your company’s proprietary information. It’s always wise to have your Houston employment law attorney draft all such agreements to be sure all new employees know when they start that they cannot later provide this type of information to others.
  • Non-compete terms. These usually state how long an employee must wait after leaving your company before doing any work that directly competes with your business. Check

with your Houston employment law attorney to see how you should summarize this information. It will normally be contained in a separate non-compete agreement that the employee must sign on his/her first day of work.

The two lists above (which are normally combined) will usually meet the needs of most businesses. However, depending on your company’s unique situation, you may want to add terms related to the following topics.

  • Specific work location. If you employ people in multiple cities – or in different locations within the same city — you might want to note this information to avoid confusion.
  • Proper terms of acceptance. You can indicate how the prospective new hire should respond to the offer and by what date.
  • Pre-employment medical tests or exams. Be sure to provide all necessary details and note when these must be completed.

Please feel free to call one of our Murray Lobb attorneys about any of your employment law, general business or estate planning needs. We are also available to draft the various contracts and other documents you need to use on a regular basis.

Employees Deserve a Workplace Free of Politics, Discrimination & Harassment

Most Americans are aware that many people now publicly share strong political opinions that can hurt or insult others. While we each can decide how to handle this problem in our private lives, employers face far greater challenges. Their need and right to create a highly productive and politically neutral workplace must be carefully balanced against legitimate free speech concerns, applicable state laws and the governing provisions of the NLRA (National Labor Relations Act).

Carefully developing a company policy that protects the legal rights of all concerned takes considerable planning and input from experts. Should errors be made and employees sue their employers claiming a hostile work environment has developed, the courts will have to weigh the presented evidence and decide if any damages are owed.

Balancing the right to control worker productivity with First Amendment rights

Since employee free speech rights in most workplace settings are not absolute, political neutrality must be maintained and enforced in a highly consistent manner. Simple complaint procedures must be created and employees at all levels properly disciplined when actionable abuse has occurred. Courts may have to decide whether an office atmosphere became so severe that aggrieved employees not only had the right to sue – but should be awarded financial damages.

Here’s an overview of the key topics you must address in an office policy that seeks to maintain a workplace free of harassment and discrimination based on political views. Company owners should speak with their Houston employment law attorneys about how they can create this type of policy — while still paying proper legal respect to the rights of all parties concerned.

Key points to cover in an office policy designed to limit conflicts over political speech

  • Public and private employers. Your policy must clearly reflect whether your employees are working for a private employer or some type of public or government entity;
  • Abide by the NLRA. You must make it clear that any limitations you place on “political discussions” in the workplace are in full keeping with the language and intentions of the National Labor Relations Act (NLRA). After all, there are instances both during and after work hours when some employees may have a legally protected right to discuss certain aspects of their jobs with their co-workers;
  • All employees must be covered by the policy. Indicate that all supervisory personnel will also be required to greatly limit their own discussions or expression of questionable free speech topics related to politics;
  • Provide time for discussion of the policy. This might occur during all future new employee orientation programs – or when privately meeting with each new worker in your human resource manager’s office. It would be wise to consider having each current or new employee sign a form indicating they’ve been given a chance to read over the policy and ask questions about it. Be prepared to explain that the wearing of certain types of political buttons and T-shirts at work will not be allowed;
  • Make it clear that you will respect employee needs for time to vote. You can encourage workers who won’t have time to stand in lines before or after their work hours to tell you in advance of their needs (if certain positions must be covered in their absence). However, you should try and remain as flexible as possible regarding this type of request;
  • Indicate your awareness that some employees may choose to run for public office. Should this occur, privately ask any such employee to avoid discussing a run for any non-union office during work time. However, you should acknowledge your full awareness of the person’s right to pursue this type of activity on their own time;
  • Consider revamping your overall policy against workplace harassment and discrimination. You might want to ask your lawyer to either redraft this type of policy or carefully add new provisions to it that clearly forbid workplace harassment, discrimination or retaliation based on any worker’s real (or imagined) political affiliations. This approach might help you avoid the false impression that you are attempting to place a “chill” on employee free speech rights – when you’re simply trying to extend new protections you believe are owed to all workers.

While this list is not intended to be comprehensive, it should provide you with a better idea of how important it is for you and your entire workforce to have a policy in place that addresses these crucial topics. We all deserve to work in an office that’s as politically neutral as possible so we can do our best work.

Our Murray Lobb attorneys are available to help you draft policies like this one — or any of the many contracts and other documents you need to daily run your business. We’re also available to provide legal advice on many general business, employment law or estate planning topics.

Important Legal Tips for Communicating with Disabled Employees

Since everyone deserves to be treated with respect, employers must make sure that they’re communicating professionally and politely with all their disabled workers. Careless employers who speak callously with their disabled workers not only set a poor example for everyone else in the workplace – they also increase their chances of being sued for unlawful discrimination under the Americans with Disabilities Act (ADA).

Here are some other important tips that can help you create a more pleasant work environment for everyone – that’s also fully compliant with the ADA.

Examples of workplace situations that may require special communication skills

  • When someone present in a meeting has a hearing disability. Should there be an employee present with a known hearing impairment, always remind everyone to speak one at a time – and never “over” one another. That will help everyone more easily follow the conversation and possibly take notes. Of course, never refer to the person by name who may need this simple accommodation.
  • Always speak directly to the disabled person. Even when someone has a sign language interpreter, always turn and speak to the disabled person – and not their helper or other companion – whenever possible.
  • Be honest with the disabled during regular workplace evaluations. This is important so they’ll have the chance to improve their performance – and request any new accommodations they may need. They deserve an honest appraisal like everyone else. This will also limit the chances of painful misunderstandings in the future. Be willing to give them concrete ideas for how they can improve the quality of their work.
  • Be prepared to shake the hand of a disabled person – even if this means shaking their left hand and not their right one. This is a simple gesture that communicates respect and equality. You don’t need to shake the person’s hand for an extended time period.
  • Always introduce yourself when speaking with someone who is sight impaired. Be sure to also identify everyone else who is present during the conversation.
  • Never pat anyone who is very short (or in a wheelchair) on the head or shoulder. This makes all adults – and even older teens – feel a bit demeaned. We all have a right to have our “personal body space” fully respected by others.
  • Should you decide to offer a disabled person your assistance – wait briefly to find out if they would like to accept it. For example, it’s possible you may want to help someone transfer from a wheelchair or walker to a nearby chair. However, be aware that many disabled people want to move about on their own as much as possible, to maintain their sense of independence.
  • Be sure you’re addressing the disabled person in the same manner as everyone else present. Far too often, well-meaning bosses or employers may refer to the new department head who’s disabled as “Johnny” – while calling everyone else in the room by his or her last name. Be consistent with how you refer to all who are present.
  • Don’t lean on, move, or play with a disabled person’s crutches, wheelchair or walker. You may think you’re just being lighthearted – but when you do this, you’re calling attention to the person’s disability when that person may simply want to blend in with everyone else. However, if you believe it’s a safety hazard to leave a wheelchair or other assistive device where the disabled person left it, always politely ask that person if you can move it to a different location to make it easier for everyone to walk in that area. Also, be sure to tell the disabled person that you’ll personally retrieve the device when the meeting or seminar is about to end. Finally, never lean on someone’s wheelchair for support – that often makes disabled people feel like you’re violating their personal body space – and that can make them feel very uncomfortable.
  • Be very respectful when listening to a disabled person talk who has a speech impediment. Never assume you’re helping them by suddenly announcing a “translation” or “clarification” of what was just said. Instead, if you think you and others were left a bit confused by what was stated, calmly wait until the person finishes talking and say something like, “So, if I understood you correctly, you’re asking or suggesting that we start handling this account differently in this manner” – repeating what you think you heard. If you misunderstood what was said, then give the person a chance to repeat what they said earlier – or allow them to present it to you in a different way.
  • If someone you need to speak with is in a wheelchair, respectfully pull up a chair so you can speak with that individual at eye level. This conveys both respect and equality.
  • Never assume that all hearing-impaired people can read lips. Should you need to gain the attention of a hearing-impaired person who is looking off in a different direction, very lightly tap the person on his/her shoulder to gain their attention (assuming you’re not interrupting another conversation). If you’re certain someone can lip read – stop eating, drinking or smoking – so it will be easier for that person to follow what you’re saying.
  • Try to interact naturally with the disabled. Should you accidentally say something like “Did you hear that there’s an extra meeting next week?” – only to realize you said that to someone who is hearing impaired, forgive yourself. You can then point to a flyer about the meeting or write the information down on a piece of paper and hand it to the disabled person.

Always remember to stay calm and polite, even if you’re finding it hard to communicate with the disabled worker – and realize that the situation may be far more frustrating for that individual. If you’ll be speaking with one or more disabled people during a meeting, try to let them know, in advance (through a medium they can easily access like email), that you’ll be supplying everyone with a complete summary of the meeting’s highlights in a follow-up email.

If one or more workers are sight-impaired and read Braille, let them know that you’ll get a copy of the meeting notes to them in that format (if you have that capability) within one to two business days. Also, tell them that you’ll be happy to answer any questions they may have prior to their receiving their copy of that summary. Finally, whenever possible, use such terms as “hearing impaired” instead of deaf – and “sight impaired” in the place of blind.

Please feel free to get in touch with one of our Murray Lobb attorneys so we can provide you with any guidance you may need when relating to your disabled employees. We’re also available to provide you with legal advice concerning many other general business, estate planning or employment law topics. And we can draft a wide variety of legal documents on your behalf or help you revise an outdated employee handbook.

Ways to Avoid Defamation When Disciplining Employees

Every employer has the right to create a pleasant and productive workplace. Yet this goal can be elusive when a worker acts unethically or behaves poorly toward others. If the behavior was grossly unethical or offensive and the person was an “at-will” employee, you can usually fire him on the spot. However, some misconduct claims must be thoroughly investigated.

General principles to bear in mind when disciplining employees

If immediate firing isn’t appropriate, you must handle all investigatory matters in a private manner. You should also only inform those with a formal “need to know” regarding specific information you are learning. Always make sure to act in a non-discriminatory manner. You can never let anyone go in a way that violates their civil rights or unjustly defames them.

Here are some suggested steps your business should take while resolving problems with difficult employees.

Responsible ways to discipline workers

  1. Create a written policy that states how your office will interact with employees who are accused of wrongful behavior. While you should be consistent in taking certain steps, you must clearly state that your office always reserves the right to immediately fire at-will employees when circumstances justify such actions. When an exempt employee is involved, try to provide warnings and always listen to their side of the story. It’s a good idea to place this policy in an employee handbook and to reference it upon first hiring all employees – and during all periodic work evaluations;
  2. Investigate all accusations, especially when immediate firing isn’t necessary. Be sure to handle all interviews in a private setting, stressing the confidential nature of the process. If there is written or documented proof of wrongdoing, obtain copies of the materials;
  3. Create a separate investigation file for the accused employee. You should also create notes in the person’s regular personnel file – making sure only a small number of employees can review either folder. In very rare circumstances, it may be necessary to hire an outside group to handle the investigation for you. Your Houston employment law attorney can fully explain when hiring outside investigators may be necessary;
  4. Create a clear plan for each employee’s disciplinary investigation. Avoid making accusations or labeling someone as a “thief.” Let the person know that you are investigating the claims. When meeting with the individual, always take notes and have at least one other staff member present as a witness. You may want to ask the employee to sign a statement, indicating awareness of the investigation.  In order to get an employee to sign a form, you may need to note in it that his/her signature does not constitute any admission regarding wrongful behavior – only that the person knows certain claims are being investigated. Be sure to listen carefully to any defense claims the employee may offer – but do not let any meeting become confrontational. If tempers flare, note that you will reschedule the appointment for a later time;
  5. Do not publicize the investigation. Only share limited information about it with those who have a “need to know” regarding it;
  6. Once a decision is reached regarding discipline, advise the employee. Make sure your decision is based on fully objective and reasonable grounds – and note them in your files. Document what you’ve decided to do in the regular personnel file – and reference the separate investigative file where all detailed notes are kept. Do not allow anyone access to the main investigative file who doesn’t have a right to see it. Be sure to keep all investigative files for a lengthy time period in case future lawsuits are brought against your company;
  7. If you decide to terminate an employee, do so in an orderly fashion. Allow the person to gather together all personal possessions before leaving the building in a private fashion. If the fired employee was fired due to dishonesty – or any violent or inappropriate behavior – you may want security to escort the person off the premises. To protect the fired employee’s privacy concerns (and to avoid defamatory actions), you may want the exit to occur when few other employees are present;
  8. Do not share details about any firing with other employees. Unless there was documented criminal activity that all personnel may need to know about, you have a duty to maintain privacy regarding the exact reasons why you chose to fire an employee.

Always remember that you cannot discipline an employee for taking lawful advantage of any state or federal right. This can include taking time off under the Family Medical Leave Act after you’ve approved the temporary departure – or taking a military or pregnancy disability leave.

Additional behaviors to avoid when disciplining employees

  • Never jump to conclusions about any claim. Don’t allow yourself to be greatly swayed by reports made by one or two individuals. Be sure to speak with all key witnesses and interview the employee concerned – to hear his/her perspective on what happened;
  • Always be/remain reasonable and flexible. Don’t ever over-penalize an employee for a minor infraction. Also, if you’re having to fire a more senior, exempt employee, make sure you have fully documented all proven reasons (or “just cause”) as to why the employee must leave;
  • Seriously consider documenting verbal warnings. While this may not be necessary, it’s usually a wise move. One way you can document them is to send yourself an email, noting in general terms (using a computer at work) why you had to verbally discipline an employee on a specific date;
  • During regular employee evaluations, be sure to note any disciplinary actions taken and how they’ve been resolved. Always have the employee sign the evaluation, noting that the person recalls all that’s happened and how all situations have been resolved;
  • Avoid telling an employee after being disciplined that you’re sure the person is likely to have a bright, long future with the company. A court might later view this type of language as reasonable proof that you were creating a new employment contract, one providing some type of guaranteed or continuing employment – as opposed to the at-will status the employee once had; and
  • Don’t punish workers for trying to improve working conditions or wages during breaks or at other times when “off the clock.” Rights like these are normally protected under the federal National Labor Relations Act.

If you’re concerned about how to handle any employee discipline or firing issue, please feel free to contact one of our Murray Lobb attorneys. We can provide legal advice based on the specific circumstances that you relate to us — and help you decide when you may need to hire outside investigators to handle a specific claim. We can also draft professional language for describing your employee discipline policy in your employment handbook.

10 Ways to Minimize Liability When Providing Employee References

Although it was far simpler twenty years ago to provide references for most departing and former employees, it now requires careful planning. Employers must take deliberate steps to protect themselves against possible lawsuits brought by disgruntled former employees who may claim that they’ve been harmed by defamatory or negative job references.

All companies should now consider requesting (as a hiring condition) that each new employee sign a release form granting permission for the company to provide future job references without threat of liability. As noted below, that paperwork can then be supplemented by new, signed and dated authorization forms for each future reference requested.

Before sharing ten ways your company can reduce its potential liability when providing job references, this article will first briefly review common legal arguments advanced by former employees when they sometimes sue claiming a reference harmed their future job prospects.

Types of arguments past employees advance when alleging harm due to a job reference

Keep in mind that defamation does not have to produce actual harm – it’s enough that the negative reference was published or communicated to a third party and might reflect poorly on a past employee’s good name or overall reputation. Courts will normally review all the surrounding circumstances to determine whether a reference was truly damaging.

  • Intentional infliction of emotional distress. An angry former employee may claim that the person who issued the reference used unjustified and inflammatory language. While this isn’t asserted often, it’s a reminder to create a clear and distinct policy for how all references should be handled – free of unsubstantiated opinions or undocumented gossip. For example, it’s always wise to avoid alleging that a former employee demonstrated clear signs of struggling with some form of substance abuse on the job;
  • Invasion of privacy. Your company must avoid publicizing private information about an employee. For example, if you investigated why an employee was late to work on several occasions, you should never publicly disclose that the person was repeatedly jailed overnight due to arrests for drunk driving;
  • Interference with contract. A business should never knowingly provide false or misleading information about a former employee that could reasonably bias a prospective employer against hiring the person. Be as honest as possible and rely on neutral, documented information in the employee’s personnel file whenever possible;
  • Title VII discrimination. You must never provide a negative reference because a past employee was a member of a protected class. So, do not claim you fired someone because of their disability or alleged problems due to their gender. Title VII of the Civil Rights Act of 1964 forbids this type of discriminatory behavior.

Ten practices that can help you provide safe and proper references

  1. Always obtain employee consent. You should require a written request from all past employees asking you to provide a reference to a specifically named individual. This is very important since references should only be provided to proper parties;
  2. Designate only one or two company officials to handle all employee references. Centralizing this operation can help your company avoid releasing poorly drafted forms or letters of reference. It’s usually best to forbid all supervisors and other employees from providing their own references. You may want to create your own simple form for providing all references;
  3. Maintain accurate personnel files for all employees. Furthermore, be sure to conduct regular employee evaluations – and have employees sign the bottom of all written evaluations. This information should provide the basis for future letters of reference. It must be free of any biased or highly negative comments whenever possible;
  4. Avoid providing references over the phone. This is important since phone requests can be placed by nearly anyone. You must always be sure you’re only providing information to legitimate parties. Secure, written communications are always best. And never provide a reference until after you’ve received a new, written authorization form signed and dated by the former employee. (It should state that your company will not be held liable for providing the requested reference.) You can email or fax this form to the past employee when you receive a new request;
  5. Only provide information to proper parties. Be aware that private investigators and others may contact you and just pretend to be potential employers. Your company could be sued if you release a reference to someone who is not a prospective employer;
  6. Try to stick to the scope of the requested information. Don’t volunteer opinions or offer unsubstantiated data. Depending on your firm’s established policy for providing references – just stick to basic facts. (However, be sure to review the last paragraph of this article about providing references for past employees who exhibited violent workplace behavior – made serious threats – or sexually harassed other employees);
  7. Keep detailed records regarding all reference requests. If you fail to keep all written data involved with these requests and copies of the information your company provided, you may have a very difficult time mounting an effective defense if you’re sued for defamation – or on the other grounds named above – by a former employee;
  8. Be careful and provide about the same amount of information about all employees. While it may be tempting to provide lengthy praise for some former employees, it’s best to only comment on factors that may apply to all employees. If you’re going to provide negative information, be sure to first check with your Houston employment law attorney to be certain you’re not being too harsh – or revealing too much;
  9. Try to avoid requiring or compelling self-publication. If you fired someone because they were recently convicted of a serious crime or are no longer qualified to maintain a certain level of a security clearance, be careful what reason you give for firing that person. Otherwise, you may be forcing that person to later “self-publish” negative facts about themselves. Ask your lawyer if there are other valid legal grounds you can state as the basis for the firing of an employee when controversial issues were also involved. This can cause complex problems — yet honesty is always crucial; and
  10. Only share objective information. Never tell a prospective employer about any workplace gossip tied to the past employee’s personal problems. You should only be sharing data that can be easily verified by reviewing the employee’s personnel file.

While all these tips should help you reduce your chances of being sued based on a claim of defamation (or the other grounds stated at the beginning of this article), you must remain aware that providing too little information about a past employee can potentially render you liable in a lawsuit brought by the new employer. More facts about that problem are provided below.

Can you be sued for negligent referral, fraud or misrepresentation due to your reference?

Those types of lawsuits are becoming more common. If you had knowledge that a past employee behaved violently in your workplace, made serious verbal or physical threats against others – or sexually harassed one or more workers, you might need to disclose some of that information. This is a topic you must discuss in much greater detail with your Houston employment law attorney since Texas law may or may not provide you with adequate protection from liability.

If you’re uncertain how to provide a reference for a past or departing employee, please feel free to contact one of our Murray Lobb attorneys. We can provide you with sound legal advice regarding such topics. Our firm can also help you create employee release and authorization forms. Should you be sued by a former employee, we’ll be available to defend you through every stage of any proceeding.

Should My New Texas Business Be Formed as an “S” Corp or an LLC?

While deciding which business structure will best serve your needs, always consider several key factors. For example, look at how many employees you plan on hiring and how much time you want to spend managing the company. You should also make sure you’re fully protecting your personal assets against future lawsuits and not incurring any excess taxes.

One excellent way to choose the best structure for your company is to meet with your Houston business law attorney. The two of you can discuss all that you might gain (or lose) by starting your company as either an LLC (limited liability company) or an “S” corporation.

Before noting some of the basic steps involved with forming an LLC and an “S” corporation, here’s a brief overview of the unique offerings and drawbacks of both structures.

What are some chief advantages and drawbacks of starting an LLC?

Depending on the size of your business and the types of goods or services you’re selling, you may prefer an LLC for the following reasons.

  • It offers a less formal structure. An “LLC” is also often easier to manage than an “S” corporation, especially when you have few employees. And you’ll never need to have any board meetings to tackle problems tied to issuing stock certificates;
  • You can readily change this business structure (once all proper paperwork is filed). If

you’re running an “S’ corporation, you’ll first have to arrange a formal board meeting before trying to change the business structure);

  • All members of an “LLC” do not have to be permanent residents or U. S. citizens;
  • You can more easily divide up who handles most of the daily work – while allowing others to just be investors. You can also simply divide up the profits based on each person’s initial investment and daily work contributions;
  • Disadvantages of an “LLC” compared to an “S” corporation. These can include having all the company profits subjected to self-employment taxes. Your growth may be limited since your business cannot issue any stock shares. Always ask your Houston business law attorney about any other potential disadvantages that may apply to your unique situation.

Why do some entrepreneurs prefer forming “S” corporations – despite the limitations?

  • Formality is viewed more favorably by some. Outside businesses often prefer interacting with companies that employ a more formal corporate structure;
  • You can often use this structure to avoid double taxation of income;
  • Profits are passed on to the shareholders (by way of their paid dividends). Therefore, the company does not have to pay taxes on those profits;
  • Possible drawbacks. All shareholders must be permanent residents or U.S. citizens. There can be no more than 100 shareholders. Added state filing fees may apply. Also, the IRS

tends to monitor “S” corporations very closely since some people try to improperly avoid certain taxes by wrongfully using this business structure.

What are some basic issues that must be addressed while forming an “LLC” in Texas?

  • Membership. You’ll need to decide how many owners or members you’ll have and if they’ll share all the managerial duties;
  • Naming your business. You must choose a unique name to avoid confusion with already existing companies;
  • File all required forms. You’ll need to start with a certificate of formation (Form 205) that must be filed with the Texas Secretary of State’s Office;
  • Registered agent. You must name a registered agent who can accept the service of process on behalf of your company;
  • You’ll need to create an operating agreement. It’s usually best to ask your Houston business law attorney to draft this document for you after you’ve

discussed the precise nature of your new business;

  • Fully satisfy all state and federal paperwork requirements;
  • Obtain all required state and local business licenses that may be required for your industry.

(Note: Some of these same steps may also be required while forming an “S” corporation below, regardless of whether they’re listed).

Here’s a brief review of key issues involved in starting an “S” corporation in Texas

  • The drafting of Articles of Incorporation. These must be filed with the Texas Secretary of State’s Office;
  • Stock certificates must be issued to all initial shareholders;
  • All applicable business licenses and certificates must be obtained in a timely manner;
  • You’ll need to file Form 2553 with the Internal Revenue Service. (Your lawyer can first check to be sure you meet all the qualifying terms for creating an “S” corporation).

Please feel free to contact one of our Murray Lobb lawyers so we can answer your questions about each of these business structures. We can also help you draft all the documents you’ll need to transact business throughout the year.

How Texas Estates Are Often Handled When Wills Cannot Be Found

Given how hard most people work to pay their bills and save up for their retirement years, you would think all of us would want to maintain strict control over who will inherit from us. Yet statistics reveal that only about forty percent (40%) of Americans have faced their mortality and asked their lawyers to help them create Wills.

When we make this error, we increase the chances that relatives we don’t know very well – or perhaps even like – may one day receive all our wealth. That’s regrettable since most of us have specific family members who would benefit the most from an inheritance. And great charities and faith-related beneficiaries can always use our funds to bless many others.

Hopefully, this article will help you see the advantages of meeting with your Houston estate planning attorney to create a first Will — and then later update it as your estate grows.

What are the five ways Texas wealth is often distributed when there is no Will?

  1. Under the state’s intestate succession laws. While these are useful, they do not let you determine who will inherit from you. Furthermore, if you own any of the following types of accounts or property, you must make sure that you’ve provided an updated list of beneficiaries to those who maintain these accounts (or other forms of wealth) on your behalf.
  1. Proceeds from a life insurance policy
  2. Retirement account funds that may include a 401k, IRA — or another, similar type of account
  3. Property that you and another person own together
  4. POD or payable-on-death account funds
  5. Property that’s already held in some type of living trust
  1. Through the filing of an Affidavit of Heirship. This approach can normally only be used when the assets requiring a title transfer are real estate. However, you can sometimes use this type of affidavit for non-property assets – depending on the rules of the institution that currently manages those items. Be prepared to discuss this topic in detail with your lawyer since there are certain limitations involved with using this type of affidavit.

For example, some title companies will not accept these types of affidavits when you’re trying to establish a legally valid chain of title for property. In addition, since no personal representative will be appointed, there won’t be anyone who can manage the estate’s assets and pay all required debts. Also, two witnesses must sign this type of affidavit and both are liable for any false statements that may be contained in it.

  1. By filing a Small Estate Affidavit. If your attorney takes this approach, he’ll first have to determine if the estate is solvent and if it’s worth $75,000 or less. In addition, the affidavit can only be used to transfer title to a homestead. Furthermore, there will be no appointed personal representative to collect all the assets, pay all required debts and deal with necessary third parties. Financially responsible witnesses must also sign this type of affidavit.
  1. Using a probate court proceeding called a determination of heirship. The advantages of this approach include having a hearing, the presentation of evidence and a court issuing a judgment accepting or rejecting all submitted affidavits of heirship. However, some relatives eager to settle an estate may find this approach less appealing since it can be rather costly – mainly due to the need to file various pleadings with the probate court. You must also coordinate everything with the court appointed attorney ad litem who will investigate whether there’s any possible fraud regarding the filed affidavits of heirship. However, obtaining a court ruling that specific parties are lawful heirs is very useful;
  1. Handling the matter as either an independent or dependent administration of the estate.

The difference between these two types of administrations is based on the degree to which the probate court must be involved in the proceedings. The term “independent administration” simply means that the court has minimal involvement.

Whichever approach is chosen, there will need to be an appointment of a personal representative who is qualified to receive letters of administration provided by the probate court. These “letters” allow the personal representative to collect all the assets and pay all the debts. The biggest drawback of this approach is that it’s often the most expensive way to handle the estate of someone who died without a Will.

Hopefully, this general information has helped you see that creating a Will is one of the best ways to move forward into a more stable financial future.

Please feel free to contact one of our Murray Lobb lawyers so we can answer any questions you may have about settling someone else’s estate — or drawing up a Will (or full estate plan) of your own. We appreciate the opportunity to help our clients handle these types of matters and look forward to hearing from you soon.

Tenants: Beware and Negotiate

In a matter of first impression before the Texas Supreme Court, the Court ruled that a Residential Lease provision that obligated the Tenant to pay for any damages that result from “any cause not due to Landlord’s negligence or fault” was not void and unenforceable.

The background facts:  A young lady, Carmen White, got her first apartment and signed a standard Texas Apartment Association (“TAA”) lease.  Her parents gave her a washer and dryer set as a gift.  While using the dryer, it caught fire and burned her apartment and others nearby.  The damages to the apartment complex exceeded $83,000.00.  The source of the ignition was unknown and no fault was placed on White or the Landlord.  The landlord’s insurance company paid the claim, subrogated, and demanded reimbursement from Ms. White.  When she refused to pay the insurance company brought suit against her. 

The Procedural facts:  The case was tried to a jury.  After trial, the jury answered “no” to a question asking if White’s negligence proximately caused the fire.  However, the jury answered “yes” to the question whether White breached the lease agreement by failing to pay the casualty loss.  The jury awarded the landlord $93,498.00 in damages.  White moved for judgment not withstanding the verdict which was granted and the trial court rendered a take-nothing judgment.  The Court of Appeals affirmed the trial court ruling holding that that the Reimbursement Provision was void as against public policy.  The Appeals Court found a fatal conflict between the Reimbursement Provision’s broad language and Chapter 92 of the Texas Property Code restricting a Landlord’s ability to contractually allocate repair responsibilities.

The Supreme Court ruling:  The Supreme Court was to determine, as a matter of first impression, whether public policy embodied in the Texas Property Code precludes enforcement of a residential lease provision imposing liability on a tenant for property losses resulting from “any other cause not due to the landlord’s negligence or fault”.  In so holding the Supreme Court (in a 5-4 decision) repeatedly stated the well known legal axiom that “Parties in Texas may contract as they wish, so long as the agreement does not violate the law or offend public policy, recognizing the the Legislature has limited the freedom of a landlord and tenant to contractually allocate responsibility for repairs materially affecting health and safety.  Interestingly in footnote 4, the court acknowledged that above the signature block, the lease prominently states that the lease can be modified by agreement of the parties, but neither party requested modifications to the Reimbursement Provision. 

The Lease contained a reimbursement provision standard in the TAA lease which obligated the Tenant to pay for any damages that result from “any cause not due to Landlord’s negligence or fault”.

As we all know it is almost impossible to get a Landlord to revise any provision in a standard form lease, but if you are to avoid the tragedy that happened to Ms. White, you must negotiate a modification of the Lease.

Be aware that the TAA Lease is a legal document and forms a binding contract.  You should consult an attorney for help revising the Lease. 

We would first add a sentence to Section 10, Special Provisions.  We would write in the blanks a sentence to limit my liability.  For instance, “Notwithstanding anything to the contrary, Tenant shall never be responsible for repair, or liable for damages to Landlord’s property, including other units in the complex, unless such damage is proximately caused by the negligence of Tenant, Tenant’s guests, or invitees.”

Secondly, we would strike out certain language contained in Section 12. We would strike out “or any other cause not due to our negligence or fault”, at the end of the first sentence of Section 12.

We firmly believe that no residential Tenant should be held responsible to repair other units damaged or for property losses “resulting from any other cause not due to the landlord’s negligence or fault.”  Do not let this happen to you.

How the Texas Business Opportunities Act Seeks to Help Consumers

One the main goals of the Texas Business Opportunity Act is to protect consumers interested in starting their own businesses from scam artists eager to defraud them out of their money. When ads appear on TV or via email — promising large profits in exchange for a small, initial investment – it’s never wise to assume a valid offer is being made.

Some of the most common business opportunity ads often claim that you’ll need to do very little work before you’ll start receiving your first profits. That’s rarely an honest offer since running a business is often hard work. Now that so many older Americans (and others) have been laid off from their jobs, it’s critical to carefully review each offer and look for “red flags” warning you of possible fraud.

The following information will help explain some of the different ways that the Texas Business Opportunity Act tries to regulate the way that many programs go about seeking investors and operating in this state.

Types of business offers governed by the Texas Business Opportunity Act

  1. Those that require the buyer to pay at least $500 to begin setting up the business that’s being sold;
  2. Where the seller claims that you’ll earn back your initial investment (or more) in profits; and
  3. The seller promises to do one or more of the following acts to close the deal:

a). Provide you with a location – or help you find one (that’s not currently owned by you or the seller) where you can use or operate the goods or services being leased or sold by the seller;

 b.) Help you create a marketing, sales and production program (unrelated to a formal franchise business governed by separate laws);

 c.) Promises to buy back products, equipment or supplies (or goods made from them) provided to you so you can run the business.

To further protect the public from dishonest business offers, the Attorney General of Texas requires parties making offers that meet the description above to first register with the Secretary of State and provide any applicable bond or trust account required.

Whenever you become interested in investing in any business opportunity that even vaguely appears to be covered by the Texas Business Opportunity Act, it’s always best to review the matter with your Houston business law attorney. Our firm can check to be sure the seller’s company has formally registered with the Texas Secretary of State’s Office and posted all required funds.

As a potential investor, you should also be provided with key information (required by law) about any company – before ever tendering any money.

Legal disclosures companies must provide

When a business offer is made in Texas and is covered by the Texas Business Opportunity Act, the seller must provide specific information to the buyer ten (or more) days before any contract is signed by the parties and before any money is paid to the seller.

Here are some of the disclosures that must be provided.

  • Names and addresses of all parties directly affiliated with the seller in the business being marketed;
  • A specific listing of all services the seller is promising to perform for the buyer (such as setting up a product marketing program);
  • An updated, current financial statement covering the seller’s finances;
  • All details covering any training program being offered by the seller;
  • How all services will be provided by the seller regarding the products and equipment being sold – and all key terms involved with the leasing agreements covering business locations being provided to the buyer;
  • Information pertaining to any of the seller’s bankruptcies (or civil judgments obtained against the seller) during the last seven years.

The importance of distinguishing multi-level marketing offers from pyramid schemes

Make sure the business you’re interested in requires you to do some type of work (such as selling products or services) before paying you any profits. If you are only being urged to solicit additional participants in the business, there’s a strong chance that you’re being “tricked” into building a pyramid scheme that may earn you short-term gains before the entire investment program collapses.

Always obtain legal advice regarding any business that sounds too much like a quick way to earn a lot of money. Attractive shortcuts to huge profits – especially those promoted in many weekend hotel and restaurant seminars – are often sham operations.

Please contact our law firm so we can provide you with the legal advice you’ll need before investing in any new business opportunities.