What Types of Deceptive Trade Practices Are Forbidden in Texas?

Too many Texas consumers regularly lose money on purchases due to misleading advertising and fraudulent business practices. When those events occur – especially when large sums of money are involved – it’s often necessary to contact the Consumer Protection Division of the Texas Attorney General’s Office. That division is charged with enforcing the Texas Deceptive Trade Practices Act (DTPA) that’s set forth in the Texas Business and Commerce Code.

A Consumer Protective Division lawyer must then investigate the consumer complaint and decide if any legal remedy like an injunction must be pursued. The wronged consumer should also consider hiring a Houston business law attorney to file a lawsuit seeking Texas DTPA damages from the merchant or company that allegedly violated the DTPA.

Here’s a brief look at those who may want to file these types of complaints and lawsuits, followed by a review of some of the commonly alleged DTPA violations — and the basic types of civil damages available to plaintiffs who win these kinds of cases.

The general categories of plaintiffs under the Texas Deceptive Trade Practices Act

  • The average, individual consumer buying property or goods. When buying a home, a car, indoor furnishings or other personal property, a consumer has the right to complete such transactions without being fraudulently manipulated by false advertising or other schemes that cause the loss of hard-earned money;
  • Those seeking repairs (or other types of service) work. Consumers must be quoted fair and accurate rates. They must also be provided with correct information about the training and experience of those who will be performing the requested services;
  • Individuals or companies seeking to close expensive business transactions, within certain established financial limitations. For example, a person or company seeking to buy a business franchise worth three hundred thousand dollars will usually be covered. However, the Texas DTPA is not intended to cover any business consumer with assets worth more than $25 million or more – or a business entity with $25 million (or more) in assets that’s controlled or owned by another business or corporation that has assets valued at or above $25 million.

Types of complaints and claims often brought under the Texas DTPA

Since highly diverse claims are covered by this statute, the following list only provides a general sampling of the complaints often alleged by consumers.

  • Being sold goods or services that were not actually made by the company that claimed to have created or provided them. In other words, the seller tried to mislead the buyer as to the true maker or provider of what was being sold;
  • Buyers were intentionally misled as to where certain goods or services originated. It’s against the law to sell goods claiming they were grown or made in a specific country when the seller knew that wasn’t true. Likewise, you cannot advertise that certain services will be provided by employees or contractors from one city or region who will be coming from another location;
  • Advertising goods or services as having the approval or sponsorship of specific individuals or groups when that’s a fraudulent claim. For example, you cannot sell certain medical devices and claim they’re backed by the American Medical Association (or a local medical group) when that’s untrue. Likewise, there can be no attempt to claim that the seller had direct ties to another specific company or government entity when that’s a fraudulent misrepresentation;
  • Selling goods or services and saying that they meet certain objective standards (or are made of specific types of materials) when that’s an intentional misrepresentation. For example, a company cannot claim that a couch was made of leather when it knew it was made of Naugahyde. Likewise, a company cannot claim all service personnel have earned specific licensing credentials – or are bonded – when it knows that’s false information;
  • Making purposeful “bait-and switch” sales. It’s a deceptive trade practice to run a print ad (or an online or televised commercial) that states that a store is selling a specific brand of products – or providing a certain grade of service by specially trained personnel – when the seller knows those facts to be false. Likewise, a company cannot claim that highly experienced contractors with over 10 years of experience are being sent to someone’s home to repair a major roof leak – when the actual workers have very little experience handling such tasks;
  • Misleading the buying public as to why certain goods are being sold at a major discount. For example, a merchant cannot claim that an accidental, large shipment of goods came in and they must now be sold at a greatly reduced price – when that merchant is really trying to unload damaged goods on unsuspecting buyers;
  • Selling a car, truck or other vehicle after rolling back the odometer. When a seller has any reason to believe that someone has reset or rolled back an odometer – or has personally done so because that part stopped recording mileage – all such facts must be fully disclosed to each potential buyer;
  • Taking advantage of the buying public after a natural disaster has been formally declared by the state’s governor. The DTPA does not allow anyone to sell goods at excessive or unfair prices, especially after a natural disaster like a flood. Therefore, no store can charge inflated prices for necessities like water, food, fuel, flashlights, batteries or medicine.

While this list isn’t comprehensive, it should provide a clear idea of the types of fraud and misrepresentation that can cause lawyers with the Texas Attorney General’s Consumer Protection Division – and individual consumers — to pursue through DTPA litigation.

Penalties or damages that can be sought for Texas DTPA violations 

As your personal lawyer will tell you, the Texas Attorney General’s public remedies may include different types of injunctions, restraining orders and penalties. Should you file a private lawsuit, the penalties awarded to you can be influenced by whether the wrongful conduct was knowingly committed. When a violation of the DTPA was “knowingly” committed, penalties are sometimes awarded at the level of three times the sum awarded for the economic damages.

If you believe your consumer rights under the Texas DTPA have been violated, you should contact one of our Murray Lobb attorneys. We can provide you with the timely advice you’ll need while we help you decide whether to file a DTPA lawsuit on your behalf.

EEOC Guidelines: Training Employees About Workplace Discrimination

To create and maintain a professional work environment, employers must make sure everyone interacts in a respectful manner. The best way to promote respect is to provide proper employee training that carefully defines discriminatory behavior and clearly states what won’t be tolerated.

Newly hired employees should always be trained, even if this must be done individually. They must learn how to recognize forbidden forms of discrimination. Periodic retraining on sexual harassment and other common forms of discrimination should also be mandatory. If you don’t already have a hard copy or online employee handbook that clearly sets forth your workplace standards on discrimination, you can ask your Houston employment law attorney to help you draft one.

Here’s a review of the types of workplace discrimination and harassment that should be clearly forbidden in writing and during oral training sessions. After presenting information on these topics to all your employees, it’s best to also provide a bit more in-depth training to your supervisors and managers who will need to handle the discipline, complaints and investigations usually involved with reported acts of alleged discrimination.

What types of workplace discrimination are most common today?

  • Treating others differently due to their race, skin color, ethnic background or country of natural origin. No job applicant or employee should ever be treated unfairly due to any of these facts or traits. When investigating this type of claim, you may need to privately admonish and inform the wrongdoer that such behavior is legally forbidden and can lead to dismissal. (In egregious cases, immediate firing may be required.) Employers should keep detailed notes about all such complaints and formal reprimands. It’s wise to always have disciplined employees sign and date forms indicating that they’ve been warned that additional acts of discrimination may lead to dismissal. All employee files and complaints must be kept safely locked up and only accessed by a few managers;
  • Discrimination based upon a person’s sex including sexual harassment or current pregnancy status. All workers must learn to respect their coworkers, regardless of another employee’s sex. Stay open to questions and provide answers that are clearly supported by your company’s anti-discrimination policies;
  • Disability status. Regardless of whether someone was born with a physical disability or acquired one later in life, every effort must be made to help that person handle his/her job, unless doing so would place an undue burden on the employer. (Requests may often involve making facilities more accessible or changing an employee’s work schedule so it will interfere less with a medical disability);
  • Age. When workers are young, it’s hard for them to believe that age discrimination is real. However, as they grow older, they’ll start noticing how the most desirable promotions are often given to younger staff members – and not to older workers. And older workers often find themselves in the groups being laid off when a company claims it’s going through hard times. This type of discrimination is often self-defeating since older workers often: (1) have excellent problem-solving skills due to all their experience, (2) usually enjoy learning new skills and helping to train newcomers – and (3) often have the lowest rates of absenteeism due to their dedication to their employers;
  • Religion. Sadly, although most American adults know that one main reason this country was founded was to extend religious freedom to all citizens, too many people today treat coworkers with disrespect when they appear to follow faith practices different than their own;
  • Discrimination related to an employee’s genetic information (or family medical history). Both state and federal laws forbid this type of discrimination. One of the federal laws is named the Genetic Information Non-Discrimination Act (GINA). Title II of GINA specifically prohibits workplace discrimination based upon an employee’s genetic information. Employers must exercise great care when hiring the employees who must handle all company medical insurance and claim forms. These workers must understand that any knowledge they accidentally gain about an employee’s medical condition(s) or family history must be held in the strictest confidence.

Special training for company managers and supervisors

An additional, separate training should be periodically presented to these employees to be sure they fully understand how to handle every discrimination complaint they receive. After all, they will be playing a key role in investigating these complaints and making sure they handle their responsibilities in strict compliance with all state and federal laws.

Be sure that these higher-level employees have made the complaint process both easy and transparent for workers. It’s their job to remind employees that they will not be punished for coming forward with claims – or acting as witnesses for those who are filing claims.

In your special training program for these workers, be sure to also address the following topics.

  • Managers must understand that detailed, investigative notes must be kept. When an employee files a complaint based on alleged acts of discrimination or harassment, you need to obtain information about each time such acts were committed and get the names of all possible witnesses. Dates and times are crucial bits of information. If more than one person was involved in the illegal behavior, be sure to write down all names – and speak with each of these individuals separately;
  • All managers and supervisors need clear definitions of what can constitute a “reasonable accommodation” for a disabled employee. It’s a good idea to review the content of your training with your attorney prior to making this type of presentation;
  • Retaliation. Inform higher-level employees that all forms of retaliation for reporting alleged acts of discrimination or harassment are strictly forbidden – and can result in liability for those involved;
  • Acceptable religious attire, hairstyles and practices. Explain to your managers what type of religious clothing is fully acceptable in the workplace. You should also tell them which hair or beard styles should be allowed, based upon an employee’s stated religious beliefs. When possible, managers should try to accommodate time off from work to attend special worship services – if doing so won’t cause an undue burden on co-workers or the company;
  • Sexual harassment. Supervisors and managers must be fully acquainted with all the types of language and behavior that can constitute sexual harassment. Remind them that offensive cartoons or signs related to sex should never be posted or circulated at work;
  • Privacy is crucial to all investigations. Remind all of those involved with investigating any claims of discrimination or harassment that they must never share any information they gain with non-investigative employees – or anyone outside of the company – since confidentiality is critical for everyone.

Please feel free to contact one of our Murray Lobb attorneys if you have any questions about how you’ve drafted portions of your employee handbook, especially sections addressing discrimination and sexual harassment. We can provide you with useful advice and are always available to help should an employee file a claim with you or the EEOC alleging any form of workplace discrimination.

Key Provisions of the FLSA Most Businesses Must Uphold

The Fair Labor Standards Act (FLSA) is a federal law governing such employee issues as the minimum wage, overtime pay, child labor restrictions and record-keeping practices. It’s the duty of the Wage and Hour Division of the Department of Labor to administer this law.

The FLSA benefits exempt and nonexempt employees somewhat differently. For example, exempt employees do not have a federally guaranteed right to overtime pay — and minimum wage provisions usually don’t apply to them. Company executives and “outside sales” employees are among those who often hold exempt positions. Human resource personnel must fully understand the different rights that apply to these distinct classifications.

Here’s some additional information on jobs not usually covered by overtime pay, the wages owed to nonexempt employees, laws designed to safeguard children and basic ways that the DOL enforces violations of the Fair Labor Standards Act.

Workers or specific professions often exempt from overtime pay

  • Railroad and air carrier employees
  • Taxi drivers and some motor carrier workers
  • Those employed on American vessels at sea
  • Local delivery workers who are compensated under specific rate plans
  • News editors, announcers and chief engineers working for non-broadcasting stations
  • Farmworkers

Basic nonexempt employee wage rights

The current minimum wage in Texas is $7.25 an hour. However, waitstaff and other employees are governed by unique standards that are supposed to bring them up near (or equal to) the minimum wage. In addition to the wage rights set forth under the FLSA, state and municipal laws often provide somewhat higher minimum wages to nonexempt employees. Your Houston employment law attorney can update you on any recent changes in Texas law on this point.

Another important wage guarantee provided by the FLSA involves overtime pay. Nonexempt employees who work over 40 hours per week must be paid one and one-half times their regular pay rate for additional hours. Therefore, if a nonexempt employee normally earns $12 an hour – and is asked to work five extra hours one week – that employee must be paid $18 an hour for each of the additional five hours (in addition to the regular rate of pay for the 40 hours).

In some states, there are laws limiting how many hours a day a worker can be on duty. All employers must make sure they honor such provisions.

Federal job protections designed to benefit children

In most workplace settings, children must be age 16 or older to hold down a job – although they must be at least 18 years old to drive a motor vehicle for an employer – or to work in mining. However, exceptions have been made so that the FLSA does not apply to child actors, kids delivering newspapers or those making simple crafts at home.

Unfortunately, few restrictions protect children who’ve been hired as farm labor. Once a waiver has been obtained from the Department of Labor (DOL), a child as young as 10 or 11 can be hired to help with hand harvest labor.

There is also a “youth minimum wage” that applies to children (age 20 and younger) that’s equal to $4.25 an hour; it can be paid for 90 consecutive days of work. This makes summer jobs for teenagers easier to come by – although the pay isn’t very high. However, employers cannot displace any older workers receiving the standard minimum wage to simply save money by hiring teenagers at that lower pay rate.

The DOL’s Wage and Hour Division is charged with enforcing the FLSA

A complaint can be filed against businesses that violate any FLSA employee rights. While willful violations can be prosecuted in a criminal court, less serious or unintentional mishandling of FLSA duties may only result in civil liability. For example, if your office hires employees below the age of 16, you might be required to pay a fine of up to $1,000 for each underage young person on your payroll. A civil court might also impose specific changes in the way you handle certain hiring and record-keeping practices to prevent similar mistakes in the future.

Should the Wage and Hour Division decide that your company has failed to fully pay all that’s owed to specific workers, it can file suit against you to recover the unpaid sums of money — or obtain an injunction that will forbid any further violations of the FLSA.

If you’re uncertain whether your office is in full compliance with all FLSA regulations and all relevant Texas employment law statutes — please feel free to contact one of our Murray Lobb attorneys. We can help you review all your current practices involving the payment of a minimum wage, proper classification of all workers, the handling of overtime assignments and any other duties covered by the FLSA. A periodic review of all these workplace standards can help your business avoid any fines or lawsuits.

Is Your Business Honoring All Federally Protected Employee Rights?

Most personnel managers must work hard to keep up with all the federally guaranteed rights owed to employees and job applicants. And when small companies aren’t required to do the same, they should still try to offer all the legal rights referenced below since every office runs more smoothly when employees are treated with respect and granted as many rights as possible. Employers must also be sure they’re upholding all state employment laws that are often more favorable to employees.

Although many federal laws govern various employee rights, there are five specific ones that set the core standards involving discrimination — and provide fairness when addressing worker hours, wages and time off to handle urgent medical needs. All business supervisors and managers can benefit from reviewing the following brief summaries of Title VII, The Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA).

Basic employment standards established by Title VII

Businesses with 15 or more employees must abide by the full provisions of this law. While some might assume that employers with fewer than 15 employees can openly discriminate, lawyers frequently point out that other federal statutes (42 USC Sections 1981 and 1983) still protect ethnic and racial minorities against discrimination. These statutes govern the formation of contracts — and hiring employees always involves some type of oral or written contract.

Title VII strictly forbids all employers from discriminating against anyone regarding all

possible terms and conditions of employment. Therefore, employers cannot discriminate when handling any of the following activities.

  • Recruiting and hiring
  • Training and assigning work
  • Evaluating or measuring work performance
  • Disciplining
  • Promoting and transferring
  • Providing all promised benefits – including those owed after employment ends
  • Discharging

If your office has any questions about these standards, it’s best to contact your Houston employment law attorney to discuss your specific concerns in greater detail.

Employee rights guaranteed by the ADEA

While it may seem like a non-existent problem to younger workers, discrimination against older employees often incurs in many workplaces, especially when workers are nearing retirement when added benefits will likely vest. The Age Discrimination in Employment Act is designed to protect all employees age 40 and older when they work for an employer with at least 20 total employees.

All the basic employer activities listed above (regarding Title VII) must be applied fairly to older workers. Stated differently, the federal government forbids treating younger workers in a preferred manner over older workers who often have both strong skills and highly valuable years of experience.

Rights guaranteed under the ADA to the disabled

When a job applicant or hired employee can demonstrate his or her ability to handle all required job functions – without or without reasonable accommodations – discrimination is strictly forbidden. The ADA defines a disability as a physical or mental impairment that substantially limits any of a person’s major life functions or activities.

Reasonable accommodations should be offered to help the disabled person fully perform all required tasks, unless such adjustments would result in a fundamental alteration or change in meeting the employer’s program needs.

While the ADA has helped many workers, there’s still a need for greater societal change since many employers who can see a job applicant’s disabilities will privately opt to only hire those who don’t appear to have any cognitive or mobility issues.

Rights provided by the FLSA to all employees

The federal government has used the Fair Labor Standards Act to establish basic standards governing worker hours, minimum rates of pay and the handling of overtime hours. However, state law can offer more favorable rights, including a higher minimum wage.

Individual employers often choose to designate workers as either at-will employees who can be dismissed without cause or contract employees who must be provided with just reasons for their dismissal. The U. S. Department of Labor (DOL) states that if a company is a covered “enterprise,” and its workers are not exempt (or contract employees), the company must comply with all the FLSA provisions. Since determining what constitutes an “enterprise” isn’t always straightforward, you may need the help of your employment law attorney to interpret this for you. However, the DOL states that even if a company doesn’t qualify as a covered enterprise, all of its employees may still be protected by the FLSA provisions if their assigned tasks meet “interstate commerce” requirements.

Worker privileges available under the Family Medical Leave Act

This legislation applies to private employers with 50 or more employees working within 75 miles of the employer’s main worksite. To qualify for the extended leave provided under the FMLA, workers must have been employed by the company for at least twelve (12) months prior to making a request — and meet other specific criteria set forth under the law. Employees are supposed to be reinstated to their past jobs (or very similar ones) upon returning.

The FMLA is often used by a worker to care for a very ill, immediate family member or when the covered employee is personally battling a serious medical condition. Great care must be exercised when any worker states that s/he is not yet physically able to return once the full amount of leave allowed has been used (to avoid running afoul of provisions of state disability laws and the ADA.)

If you have any questions regarding how your office should apply any state or federal laws to employee issues, please don’t hesitate to call one of our Murray Lobb attorneys. We can also provide you with legal advice as to how some of these laws may have been recently modified by new Texas statutes.

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.

Be Careful When Creating a Company Policy on Moonlighting

When addressing employee management issues like moonlighting, it’s often best to seek out a middle ground. If you’ll first establish clear work standards that fully protect your company’s intellectual property and ongoing research and development efforts, you should be able to accommodate those who can responsibly handle a second job outside their regular work hours.

Perhaps the best way to create a balanced moonlighting policy is to first review your main concerns about allowing employees to do any outside work. You should then try to objectively embrace your employees’ reasons for wanting to take on another job. Although you do have greater freedom to dictate when exempt workers put in their hours, that’s not always the case when interacting with at-will employees who are paid hourly.

Here’s a look at the competing interests involved when trying to design a moonlighting policy for your unique workplace. That information is followed by some general guidelines that you’ll want to review with your Houston employment law attorney. Employees do have certain privacy rights about how they conduct their lives outside of work and those must be respected.

Legitimate reasons why employers often want to limit moonlighting

  • To protect the company’s intellectual property. No employer wants to worry about employees knowingly (or accidentally) sharing confidential, proprietary information with another employer – or using such information while starting their own companies. Non-disclosure agreements are crucial to protecting these types of rights;
  • To maintain control over employee schedules for valid staffing purposes. Many companies require employee flexibility with work schedules in order to cover the ongoing, often unpredictable nature of their work volume. For example, customer “help” or call centers often experience times of peak calling. However, these fluctuations can change from week to week – or even day to day. People hired to work in these environments can be legitimately required to forfeit or greatly limit outside work – if those unique requirements were clearly stated in writing prior to their hiring;
  • A desire to have employees provide the company with their very best efforts. When employees take on “second” jobs – they’ll often be tempted to put in too many total work hours each week. It’s completely legitimate to want every worker to show up on time each day, fully rested and able to adequately focus on their assigned tasks;
  • Safety concerns. Moonlighting frequently causes many people to lose sleep. When they show up to your workplace greatly fatigued, they can pose a serious safety threat to their own health – and that of their coworkers;
  • Loyalty and commitment. While a moonlighting employee can provide you with these desirable attribues – you have every right to expect them to demonstrate respect for your company while interacting with others.

Although these aren’t the only reasons you may want to carefully limit employee moonlighting – they do touch upon common concerns. Keep in mind that it’s your right to carefully monitor the quality of work of your moonlighting employees to be sure it doesn’t start to decline.

Some of the valid reasons many workers want to do some moonlighting

  • Additional money to support themselves and other family members. Regardless of what you’re paying each worker, everyone periodically encounters unexpected medical bills and other crises that require extra income;
  • A desire to realize their own entrepreneurial dreams. Few people can afford to simply quit their “day jobs” while trying to launch new businesses. If employees pursue this type of goal while using their own resources outside of regular work hours, there may be few issues. However, if their companies will cause them to compete for clients with your business, restrictions are fully justified;
  • An interest in taking on paid union work to improve conditions for themselves and others in their industry. Employers must tread lightly when trying to restrict such activities. While company loyalty is a legitimate concern, this isn’t necessarily violated if the workers are openly addressing key safety and health issues that affect all employees.

These are just a few of the many reasons why some workers are strongly motivated to take on moonlighting jobs.

General guidelines for drafting a moonlighting policy

  • Companies should rarely try to completely forbid moonlighting. However, as your Houston employment law attorney will tell you, it’s best to inform all “new hires” if their jobs may require sudden changes in their weekly schedules or limited overtime hours on short notice. Whenever possible, try to remain flexible with workers – or your best and brightest ones may leave so they can pursue moonlighting and other privileges elsewhere;
  • Decide if you need to specifically address this topic in your employee handbook. If you don’t wish to create a “moonlighting” policy, you can ask your attorney to provide you with hiring contracts (and/or) non-disclosure agreements. These will clearly explain to all employees that they’re legally forbidden to share any company trade secrets, research and development data – or other proprietary information – with outside parties without first obtaining express, written permission from your company. It’s also wise to have all employees sign non-compete contracts with your company before they start to work;
  • Consider requiring employees to obtain your permission before taking on “second” jobs.  Should you decide that you want to expressly forbid an employee from taking on a specific “moonlighting” job, always immediately speak with your attorney – to be sure you’re within your legal rights to do so. You’ll need to carefully document all your reasons to protect yourself from any future litigation;
  • Try to be accommodating when an employee indicates that s/he will not be competing with your company in any way. After all, it’s entirely possible that you may one day become a client of your employee’s fledgling new company. Of course, you should still periodically touch base with all moonlighting employees to be sure no conflicts of interest have developed since they started their second jobs;
  • Use periodic job evaluations to your advantage. During these, be sure supervisors ask questions that can help determine if the employee’s outside job is starting to compromise his/her ability to provide you with top-quality work.

Please feel free to schedule an appointment with one of our Murray Lobb attorneys so we can help you draft the various contracts you need to protect your company’s proprietary interests. We can also help guide you as you create (or update) your current employee handbook on this and other topics.

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.

You Might Need a Revocable or Irrevocable Trust

Depending on the nature of the property you own and how it’s titled, you may want to ask your lawyer to create a trust that will help you meet all your estate planning needs. To prepare for such an appointment, be sure to take along two lists – one noting all the properties you own and the other indicating the beneficiaries you want to help by naming them in the trust.

Your attorney will need to ask some general questions to help you decide which one of these trusts is best suited to your current financial situation.

Before describing some of the precise differences between revocable and irrevocable trusts, this article will note some of the general reasons why they’re often desirable.

What general benefits do trusts often confer on estate planning clients?

  • They can help maximize family privacy. Most property that passes to beneficiaries under trusts is never publicly disclosed — except to the extent that certain taxes may be owed on gifts given or received. Obviously, when property passes through probate, members of the public can learn about your estate by reviewing court records. Therefore, trusts offer greater privacy;
  • Trusts can help protect your assets from outside creditors. While this goal can be achieved if you’re not attempting to defraud others when you have the trust created, you must be prepared to answer questions if creditors sue you. If you want to put assets in a trust in hopes of getting around specific Medicaid rules and regulations, you must let your lawyer explain how the government prevents fraud in this legal area;
  • They can provide specific tax advantages. For example, since property or assets placed in an irrevocable trust account are considered owned by the trust and not by the grantor who had it created, those assets will not be treated as part of your estate (for tax purposes) at the time you pass away. (However, any assets in a revocable trust when you die will be taxed as part of your overall estate);
  • Trusts can provide added financial security to a dependent disabled person. In order to qualify for some Social Security benefits, recipients must meet certain financial criteria. If they own too much property or are too wealthy, they won’t be qualified to obtain key benefits. One legal way to get around this problem is to place assets in an irrevocable trust and name the disabled person as a beneficiary. Your Houston estate planning attorney can explain this process in greater detail. Aging parents and others often set up trust accounts like this to be sure seriously disabled family members will have enough to live on in the future – long after others have passed on;
  • At the time of a divorce, most trust funds should remain protected. However, you cannot place funds in a trust prior to a divorce to try and defeat your spouse’s community property rights;
  • Properly created trusts have long helped grantors provide for the basic needs of their loved ones.

It’s important to note that all trusts are categorized as either “testamentary” or “living” (inter vivos) trusts. The latter type become viable during the grantor’s lifetime – while testamentary trusts – which are directly linked to your Will — don’t go into effect until you’ve passed away.

What are some specific benefits of revocable trusts?

  • They can provide ongoing control over all trust assets. If you create a revocable trust, you can decide if you want to serve as the trustee and move certain assets in and out of the trust when you choose, depending on the terms you created for the trust;
  • You can change the terms of the trust when you choose. This might mean picking a new trustee or altering the list of beneficiaries;
  • They are relatively easy to handle at tax time. As the grantor (or creator) of this trust, you can simply declare your earnings from the trust in your personal tax return.

What are some specific benefits of irrevocable trusts?

  • The trust assets are usually considered safe from the reach of outside creditors. This will prove true if you didn’t have the trust created to defraud others. Courts will review all aspects of the trust’s initial drafting when checking to be sure it wasn’t set it up to defeat known debts;
  • As noted above, disabled people needing to receive special Social Security benefits can often receive critical added funds from properly drafted irrevocable trusts;
  • For tax purposes, the IRS and others don’t usually view these trust assets as being owned by the grantor at the time of his/her death. Therefore, any assets in the trust at the time the grantor dies will not be added to assets outside the trust when calculating any estate taxes that may be due.

Always keep in mind that the laws controlling the creation of trusts change periodically. Be sure to always confer with your Houston estate planning lawyer who keeps up with such changes before ever trying to create or modify a trust. Attorneys also stay abreast of all new state probate laws that may affect clients’ estate plans.

Should you need any help with creating or updating a trust account, please feel free to contact one of our Murray Lobb attorneys. We’re ready to provide the legal advice you’ll need to fully protect your assets in the future. Our firm can also help you revise your estate plan as your family continues to grow and new investments are added to your portfolio.

Basic Requirements for Creating a Trust in Texas

Before meeting with your lawyer to create a trust, it should prove helpful to first review the following general legal terms and requirements that govern this effort. Once you understand your duties and the different parties you’ll need to name in the trust, you’ll be better prepared to begin listing the property you wish to transfer through your trust.

Key terms such as grantor, trustee, beneficiary and trust agreement

If you’re the party seeking to create a trust, you may be referenced in the trust document as the grantor, settlor or trustor. In order to create a valid trust in Texas, you must have the present intent or goal to create this type of document that allows you to protect property in a trust during your lifetime. Depending on the exact type of trust you create, you may also retain the right to fully control the property during your lifetime – which may include moving specific bits of property it in and out of the trust according to your needs.

Among your various duties as the grantor, you’ll need to decide who you want to name as the trustee – or controlling party – of your trust. If you choose to create the type of trust that must be managed and controlled by another party, you’ll have to decide if this should be your lawyer, a family member or another party with strong financial management skills.

As the creator of the trust, it will also be up to you to carefully describe all the duties you want your trustee to handle and how you prefer that those duties be carried out. And if you’ve chosen to act as the trustee, you should also name a potential “successor trustee” who can step in and take over if (or when) you become incapacitated — or pass away.

Additional requirements that must be met when creating your trust

You’ll need to be of sound mind, fully capable of understanding all that you’re trying to do with your property and have a proper legal purpose for the trust. In other words, you’ll just need your lawyer to state the specific type of lawful trust that you’re creating – such as a revocable, irrevocable or spendthrift trust – and which parties will receive the benefit of the properties held within the trust.

Texas law also mandates that your trust fully complies with all the requirements of the Statute of Frauds. This basically means that the trust is set forth in writing and is properly executed in full keeping with that statute so that it’s legally enforceable in a court of law. Your Houston estate planning attorney can also explain to you why certain gifts must become vested within set time periods so that they’re not in violation of the Rule Against Perpetuities.

Why you may need more than one trust

In addition to creating a trust that provides all your property with certain tax advantages during your lifetime, you may also wish to create an educational trust that will benefit your grandchildren or even one to cover the needs of a beloved pet after you pass away.

A simultaneous review of your entire estate plan will also benefit you

Whether you’re married or single, it’s always wise to carefully review all your assets with your attorney when creating a trust. In some cases, you may even want to go ahead and change how certain property is currently titled and change some investment accounts so that they’ll pay out directly to specific beneficiaries at the time you pass away – thereby lessening the duties of any party you’ve named as your trustee.

Please feel free to contact one of our Murray Lobb attorneys so we can create the type of trust you currently need. We’ll also help you review your overall estate plan and provide you with legal advice about the right way to properly manage any property or business interests not currently covered by a trust.

What Kinds of Property Can Be Placed in a Revocable Living Trust?

A revocable living trust is an estate planning document that allows its trustee to actively control many properties and possessions during an entire lifetime. Both new and older possessions can be freely moved in and out of this trust and left to various beneficiaries. Once the trustee passes away, all the property still held by the trust can immediately pass to the beneficiaries and avoid incurring unnecessary probate fees.

Since real estate, business interests and personal possessions can be quite varied, it’s wise to discuss their individual characteristics with your lawyer before placing them in this type of trust. This especially holds true if you plan on buying and selling some of your possessions on a regular basis. In some cases, it may be easiest to allow a few less expensive properties to pass through probate when their value will help minimize any fees.

Here’s an overview of the type of personal possessions, real estate, business accounts and other items that you may want to place in your revocable living trust (RLT).

Types of property often placed in a revocable living trust

  • Real estate and houses. You can place these in a revocable trust, even if they’re encumbered by mortgages. Of course, any debt still owing on the property will pass to the beneficiary;
  • Legal interests you own in most small businesses. You’ll need to give this very careful thought since you’ll want to be sure your beneficiaries can capably run the business and handle other required tasks. Also, you and your Houston estate planning attorney need to carefully read all the small print in your business contracts to be sure they don’t specifically forbid the transfer of your ownership interests into a trust. Other formalities may also become pertinent. For example, if you’re a partner in a group governed by a partnership ownership certificate, that document may have to be changed to indicate your trust is the legal owner of your share in the business. Somewhat similar issues may arise if you own shares in certain types of corporations;
  • Stocks, bonds, bank and security accounts. While it can prove useful (if allowed by the terms of each account) to place all of these in your revocable living trust, it may be simpler to just a name a TOD (transfer on death) beneficiary for one or more of these accounts. Ownership can then pass directly to your beneficiaries as soon as they produce legal proof of your death;
  • Copyrights, trademarks, royalties and patents. These can all be placed in your LRT (living revocable trust). After you pass away, the rights – and limitations – that governed these interests will pass on to your beneficiaries;
  • Gold, silver and other precious metals. Before deciding whether it’s wise to place these in your trust, be sure to get them accurately appraised;
  • Prized pieces of artwork, antiques (and less expensive) furniture. Be sure that all these unique items are properly insured before placing them in your trust;
  • Your collectibles. These often include coins, stamps and other unique items you may have spent a lifetime collecting. (Be sure all these items are also properly appraised and insured).

Should you place your life insurance policy into your revocable trust?

If you’re considering this move because you’re trying to protect the policy proceeds from having to go through probate, be aware that such proceeds automatically bypass probate and go straight to your named beneficiaries. However, if the only beneficiary of your policy may still be a child should you suddenly pass away, you may want to put the life insurance policy into your trust and name the living trust as the beneficiary. Your lawyer can then make sure that the trust names an adult to manage the proceeds of the life insurance policy for the specifically named child until s/he reaches adulthood.

How should 401(k), 403(b), IRA and qualified annuity accounts be handled?

You can create various tax problems for yourself by trying to transfer these into your LRT. Ask your lawyer if it would be better to just change the beneficiaries named for these accounts.

Should you place ownership of any vehicles in your trust?

If you use them regularly, this is often not practical. However, if you own one or more antique autos, you may want to talk with your attorney about whether it’s fully beneficial to hold title to them in your trust – or if there’s a better way to keep them out of the probate process.

Can oil and gas mineral rights be placed in a revocable living trust?

What you can do with these depends on the precise nature of the rights you hold. Ask your Houston business law attorney if you should create an assignment to these rights or try to formally obtain a new deed before transferring them into your revocable living trust.

Please contact us and allow one of our Murray Lobb attorneys to help you draw up any living revocable trusts you may need to help protect your personal property and possessions.