Kilgore & Kilgore Employment Lawyers Score a Win for Two Texas Whistleblower Employees

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On August 29, 2022, the Fifth Circuit Court of Appeals affirmed a jury verdict for two former Denton Municipal Electric (DME) employees. Michael Grim and Jim Maynard sued the DME after they were placed on administrative leave for reporting that council member Keely Briggs leaked of confidential information regarding the proposed Denton Energy Center to the Denton Record-Chronicle. The newspaper then published the information online. The day after they filed their lawsuit, they were fired.

Grim and Maynard, through their Kilgore & Kilgore attorneys, Robert Goodman and Eric Roberson, argued that their firing was unlawful under the Texas Whistleblower Act (TWA). The TWA protects public employees from retaliation when they make good faith reports of violations of law by their employer to an appropriate law enforcement authority.

Do You Suspect Your Own Employer of Retaliation or Other Unlawful Action?

Perhaps your employer is engaged in illegal activity. This is a sensitive and uncomfortable situation. To be frank, it can cost you your job if you report it. On the other hand, if you have played an unwitting part in their activities, you may be legally exposed. Do not wait until something happens. Several different laws protect whistleblowers and employees who experienced retaliation, such as wrongful termination. Contact Kilgore Law for a confidential discussion. Click this link to get the conversation started Contact Kilgore Law. For more information about our whistleblower law practice, click this link. To learn about Kilgore Law’s employment retaliation law practice, click this Employment Retaliation.

Whatever you decide to do, reach out to a lawyer before you file a complaint.

This Case Involved Complicated Facts

The facts in this case, Grim v. DME, are complicated. This is the situation in almost all whistleblower and retaliation cases. Michael Grim was the executive manager for power legislation and regulatory affairs at DME. Jim Maynard worked as an energy project development manager for DME. They became concerned when Denton City Council Member Keely Briggs leaked confidential information about a controversial $265 million gas-fired power plant contract, which was approved by the Denton City Council in September 2016. It was leaked to the local newspaper, which published the details.

City of Denton Irregularities Multiplied

Allegations were already in the air about possible irregularities in DTE’s contracting process. Grim and Maynard reported the leak to then-city attorney Anita Burgess, who took no action against Briggs, the council member who leaked the information. Subsequently, the opponents of the power plant contract obtained political control of the city council. Grim and Maynard were called into a series of closed meetings with their employer, DME. They characterized the meetings as interrogations. Both had asked that the meetings be open in accordance with the Texas Open Meetings Act, to no avail. Thereafter, both were terminated. DME cited their inaccurate and misleading responses during their interviews on the matter as the reason for their termination.

Grim and Maynard filed their lawsuit in July 2017, claiming they were put on administrative leave in retaliation for reporting a media leak of confidential contract information. This action, they claimed, violated the Texas Whistleblower Act. On July 11, 2017, the day after they filed their lawsuit, both were fired.

At trial, the jury found in favor of Michael Grim and Jim Maynard on their claims under the Texas Whistleblower Act (TWA). The award of damages was thereafter reduced, however, the amount of the judgment with interest is approximately $3 million. The jury’s finding that their employer’s actions violated the TWA was affirmed on appeal.

Texas Whistleblower Act (TWA)

Public employees who make good faith reports of violations of law by their employers to law enforcement are protected by the TWA. Whistleblowers provide an important safeguard because they are often the eyes and ears on the ground and the first to know about corporate and government wrongdoing. Although there are also federal laws that apply more broadly, the TWA applies specifically to people employed by Texas local or state government entities. This includes employees of state education institutions, commissions, boards, law enforcement, bus drivers, and others.

Employment Retaliation Claims Face Tricky Legal Questions

To bring a successful retaliation claim under the TWA, a Texas claimant must:

  • be a public employee; and
  • act in good faith when making the report.

In addition, the employee must show that:

  • the report was made to an appropriate law enforcement authority.
  • the reported action was unlawful; and
  • the employer must have taken what is legally defined as an adverse action against the employee in response to the report.

Texas Whistleblower Lawsuits Require Competent Legal Expertise in Order to Win in Court

Whistleblowers who believe they have a case should arm themselves with expert legal advice. Whistleblower lawsuits can turn on subtle legal questions like what is good faith? What is an appropriate law enforcement authority? What is an adverse action? Some critics have suggested that the law provides disproportionate protections to employers. Whistleblowers who believe they have a case need to be ready and arm themselves with expert advice.

Our Employment Lawyers Can Guide You Through Your Whistleblower and Retaliation Claims

Contact us with your whistleblower and employment retaliation questions. Competent legal representation is necessary in these complicated situations. We may be able to help you, just as we assisted Michael Grim and Jim Maynard. Reach out to us. To get the conversation started, click here Contact Kilgore Law.

The Story of Employment Discrimination in Texas by the Numbers

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According to statistics compiled by the federal Equal Employment Opportunity Commission (EEOC), there is a widespread occurrence of employment discrimination in Texas. In fact, Texas consistently accounts for ten percent of the total workplace discrimination charges filed in the U.S. The total number of all discrimination complaints filed with the EEOC fluctuates from year to year. But it has not declined appreciably since 2009.

The conclusion that employer discrimination is a persistent problem in Texas cannot be denied. How this compares with other states is interesting. Those states with high employment discrimination complaints, according to the federal EEOC are, in descending order from Texas, include Florida, California, Illinois, and North Carolina.

Workplace discrimination is a deeply personal experience with profound consequences for workers and their families. Therefore, workers need to know how federal and Texas state laws protect them from illegal discrimination and what they can do to protect themselves when they believe their legal rights are violated.

Kilgore & Kilgore Texas Employment Lawyers Hold Employers Accountable

Legal rights? Let’s discuss them. Have you experienced discrimination, harassment, assault, unjust termination, retaliation, color, or endured a hostile work environment because of race, sex, pregnancy, disability, age, or national origin discrimination? Reach out to our employment lawyers who can help you decide if what you saw or experienced is illegal and what you can do about it. To get the conversation started, fill out and submit the form you see when you click on this link Contact Kilgore & Kilgore. You can also call us at (214) 949-9099. To learn more about discrimination situations in the workplace, click this link Employment Discrimination legal practice. Also, see our many discrimination articles on our website. Just click here to read more Discrimination Blogs.

Statistics Reveal that Employment Discrimination is Rampant in Texas

The federal EEOC numbers show three unsettling trends. The first trend relates to the types of workplace discrimination issues most frequently identified by Texas workers. Of all the Texas employment charges filed, more than half (57.9 percent) were for retaliation. The other most prevalent issues include:

  • racial discrimination (31.8 percent)
  • sex discrimination (30.6 percent) and
  • disability discrimination (36.6 percent).

The above percentages total more than 100 percent because employees frequently file charges in more than one category.

Types of Employment Discrimination Complaints in Texas

The second point of comparison relates to how the total numbers stack up against national averages. Compared to national numbers, Texas employers account for:

  • 10.0 percent of retaliation charges
  • 9.4 percent of race discrimination charges (but 12.1 percent of discrimination filings based on color and 13 percent of national origin discrimination filings)
  • 9.3 percent of sex discrimination charges
  • 9.8 percent of disability discrimination charges
  • 10.3 percent of age discrimination charges

Illegal Employment Discrimination Situation in Texas Does Not Seem to be Improving

The third and most meaningful point of comparison in the federal EEOC statistics relates to the question of whether illegal discrimination against Texas workers seems to be getting better or worse. Except for a small statistical blip in fiscal years 2015 and 2016, the numbers are remarkably stable.

Employees Must Actively Enforce Their Employment Rights

Under federal and Texas law, be assured that you have the right to be paid for the work that you do, regardless of:

  • race, color, and national origin
  • age over 40
  • gender
  • pregnancy or family status
  • disability

At your Texas workplace, you have the right to be free of:

  • physical, verbal, and other forms of harassment based on illegal classification
  • illegal harassment of others, including co-workers and contractors
  • unreasonable safety hazards
  • illegal termination of employment
  • a change in work conditions so severe that it amounts to a termination
  • all forms of retaliation for making a complaint regarding any of the above rights.

These rights are protected under:

  • Title VII (Title VII of the Civil Rights Act)
  • ADEA (Age Discrimination in Employment Act)
  • ADA (Americans with Disabilities Act)
  • OSHA (Occupational Safety and Health Act)
  • FLSA (Fair Labor Standards Act)
  • Federal minimum wage laws and Texas civil and criminal statutes, among other laws.

Employment Discrimination is Pervasive in the U.S.

In a new study last updated in 2020, three in five U.S. employees have witnessed or experienced discrimination. In 2019, 61 percent of U.S. employees had reportedly either witnessed or personally experienced discrimination based on age, race, gender, or sexual orientation. Forty-two percent of employed adults in the U.S. had experienced or witnessed racism in the workplace. Forty-nine percent of American workers witnessed or experienced age discrimination. It is important to remember, though, that these statistics are based only on reported cases.

And this may be only the tip of the proverbial iceberg. Everyone has heard stories of workers choosing not to complain. There are many reasons for keeping quiet. Employees do not wish to make an issue in fear for their jobs, for example. This means that the mistreatment goes on and may affect others in the same workplace or beyond.

The first thing to understand is that you are not alone. The second thing to know is that you can get the legal help you need, or at the very least, have your situation evaluated by an employment lawyer.

Getting Legal Help Creates a Powerful Weapon Against Employment Discrimination

So many experiences of discrimination go unreported, creating a haven for employers, co-workers, contractors, and others in the workplace who discriminate against people and get away with it. How can this be stopped? What can we do to make this go away? Legal help is a powerful weapon available to all of us in the U.S.

When You Experience Employment Discrimination, Take These Steps Instead

An employment attorney can help you get the ball rolling toward a legal action that may lead to a lawsuit. An attorney can help you file a thorough, accurate, and convincing claim. Someone who is represented by legal counsel has a better chance of succeeding than those who file claims on their own.

Waiting Reduces or Eliminates Your Chance of Success

The statutes of limitations on employment discrimination lawsuits vary by statute, but they are often quite short. You can easily lose your right to file an EEOC claim by waiting too long. Once you are out of time, your claim is gone.

Our Texas Employment Lawyers Have Answers to Your Employment Problems and Questions

Our employment lawyers have years of experience with employment claims under Texas and federal laws. Contact us if you believe that you have been the victim of discrimination, harassment, retaliation, illegal termination, or other workplace problems. Reach out to Kilgore & Kilgore for a free review of the facts of your case. Click here to get the conversation started contact Kilgore & Kilgore. Fill out and submit this form.

Expansion of Disability Benefits for Veterans under PACT Act and Recent Torres Supreme Court Decision

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The legal landscape has improved for the men and women who served in the military but then found it was hard or impossible to access promised rights to re-employment and health care benefits when they returned from duty. In June 2022, the U.S. Supreme Court held that a veteran who was disallowed re-employment was wrongfully denied medical benefits. This decision resulted in two important developments for our veterans because each supplements rights to benefits already available to veterans under USERRA (the Uniformed Services Employment and Re-employment Rights Act of 1994), other federal laws like the ADA (Americans with Disabilities Act), and Texas state law. All are closely tied together:

  • the first, which expands re-employment rights, and
  • the second, which expands medical benefits.

Some Kilgore Lawyers Are Also Veterans. We Know How to Help.

Are you having problems with employment or re-employment discrimination? To learn about our legal practice for Vets, click here Servicemember Rights. Click here to learn more about discrimination Employment Discrimination. To read an article on USERRA, click here USERRA. To get the conversation started about your legal rights, click this link Contact Kilgore Law.

Torres v. Texas DPS (Texas Department of Public Safety) and Disability Benefits

The President has signed into law the PACT Act, known as the Sergeant First Class (SFC) Heath Robinson Honoring our Promise to Address Comprehensive Toxics Act. The PACT Act expands medical benefits through the VA for Veterans exposed to burn pits and toxic substances. Captain Torres suffered wounds described as invisible injuries, likely the result of exposure to toxic burn pits. He enlisted in the Army Reserve in 1989. In 2007, he was called to active duty and deployed to Iraq. While serving, he was exposed to toxic burn pits, a method of garbage disposal that sets fire to all manner of trash, human waste, and military equipment. He received an honorable discharge but came home with constrictive bronchitis, a respiratory condition that narrowed his airways and made breathing difficult. These ailments, Torres claimed, changed his life, and left him unable to work at his former job as a Texas State Trooper. He asked his former employer, the Texas DPS, to accommodate his condition by re-employing him in a different role. Texas refused to do so.

State of Texas Tried to Dismiss the Disabilities Lawsuit, Claiming Sovereign Immunity

Torres sued Texas in state court. He argued that Texas violated USERRA’s mandate that state employers rehire returning veterans, use reasonable efforts to accommodate any service-related disability, or find an equivalent position where the disability prevents the veteran from holding a prior position. Texas moved to dismiss the lawsuit, claiming sovereign immunity. Sovereign immunity is a doctrine that asserts that Congress (in this case, by means of USERRA) cannot authorize private lawsuits against a nonconsenting state. If Torres had sued a private employer, sovereign immunity would not have been relevant. The trial court decided for Torres, but the appellate court reversed that decision. However, the US Supreme Court held that by ratifying the Constitution, the states agreed that their sovereignty would yield to the exercise of a particular federal power, in this case, the national power to raise and support the armed forces.

What is Federalism?

The concept of federalism works to balance the power of states against the power of the national government, giving both some authority. It is meant to divide government power, so that a national government cannot have the final say over all issues, everywhere. The US Supreme Court’s decision in the Torres matter goes deep into the weeds of federalism. The US Supreme Court held that the national power to raise and support the armed forces outweighed any state’s interest in the doctrine of sovereign immunity. Congress, therefore, has the power through federal laws like USERRA, to authorize private damages suits against non-consenting states. The bottom line in this case is that veterans who seek to enforce USERRA rights against previous employers, who happen to be states, do have the right to bring lawsuits.

USERRA and Disability Benefits

If a veteran has a disability incurred in or aggravated by his or her service, an employer must make reasonable efforts to accommodate the disability and return the veteran to the position in which he or she would have been employed but for the military service. If the veteran is not qualified for that position due to disability, USERRA also requires the employer to make reasonable efforts to help qualify the veteran for a job of equivalent seniority, status, duties and pay, which he or she is qualified to perform or could become qualified to perform. This could include providing training or retraining for the position at no cost to the veteran. These were the benefits Torres sought.

Definition of a Disability Incurred in the Course of Military Service or Aggravated Because of It

The lifelong injuries caused by bullets and bombs are typically easy to recognize. Not so, however, with equally devastating invisible injuries such as PTSD or exposure to carcinogens. The effects of these injuries may not appear for many years. That may be where The Pact Act can be effective for those exposed to toxic burn pits, Agent Orange, and radiation.

The PACT Act Briefly Explained

Briefly, the PACT Act expands and adds benefits for veterans including:

  • Expands and extends eligibility for VA medical benefits for veterans with toxic exposures
    and veterans of the Vietnam War, the Gulf War, and post-9/11 eras;
  • Adds more than 20 new presumptive conditions for burn pit and other toxic exposures;
  • Adds more presumptive-exposure locations for Agent Orange and radiation;
  • Requires the VA to provide a toxic exposure screening to every veteran enrolled in
    VA health care; and
  • Helps improve research, staff education, and toxic exposure treatments.

Focus on the word presumptive. In law, a presumption is a powerful and slippery issue. It eases the burden of proof considerably when an injured veteran tries to show that a particular event or exposure that occurred in the course of military service caused a disability years later. It can also be limited and trimmed to the point of near non-existence in a court of law.

Interpretation of USERRA as it Relates to the PACT Act Will be Explored Through Future Litigation

The Torres decision came down weeks before the PACT Act became law. In the Torres case, the Supreme Court did not decide that Texas was liable. It simply remanded the case back to the lower court for a decision that does not depend on sovereign immunity. Not all federal disability statutes use the same presumptions. The Torres decision seems to imply that exposure to toxic burn pits might qualify as the cause of a disability incurred or aggravated in the course of military service.

The Texas Military

The Texas Government Code says that members of the Texas National Guard and other state military forces who are called to active state duty by the governor are entitled to the same benefits and protections as USERRA provides to national servicemembers. Applying the PACT Act via USERRA to those who have served in the Texas National Guard and other state military forces seems like a stretch at this writing. There are few if any toxic burn pits and Agent Orange situations in Texas. Were the presumptions of the PACT Act applied to exposure to carcinogens in general, the result might be different. This remains in the realm of future court decisions.

Reach out to Kilgore’s Veteran Lawyers for Legal Help with Obtaining Military Benefits

Some of our Texas employment lawyers are military veterans who understand how to win employment, discrimination, and disability benefits denials. Use this link to Contact Kilgore with your questions and concerns.

Texas Supreme Court Hands a Big Win to Sales Employees with Employment Agreements and Commission Contracts

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A recent Texas Supreme Court decision made it harder for an employer to dodge an obligation to pay a commission by firing the employee responsible for that sale at the last minute. The Court clarified that commission contracts should be interpreted according to the century old procuring cause rule, unless the parties had explicitly agreed to other terms. If the employee produced the sale and the employment agreement was to pay a commission, then the employer may not claw back the commission by firing that employee.

The procuring cause rule says that an at-will employee who receives commissions as part of a compensation package must continue to receive commissions on sales consummated after the employee’s termination if the fired employee caused the sale. Contracting parties may agree to other terms, but these must be explicitly set out in the compensation contract or employment agreement.

Top employees are often offered complicated compensation packages. These may include salary, commissions, performance bonuses, stock awards, other forms of incentive compensation, and severance benefits. The salary provisions are straightforward. The other elements are more troublesome. The legal requirement that commissions terms be set forth explicitly in an employment agreement allows them to be negotiated. Performance bonuses, incentive compensation, whatever the terminology, are pieces of a puzzle. Hiding the ball is a poor strategy that can hurt both parties. Most agree that careful, honest, and thorough negotiation is better for all parties to an employment agreement.

Employment Agreement or Commission Contract Questions? Our Texas Employment Lawyers Can Help

If you have questions about an employment agreement or a commission contract, click on this link to get the conversation started Contact Kilgore & Kilgore. Sometimes even the best laid plans go awry, though, and we are here to help you through employment agreement negotiations. We offer a free review of the facts of your situation. To learn more about commission contracts and employment agreements, click this link Executive Compensation.

The Employment Agreement in this Case — Stunning Success and an Abrupt Firing

In 2015, a company hired a Vice President of Sales and Marketing. The company drafted an employment agreement, which the candidate signed without alteration. The agreement gave the new VP an annual base salary of $145,000 and stated that the employment would be at will. It also provided a commission of 3.5 percent of the VP’s net sales. There was no definition of net sales and no other explanation concerning the commission arrangement in the employment agreement.

After months of negotiation, the VP secured a prominent client’s agreement to amend its sales contract. It was the largest contract of its kind in the company’s history. The commission due the VP would have been roughly $1 million. The VP relayed his success to company leaders. The CEO immediately requested a meeting with him. As it turned out, this meeting was not to congratulate the VP, but to fire him, effective immediately. The next day, the client signed the sales contract amendment that the VP had negotiated. The company did not pay the VP any commission, so he sued.

The Trial Court Decided in Favor of the VP

At trial, the court instructed the jury that the VP’s sales included all sales for which he was the procuring cause. A procuring cause is the principal and immediate cause of a sale. The Court reiterated that it need not be the sole cause, and an agent is said to be the procuring cause of a sale when his acts have so contributed to bringing about the sale that but for his acts the sale would not have been accomplished. The fact that the VP was discharged prior to the time this sale was completed does not bar his right to a commission if he was the procuring cause of the sale. The jury found for the VP. He was awarded over $900,000 in compensatory damages for unpaid commissions and over $80,000 in prejudgment interest, and post judgment interest at five percent.

The Court of Appeals Reversed the Judgment of the Trial Court

The Court of Appeals for the First District of Texas reversed the trial court’s decision and rendered judgment for the company. According to the appeals court, the contract unambiguously entitled the VP to commissions only for sales made during his employment, not for sales that closed after he was terminated.

Texas Supreme Court Reversed the Court of Appeals Decision

The Texas Supreme Court reversed the appeals court decision, holding that: “When a seller agrees to pay a sales commission to a broker (or other agent), the parties are free to condition the obligation to pay commissions however they like. But if their contract says nothing more than that commissions will be paid for sales, Texas contract law applies a default rule called the ‘procuring cause doctrine.’” Under that rule, the broker is entitled to a commission when “a purchaser [was] produced through [the broker’s] efforts, ready, able, and willing to buy the property upon the contracted terms . . . In this case, the agreement between the parties was silent about any exceptions to the duty to pay commissions for sales that petitioner procured. The procuring cause doctrine therefore applies.”

At Will Employment: An Employer May Terminate an Employee Any Time With or Without Cause

This decision of the Texas Supreme Court decision may contain hope on future challenges to this application of the procuring cause rule. In this case cited here, the appeals court questioned whether the application of a doctrine originally developed in the context of real-estate sales is appropriately used in the context of at-will employment. Does an independent broker have more rights to a commission than an at-will employee who is also paid commissions? At the very least, employees whose compensation includes commissions should anticipate that many employers will now amend their employment agreements to limit commission payments through terminations of employment.

Notably, this decision, taken together with the recent decision in the case of Crane v. Rave Restaurant Group, is good news for those seeking to enforce employment contracts and an employer’s promises, especially when it appears that an employer is backing out of a deal after the executive has substantially performed his or her part of the employment contract. Here is the link to that article Fired CEO Sues Former Employer Over Stock Award.

Our Employment Lawyers Provide Perspective on Employment Agreements

Contact our experienced employment lawyers about your employment agreement. Do not have one? Reach out to Kilgore & Kilgore. Click here Contact Kilgore & Kilgore.

Pay Discrimination Affects Women in Texas and Their Families

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In Texas, a woman on average earns only 79.4% of what a man doing the same job for the same employer earns. That gap is greater than the national average, and even greater for women of color. The difference in Harris County has increased since 2017. In a real-life example, this means that if a man makes $51,000, a woman in the same position is likely to early roughly $40,000. It is as if she stopped working at the end of October instead of the end of December.

To be blunt, women have less money to live on, less to support their families, less to retire on, and are more likely to live in poverty. Yet, gender wage discrimination is clearly illegal under both federal and Texas law. So, why does this keep happening, and what can we do about it?

Some of the answers may require action by the Texas legislature. But effective and prompt legal representation can also make an enormous difference.

Time is not a Woman’s Friend. Do not wait! Reach out to the Employment Lawyers at Kilgore & Kilgore.

If you are not paid what your male counterparts are paid for doing the same job, you may be the victim of illegal wage discrimination. But you must reach out to an experienced employment lawyer quickly. The deadlines for filing a claim are as short as 180 days. Instead of sitting and stewing over an unfair situation, call us.

Our employment lawyers have a wealth of experience with employment discrimination claims. Fill out and submit the form you reach by clicking on this link Contact Kilgore & Kilgore or call us at (214) 949-9099.

Texas Equal Pay Law Addresses Pay Discrimination

The Texas Equal Pay Act provides that every woman employed by the state of Texas must be paid the same as a man when performing the same kind, grade, and quantity of service and that no distinctions in compensation may be made based on sex. There is no comparable, wage-specific state law that covers private employers.

However, the Texas Human Rights Commission Act (THRCA) prohibits employment practices that discriminate based on race, color, disability, religion, sex, national origin, or age. The law covers employers with fifteen or more employees and is enforced by the Texas Human Rights Commission. This is the avenue available for those who work for private employers and who choose to pursue a state law claim.

Federal Laws on Pay Discrimination

The federal law known as the Equal Pay Act requires that a man or a woman in the same workplace be given equal pay for equal work. Their jobs need not be identical. The law prohibits gender wage discrimination if workers perform jobs mandating equal effort, responsibility, and skill in similar work environments. Its definition of “wages” includes items such as company cars, health insurance, and bonuses. Like the THRCA, it covers employers with fifteen or more employees.

Not all pay differentials are evidence of illegal discrimination. Under the federal Equal Pay Act, an employer may pay different rates to a man and a woman based on:

  • a seniority system;
  • a merit system;
  • a wage system based upon quantity;
  • a system based upon quality standards; or
  • a pay rate system based on factors other than sex (such as geographical location).

The Lilly Ledbetter Fair Pay Act amended federal fair employment laws so that each paycheck affected by an employer’s prior discriminatory practice or decision triggers a new deadline for filing a pay discrimination claim. This law extends the deadline for filing a claim when the person who was being underpaid did not learn of the underpayment for months or even years after it occurred.

In addition to the Equal Pay Act, Title VII of the Civil Rights Act of 1964 prohibits discrimination in employment based on sex. This includes pay discrimination. The Equal Pay Act and Title VII are different in terms of how they are enforced, what they cover, and which legal remedies they offer workers, so there is often a good reason to sue under one rather than another, or under both.

In the end, however, workers who believe that they are victims of wage discrimination have a variety of choices about how to advance their claims of unlawful conduct. But evaluating and choosing among these options takes the careful advice of an experienced attorney.

How it Actually Works – the Mechanics of Filing a Claim of Pay Discrimination

If you have experienced pay discrimination by your employer in violation of federal law, you are required by law to file a claim with the EEOC within 300 days of the violation. If you want to file a claim under Texas law, you must file a claim with the Texas Workforce Commission – Civil Rights Division within 180 days of your pay discrimination. Fortunately, both the EEOC and the Texas Workforce Commission accept claims for each other. So usually, if you file a claim with one, you have filed a claim automatically with the other. The time limits under the federal Equal Pay Act are slightly longer, but still short. These are administrative proceedings, and a few cases are resolved at this stage. You have the option to bring a lawsuit in either federal or state court once you receive your notice of right to sue.

In state and federal lawsuits, the individual claiming discrimination bears the initial burden of demonstrating a difference in pay for the same work. In Lindsley v. TRT Holdings, Inc., a recent Fifth Circuit Court of Appeals case, the plaintiff brought a lawsuit under the federal Equal Pay Act and Title VII of the federal Civil Rights Act. The court held that the plaintiff had shown that she was paid less than her immediate predecessors who were male. That, at the outset, was enough to maintain a claim.

In cases like these, the burden then shifts to the employer to show that the gap is the result of some nondiscriminatory reason. This can be a tricky turn to navigate, and it takes the assistance of a skillful employment law attorney.

Kilgore & Kilgore Employment Lawyers Can Help You Navigate the Options You Have in a Pay Discrimination Claim

Our Texas employment lawyers have experience with employment claims under a variety of state and federal laws. Contact us if you believe that you have been the victim of wage discrimination or other workplace problems. Reach out to us for a free review of the facts of your case. Click here to get the conversation started contact Kilgore & Kilgore. Fill out the form and we will contact you for a frank discussion of the facts of your case.

Fifth Circuit Appeals Court Holds that the Single Use of the N-Word Can Support a Federal Civil Rights Claim of a Hostile Work Environment

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A black man’s supervisor at the French Market in New Orleans called him a “Lazy Monkey A__ N_____” in the presence of his co-workers. It only happened once, although there was abundant other evidence that he was harassed because of his race at his job, which is described as a hostile work environment. He was consistently denied a promotion. He was treated less favorably than other employees. No one took corrective action.

Anthony Woods Filed a Lawsuit with Claims of Violations of Many Different Federal Statutes and the U.S. Constitution, Including a Hostile Work Environment

Anthony Woods filed a lawsuit alleging race discrimination, disparate treatment, and a hostile work environment, in violation of Title VII of the Civil Rights Act of 1964. He made allegations under Section 1981 of the Civil Rights Act of 1866. He claimed religious discrimination and retaliation also under Title VII. He claimed violations of the First Amendment and Fourteenth Amendment to the Constitution. He also claimed conspiracy under Section 1985 of the Civil Rights Act of 1871.

Woods Did Not Have A Lawyer to Plead His Case

This was a pro se Complaint, that is, Anthony Woods filed his Complaint without benefit of a lawyer, based only on his own information and personal experience. But it failed to completely convince the court, despite the abundance of evidence, which contributed to his lack of success in court.

On Appeal, the Fifth Circuit Court held that a single use of the n-word can be enough to support a hostile work environment claim under Title VII. Three facts come to mind:

  • This decision is a shift, and it aligns the Fifth Circuit with other Circuit Courts on the same issue.
  • On the other hand, it may turn out to be a single “dirty word” decision that turns out to be extremely limited in scope on future cases.
  • And finally, it is hard not to think of what might have been a much broader ruling if only he had the help of a lawyer from the beginning to frame the arguments in such a way as to help the court arrive at a better decision.

Filing a Complaint on Your Own Could Cost You Success on Your Case. Do Not Go It Alone!

When you experience discrimination, harassment, assault, unjust termination, retaliation or have endured a hostile work environment because of race, sex, pregnancy, disability, age, or national origin, reach out to our employment lawyers. Fill out and submit the form you reach by clicking on this link Contact Kilgore & Kilgore. You can also call us at (214) 949-9099. Bring your employment law questions to us.

A Hostile Work Environment, No Luck at the Trial Court Level, and then the Department of Justice Saves the Day

In addition to the vile epithet, the man described other circumstances in his Complaint. These included shift and assignment changes, understaffing, a wrongful termination, and an incident during which Woods believed his supervisor threatened him with a screwdriver. Despite all that, the trial court dismissed his Complaint, agreeing with the defendant employer that “a single utterance of a racial epithet, despicable as it is, cannot support a hostile work environment claim.” So, Woods appealed this decision to the Fifth Circuit Court of Appeals.

Friend of the Court Amicus Brief Filed on his Behalf

Then, unbidden, the U.S. Department of Justice filed a friend of the court [amicus] brief on his behalf. Parenthetically, when Kristen Clarke was confirmed as the Assistant Attorney General for Civil Rights at the U.S. Department of Justice in 2021, many expected her to take a more proactive role in civil rights cases than had been the situation during the previous administration. In this new case, the question of whether the District Court erred in holding that “a single utterance of a racial epithet, despicable as it is, cannot support a hostile work environment claim under Title VII” was found to be sufficient to attract the attention of the Justice Department, leading to a result in Woods’ favor.

Title VII of the Civil Rights Act and a Deep Dive into the Definition of a Hostile Work Environment

Title VII prohibits several forms of employment discrimination, including many named by Woods. The law makes it an “unlawful employment practice” for an employer to discriminate because of a worker’s race, color, religion, sex [including pregnancy or sexual orientation], or national origin with respect to terms, conditions, or privileges of employment. Previously, courts have interpreted this to forbid the creation of a hostile work environment based on an employee’s membership in a protected class, such as race or color. To prevail on a claim of hostile work environment, a plaintiff must prove four things:

  • membership in a protected group;
  • unwelcome harassment;
  • that was based on the protected characteristic; and
  • affected a term, condition, or privilege of employment, if it is sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment.

Courts consider the totality of the circumstances in deciding whether harassment alters the victim’s conditions of employment. These factors include how often it occurs, how severe it is, whether it is physically threatening or humiliating, and whether it interferes with an employee’s work performance.

In its opinion, the Fifth Circuit Court focused on two things. The first was the severity of the n-word epithet and the second was totality of circumstances within which it took place. The holding brings the Fifth Circuit Court into better alignment with the First, Second, Fourth, Seventh, Eighth, Ninth and District of Columbia Circuits.

These rulings do not, however, seem to extend into situations where some other odious epithet was used. There is a risk that this case will be narrowly cabined into situations where only one word is off limits.

A Win is a Win, but Much May Have Been Unnecessarily Lost

In his original Complaint, Woods advanced claims under a variety of statutes as well as the U.S. Constitution. Some, like the Constitutional claims, were never properly before the District Court, but others, including allegations of disparate treatment and racial discrimination under Title VII, fell apart for procedural reasons – problems like the failure to exhaust remedies and pleading deficiencies. If Woods had had the assistance of an experienced employment lawyer from the beginning, these claims might have survived.

Our Employment Lawyers Have Answers to Your Employment Problems and Questions

Do not try to go it alone like the man in this true story. Our Texas employment lawyers have experience with employment claims under a variety of state and federal laws. Contact us if you believe that you have been the victim of discrimination, harassment, retaliation, unjust termination, or other workplace problems. Reach out to Kilgore & Kilgore for a free review of the facts of your case. Click here to get the conversation started contact Kilgore & Kilgore. Fill out the form and we will contact you for a frank discussion of the facts of your case.

DOJ Seeking Evidence of Wage-Fixing and No-Poaching Collusion Among Chicken Producers

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The Justice Department has begun an investigation of chicken producers to see if they have shared information about employment practices to hold down the wages of plant workers throughout the highly concentrated poultry processing industry. The issue at the heart of the civil investigation is whether these practices amount to anticompetitive behavior in violation of federal law, including the Federal Trade Commission Act, the Sherman Act, and the Clayton Act.

Line workers in chicken producer plants are among the lowest paid and most disadvantaged industrial workers. The work is dirty and dangerous, with a higher rate of injury than coal mining or logging. It is often the first job for recent immigrants to the U.S., whose English is limited or non-existent. The potential for abuse is huge.

The injustice of potential industry-wide collusion to hold down their wages shocks the conscience. But the possibility that illegal anticompetitive employment agreements exist also poses a risk for executive-level managers and human resource professionals who know the facts but may be unaware of the legal guidelines.

Our Texas Employment Law Practice Knows the Red Flags of Unfair Employment Agreements

If you have questions about your company’s employment practices, click this link, and fill out and submit the form Contact Kilgore & Kilgore. Or you can call us at (214) 949-9099. For information about our employment law practice click this link Employment Law. We look forward to speaking with you.

Chicken Producers in a Concentrated Industry Already on the Antitrust Radar

Americans have a huge appetite for chicken. In 2022, the average American is expected to eat more than 98 pounds of chicken, and chicken producers are on track to slaughter eight billion birds. Nonetheless, the huge industry is dominated by four producers: Tyson Foods, Pilgrim’s Pride, Sanderson Farms, and Perdue Farms. These are the producers reportedly under DOJ scrutiny.

In September 2021, the Biden administration announced plans to crack down on alleged meat price fixing among large meat processors. Meat and poultry makers claimed that pandemic-related labor shortages limited how much they could process and caused meat shortages and higher prices. The 2021 proposed acquisition of Sanderson Farms by Cargill and Continental Grain was delayed by a DOJ antitrust investigation and criticized by lawmakers who cited significant antitrust concerns. This is the backdrop for the latest probe concerning wage and hiring collusion.

Anticompetition Law in a Nutshell

The Federal Trade Commission Act permits the FTC to prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce. The Clayton Antitrust Act, intended to strengthen earlier antitrust legislation, prohibits anticompetitive mergers, predatory and discriminatory pricing, and other forms of unethical corporate behavior. Finally, and perhaps most importantly, the Sherman Act, prohibits “every contract, combination, or conspiracy in restraint of trade.”

Wage fixing and no-poaching agreements are likely the areas on which the DOJ is focused. Under the combined authority of all three statutes, the FTC and the DOJ have focused on two types of ant-competitive agreements that, without any pro-competitive justification, give rise to a violation of the antitrust laws. These are:

  • Wage-Fixing Agreements, which are agreements pertaining to employee salary or other terms of compensation; and
  • No-Poaching Agreements, which are agreements to refuse to solicit or hire another company’s employees.

Red Flags Among Chicken Producers

Workers in chicken processing plants are unlikely to have access to information about industry-wide agreements concerning hiring or wages. But they may have evidence that such arrangements exist if wage rates are identical among employers or if competing companies simply refuse to hire based on a current or prior employer. It is often impossible for them to raise these concerns.

Others are in a better position to raise questions, however. For executive-level managers and human resource professionals who want guidance about what is legal and what to avoid, federal antitrust agencies have identified nine red flags:

  • An agreement with another company about employee salary or other terms of compensation, either at a specific level or within a range;
  • An agreement with another company to refuse to solicit or hire that other company’s employees;
  • An agreement with another company about employee benefits;
  • An agreement with another company on other terms of employment;
  • A suggestion to competitors that they should not compete too aggressively for employees;
  • Exchange of company-specific information about employee compensation or terms of employment with another company;
  • Participation in a meeting, such as a trade association meeting, where the above topics are discussed;
  • Discussion of the above topics with colleagues at other companies, including during social events or in other non-professional settings; or
  • Receiving documents that contain another company’s internal data about employee compensation.

Even if an individual does not agree orally or in writing to limit employee compensation or recruiting, other circumstances – such as evidence of discussions and parallel behavior – may lead to an inference that the individual has agreed to do so. In addition, merely inviting a competitor to enter into an illegal agreement may be an antitrust violation, even if the invitation does not result in an agreement to fix wages or otherwise limit competition.

Competition is Good in Every Market, Not Just Chicken Producers, According to the U. S. Federal Government

Encouraging a competitive labor market is clearly a priority for the FTC and DOJ under the Biden Administration. Accordingly, employers may want to review their hiring-related agreements with competitors in the same labor market for compliance with the antitrust laws. Their goal should be to ensure that they have established antitrust policies and procedures to educate hiring managers about antirust considerations in the employment law context.

Although the current DOJ investigation of poultry processors is civil, it is important to realize that the DOJ may proceed criminally against wage-fixing or no-poaching agreements. Individuals who become aware of suspect arrangements are encouraged to report them to the DOJ or the FTC. Consulting with legal counsel would be a very sound first step at this point.

Our Employment Law Attorneys Can Help You Understand the Law Concerning Anticompetitive and Antitrust Employment Law Practices

Our experienced employment law attorneys understand the nuances of DOJ and FTC enforcement actions concerning wage-fixing and no-poaching agreements. Contact us for guidance about how to avoid prohibited information-sharing or if you believe that your company’s practices do not comport with the law. Reach out to Kilgore & Kilgore for a free review of the facts of your case. Click here to get the conversation started contact Kilgore & Kilgore.

New Federal Law Ends Forced Arbitration of Workplace Sexual Harassment and Sexual Assault Claims Despite Employment Agreements that Require It

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In March 2022, President Biden signed a new bill that ends forced arbitration of sexual assault and harassment claims. Now, employers throughout the country may no longer require employees to arbitrate claims of sexual harassment or sexual assault. The new law is effective for claims that arise or accrue on or after the date the bill was enacted, or March 3, 2022. Employees may not, however, re-open claims that have already been arbitrated.

Many employees have signed employment agreements containing the usual language requiring all employees to waive their rights to join in a class action lawsuit and to arbitrate any disputes they may have with the employer. Such agreements take away employees’ right to trial by a jury of their peers: in arbitration, an attorney typically is the finder of fact. Under this new law, employees with sexual harassment and sexual assault claims are not required to use arbitration as a method to prove a claim but will have the ability to try their cases in open court.

This is seen as a win for workers, but how the law will work is unclear. Texas law strongly favors enforcement of employment agreements. The new law is extremely limited in scope, and sexual harassment and sexual assault claims are often coupled with complaints of retaliation, salary discrimination, racial or ethnic discrimination, breach of contract, and unjust termination. A Black woman may be harassed both because she is a woman and because she is Black. Claims that are not strictly sexually based might still have to be arbitrated, which could make things complicated.

Our Texas Employment Lawyers Have Answers About Sexual Harassment and Sexual Assault

If you have experienced sexual harassment, sexual assault, discrimination, or termination at work or any other form of workplace dispute, reach out to our experienced employment lawyers. Do not suffer in silence. Find relief. Get justice. Click here, fill out and submit the form Contact Kilgore & Kilgore. We will call you. Or you can call us at (214) 949-9099. For information about our legal work in combatting sexual harassment in the workplace, visit this link Protect Your Dignity. For a wider view of our employment law practice click this link Employment Law. We look forward to collaborating with you.

Sexual Activity at Work is Common

According to the EEOC, 25 to 85 percent of women report experiences of sexual harassment at work. Definitions of sexual harassment range widely and include unwanted attention, coercion, sexist and crude comments, offensive behavior, and using pornography at work. This is based just on the reported behavior. Many employees deal with sexual harassment by avoiding the harasser, denying, or downplaying the situation, ignoring, or enduring the abuse. Men who are victims of sexual harassment or assault may be reluctant to report it or seek help. Our employment lawyers put their clients first without judgement or prejudice.

Perils of Arbitration in Employee Claims

Arbitration favors employers. Instead of a hearing before a judge, arbitration takes place in private, in front of a retired judge or lawyer who is often hired by the employer. It would be reasonable to assume that an arbitrator who develops a history of employee-friendly rulings may not be hired again.

The practice of arbitration has proliferated rapidly. It is estimated that over half of non-union private sector employees have signed contracts requiring them to file all complaints through arbitration instead of the courts. Low-wage workers are especially likely to be forced to arbitrate.

Employees win in arbitration only about 20 percent of the time, compared with 60 percent who win for claims filed in court. When employees do win in arbitration, the awards are often much smaller than in court. The average award for an employee in arbitration is $23,548, compared with $143,497 in federal court and $328,008 in state court.

It is also important to recognize that while arbitration is private, it may not allow others who work for the same employer to discover that an endemic and potentially dangerous situation exists. Much of the energy behind the #MeToo movement comes from the fact that making some noise can protect other people, too.

Texas Law – One Hand Gives, but the Other Takes Away

Both Texas Labor Code Chapter 21 and Title VII of the federal Civil Rights Act protect Texas workers from employment discrimination based on sex or sexual harassment. Effective September 2021, an amendment to the existing law expanded the definition of sexual harassment, heightened the standard for an employer’s response to complaints, and placed responsibility on individuals as well as employers for failing to address sexual harassment.

On the other hand, though, in a 2016 overtime pay case, the Fifth Circuit Court of Appeals confirmed that Texas contract law favors the enforcement of arbitration agreements. This was so, even though the plaintiff oil worker had expressly refused to sign the agreement. The court reasoned that he had accepted the arbitration requirement because he continued to show up for work.

Were this a sexual harassment case from after March 2022, federal law would govern, and the plaintiff would have had a right to his day in court. But what about any other claims arising from the same employment situation? It is still too early to see Texas or state court decisions under the new law, but things could get messy.

Our Employment Lawyers Have Answers to Your Questions About Workplace Sexual Harassment

Our experienced lawyers understand how difficult it can be to deal with harassment, discrimination, violence, or any number of other unpleasant situations at work. Contact us when workplace difficulties arise. Reach out to Kilgore & Kilgore for a free review of the facts of your case. Click here to get the conversation started contact Kilgore & Kilgore.

Dinosaurs, Grey Hair, and the Workplace — Age Discrimination in Employment

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A recent New York Times reported that tech companies are scrambling to hire. This would seem to be great news for applicants and employees. Right? But, if you are over 40, a hiring boom or job security may not be in your future. In fact, things can get unexpectedly nasty for the working “dinosaurs”. Today, approximately one-third of the workforce in the U.S. is 50 years old or older according to the AARP.

Between 2013 and 2018, IBM reportedly fired about 20,000 American employees over the age of 40, which amounted to about 60 percent of its total U.S. job cuts during those years. Internal documents compared older employees to dinosaurs and called for their extinction. Older female employees were disparaged as a “dated maternal workforce.” In recent years, similar claims have been made about hiring and retention policies at Google and Apple.

Although tech companies may discriminate on the basis of age or gender, the practice of singling out “grey hairs” for termination or demotion is not limited to them. Age discrimination rises hand in hand with the unemployment rate and older employees tend to be the last hired back and the first fired. Pandemic-related business dislocations have made a bad trend worse. Federal and Texas laws protect employees from age, gender, and other forms of discrimination. For older employees, it may just be a matter of getting the right legal help to overcome such setbacks as getting fired.

Our Employment Lawyers Can Help with Your Age Discrimination Problem

If you believe you have experienced employment discrimination because of your age, you should talk to an employment lawyer at Kilgore & Kilgore. Employment discrimination can occur in different ways and for many different reasons including age, gender, race, pregnancy, sexual orientation, national origin, disability, and any combination of these reasons. Our discrimination lawyers understand the range of remedies you may have under Texas and federal law. If you have experienced age discrimination in the workplace, reach out to us by clicking this link Contact Kilgore & Kilgore. To learn more about our employment discrimination law practice, click this link Dallas Discrimination Lawyers Hold Employers Liable for Employee Rights Violations.

Not All Unfair Treatment is Illegal Age Discrimination

Whether in the tech industry or other sectors of the economy, the requirements of age and other forms of law governing employment discrimination are the same. Not all bad employer conduct is illegal, and laws contain considerable protections for employers. Texas employers have wide discretion when it comes to hiring, promotions, and firing decisions.

An employee who brings a claim for discriminatory treatment must, first, fall within a class of employees explicitly protected by the statute. The federal law known as the Age Discrimination in Employment Act (ADEA) protects applicants and employees who are over the age of 40. The same is true of Texas Labor Code Chapter 21. Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination on the basis race, color, religion, gender, pregnancy, or national origin, is not age limited. None of these laws, however, apply to very small employers – those with fewer than 15 employees, or 20, in the case of the ADEA.

Even an employee who falls within the group of individuals expressly protected by the law has a considerable burden to bear to show that the treatment was discriminatory, not simply callous, unfair, or mean-spirited. In an age discrimination lawsuit, several issues can become important. These include:

  • direct – whether the conduct complained of was direct – as in an employer’s statement
    that “We are firing you because you are old,” which is quite rare these days; or
  • indirect – something that an employee believes is discriminatory based on the totality
    of circumstances.

If the evidence is circumstantial, it is then up to the employee to show that he or she:

  • was qualified for the position;
  • suffered some adverse employment action (like firing or demotion); and
  • was replaced by someone outside the protected group or was treated less favorably than other similarly situated employees outside the protected group.

The last requirement can prove to be a stumbling block for employees as it was for the plaintiff in a 2021 Fifth Circuit District Court case (Wright v. United Parcel Service) of a female employee who was fired for working too slowly. She claimed she was an employee over 40, which is recognized as a protected class of worker. She failed to prove that she was classified as such by her employer. She lost her claim and the Fifth Circuit agreed with the summary judgment of the lower court.

Employers Keep Employee Records Confidential for a Reason

Employers control access to information about employee firings, hirings, and job performance. This makes it more difficult for employees who claim discrimination or other illegal treatment to argue crucial elements of their cases against employers when they go to court.

Even when an employee can make what is termed a “prima facie” case for illegal discrimination, an employer may prevail by showing that a non-discriminatory reason also existed for the adverse employment action. In federal court, it is not enough that age discrimination was a contributing factor in the employer’s decision. It must be the determining cause – the “but for” cause – as reiterated in 2019 by the Fifth Circuit District Court (McMichael v. Transocean Offshore Deepwater Drilling) in a case involving a 51-year-old drilling employee and his claim of age discrimination against his employer who fired him. In fact, the employer fired 7,320 employees at once and more later. The employer’s HR department devised a plan to rank the employees to identify the top talent to decide who to keep and who to fire. The scoring system used to rank the employees considered several different factors. In addition, the supervisors of the employees ranked each employee’s on-the-job performance. The claimant who pressed this lawsuit was poorly ranked, so he was fired. A different, younger, higher ranked employee took over the job. So, the fired employee sued his former employer for age discrimination but lost because he was unable to prove the age discrimination that he claimed.

On the other hand, the U.S. Supreme Court has held that an individual protected by the ADEA can sue an employer for age discrimination if the employer’s policy, practice, or other employment action has had a disparate impact — even if unintended — on older employees. This may be useful in situations where, for instance, an employer requires a group of employees, including those under 40, to transfer to another location, with full knowledge that the older employees may chose to leave rather than relocate. This may be especially true where a telling paper trail details plans and strategies for shedding a particular group of protected employees, like older employees or older women. It is important to have an experienced employment lawyer at your side.

Contact Us If You Have Questions About Age Discrimination

If you believe that you are the victim of discrimination at work, you may be right. Let us explore how we can help you. Reach out to Kilgore & Kilgore for a free review of the facts of your case. Click here to get the conversation started contact Kilgore & Kilgore.

CEO Sues Former Employer for Cheating Him Out of His Employment Contract Benefits

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A former CEO with an employment contract promising valuable company stock claims he was the victim of a bait-and-switch scheme when he was fired just before he would have become entitled to it. The sole reason he was fired, he claims, was to save the company from having to keep its end of the bargain. In the summer of 2021, the District Court for the Eastern District of Texas, Sherman Division, held that Scott Crane, the former CEO of Rave Restaurant Group, could pursue his breach of contract and fraud lawsuit against his former employer.

Most top executives are offered complicated compensation structures in their employment contracts as incentives to join a company and improve its profitability. Although salary and bonuses are sometimes generous, the real inducement for an executive to take a top position is the promise of equity ownership in the company. This is especially true if the company is a start-up or poised for expansion. Those promises are often protected by the terms of an employment contract. But contract interpretation when the executive leaves the company can be anything but straightforward.

Employment Contract Questions? Our Texas Employment Lawyers Can Help

If you are in the process of creating a compensation package for an employment contract, negotiating an employment contract, anticipating a hard-earned stock benefit or if you are anticipating the need for a severance negotiation, reach out to our experienced Texas employment lawyers. Just click on this link to get the conversation started Contact Kilgore & Kilgore. As a word to the wise, it is always preferable to get legal advice at the contract negotiation, rather than waiting until earned benefits are anticipated, when problems arise. Wherever you find yourself, we offer a free review of the facts of your case. To learn more about executive compensation practice, click this link Executive Compensation.

Crane’s Employment Contract

Crane was recruited for the position of CEO for two of Rave Restaurants brands in 2016 and interviewed with several members of the board of directors. He was ultimately offered a salary with potential bonuses and shares based on his achievement of certain performance metrics. His executive compensation package was memorialized in an employment contract and spelled out in multiple restricted stock award agreements. Perhaps ominously, his right to collect on this deferred compensation depended on whether he was employed by Rave on a date after his achievement of the required performance. His arrival at the company was widely heralded in the Texas business press.

Rave’s stock price increased during Crane’s employment, from $2.22 per share two days before the announcement of his hire to $3.08 per share on the day before his termination was announced – an increase of 72 percent in 30 months.

Crane claims he was instrumental in fixing Rave’s balance sheets and that he met the benchmarks set by Rave’s board of directors, thus entitling him to approximately 328,000 shares for the 2016 fiscal year; 300,000 shares for the 2017 fiscal year; and 300,000 shares for the 2018 fiscal year.

Fired in Violation of his Employment Contract

In July 2019, one month after Crane claims he reached the benchmarks for fiscal year 2018, but before the date on which entitlement to the company shares vested, the board fired him. It gave no reason. Crane claims Rave failed to transfer the shares he earned, refused to pay his bonus, refused to compensate him for his earned but unpaid vacation, did not pay him $300,000 in severance pursuant to the employment contract, and did not pay his COBRA premium payments.

Rave argued that although Crane arguably met the benchmarks, he did not meet the requirement that he be employed on the required date. Crane countered that the only reason he failed to meet the second requirement was because Rave made it impossible. He argued that the Court should interpret the contract in a manner that would prevent an unjust forfeiture of the benefit of the bargain he arguably earned through his performance.

Crane filed his lawsuit in January 2020. Rave moved for summary judgment. The dispute raises a variety of contract issues, but the thorniest of these may about the enforceability of a condition precedent in a contract. Crane asked the Court to find there was a condition precedent and that Rave made it impossible for Crane to fulfill the condition precedent. Crane relied heavily on Sellers v. Minerals Techs., Inc. when making his argument.

The Employment Contract in the Sellers v. Minerals Techs Case

A condition precedent is an event that must happen or be performed before an individual has a right to enforce an obligation. In Sellers, the Fifth Circuit noted that “[b]ecause of their ‘harshness in operation,’ condition precedent are generally not favored under Texas law and should not be recognized if ‘another reasonable reading of the contract is possible’ or the condition ‘would impose an absurd or impossible result.’” The District Court’s decision in Crane further cites Sellers for the proposition that “[u]nder Texas jurisprudence, if one party prevents another from performing a condition precedent or renders its fulfillment impossible, then the condition may be considered fulfilled.”

What does this mean for Scott Crane? So far, all we know is that, at least on the portion of his breach of contract claim that relates to more than 900,000 shares of company stock, he will have the opportunity to go to trial. The same is true for a portion of his fraud claim. The District Court determined that these claims could not be decided simply as a matter of law, and that both sides should have the opportunity to introduce evidence at trial that supports their positions.

What does this mean for top executives whose compensation agreements include stock award agreements, commissions, bonuses, and other forms of incentive compensation? The Sellers decision, as applied in Crane, is good news for those seeking to enforce employer promises, especially when it appears that an employer is backing out of the deal after the executive has substantially performed his or her part of the employment contract.

Contact Us If You Have Questions About Your Employment Contract, Its Content, Negotiation, and Enforcement

Remember that an ounce of prevention is worth a pound of cure. Make sure that you get your employment contract reviewed by an employment lawyer before you sign it. It is essential that you understand it thoroughly. Contact an experienced employment lawyer if, and as soon as, difficulties arise. Reach out to Kilgore & Kilgore a free review of the facts of your case. Click here to get the conversation started contact Kilgore & Kilgore.