Fifth Circuit Strikes a Blow Against Wage and Hour Lawsuits – More Than Ever, Workers Need Good Legal Help to Win in Court

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On January 12, 2020, the Fifth Circuit Court of Appeals handed down a decision that will likely make it more difficult for Texas workers to make minimum wage, overtime, and other claims under the Fair Labor Standards Act (FLSA). The case, known as Swales v. KLLM Transport Services, is so recent that its impact has yet to be fully felt in upcoming lawsuits. One thing is clear, though: this is going to take some strategic legal thinking for workers who prevail better in court when they can join in FLSA collective action lawsuits. For those seeking the protection of wage and hour laws, good legal help is more important than ever before.

Texas Wage and Hour Attorneys at Kilgore & Kilgore Know How to Try FLSA Collective Action Lawsuits

If you have questions about your wages, hours, overtime compensation, tips, or whether you have been incorrectly classified as an independent contractor instead of an employee, reach out to the employment lawyers at Kilgore & Kilgore. Click on this link to find out about our Wage and Hour Law Practice. If you think your employer is not paying you everything you are owed, contact us using this link Contact Kilgore Law to get the conversation started. We offer case evaluations at no cost.

What Happened in a Recent Lawsuit that Went to Appeal, and Why it Matters to Workers

Between 2015 and 2017, Harry Swales drove a refrigerated truck for KLLM Transport. He, like the other drivers who joined in the lawsuit, worked as an independent contractor for the company. The drivers were paid by the number of miles driven. The drivers’ claim is that KLLM controlled their work to such an extent that they should have been classified as employees and paid at least the federal minimum wage of $7.25 per hour.

The federal statute known as the Fair Labor Standards Act (FLSA) protects employees, but not independent contractors, by establishing a minimum hourly wage, maximum work hours, and overtime compensation for work beyond 40 hours per week. It also permits similarly situated employees to form a group litigation, described in the law as a “collective action.” This is roughly analogous to a class action lawsuit, but not quite the same.

FLSA collective actions often involve violations such as:

  • misclassifying employees as managers or other employees not protected by law;
  • making improper deductions from employee salaries;
  • failing to pay employees as required from a “tip pool”;
  • requiring employees to work “off the clock”; and
  • miscalculating overtime.

The ability to sue in collective actions is hugely important because most of these claims are relatively small – too small, many workers think, to be worth pursuing on their own. If workers could not join a collective action, these FLSA violations would become a wrong without a remedy.

The Fifth Circuit’s decision in Swales is not about whether the drivers were employees or independent contractors. That has yet to be decided. It is about how courts in Texas and throughout the Fifth Circuit should decide who can join in a collective action lawsuit under the FLSA as members of a court certified class of plaintiffs. The new process designed by the Court may make it more difficult and expensive for all similarly situated workers to join collective action lawsuits under the federal wage and hour law.

Is this a Wage and Hour Class Action Lawsuit?

It is similar, but with two important differences. First, unlike the Federal Rules of Civil Procedure, which provide quite a bit of guidance on who can join in a class action lawsuit, the FLSA is silent about certain important issues, such as what the term “similarly situated” means. Courts have had to devise their own rules, which has led to some differences in interpretation.

Second, to participate in a collective action under the FLSA, individuals must affirmatively choose to participate, or “opt-in.” With class action lawsuits, individuals must affirmatively choose to “opt-out” if they do not want to participate.

New Rules for Collective Actions in Wage and Hour Lawsuits

Since 1987 most federal district courts, including those in Texas, have applied a two-step process to determine who is “similarly situated” and may be potentially included in the class of plaintiffs. This process was first established in a lawsuit known as Lusardi v. Xerox Corporation.

The first step involves a conditional certification or notice stage determination where the court decides whether the proposed members of a class of employees are similar enough to receive notice of and the right to opt-in to the pending action. This “first cut” is often based on initial pleadings. If the plaintiffs meet this burden, the court conditionally certifies the collective action, authorizes counsel for the representative plaintiff to send notice of the case inviting potential members to participate in the lawsuit, and permits the parties to proceed with further fact-finding. Step one casts a wide net to locate all possible workers whose circumstances may be akin to that of the initial plaintiffs.

As the second step, the defendant employer will likely object to the inclusion of some persons who have opted in. The court then applies a stricter standard to decide whether the members in question are, in fact, similar enough to proceed to trial as a group. The “second cut” reduces the size of the potential class previously identified.

Swales does away with this two-step process in the Fifth Circuit. It requires courts to take a hard look at whether workers are similarly situated in the first place. This initial review:

  • identifies what facts and legal considerations will be material to determining whether a group of employees that is similarly situated; and
  • authorizes preliminary discovery necessary to make that determination, which will vary according to the facts on hand.

Only those in the resulting group can be sent an invitation to opt-in to the lawsuit. The Swales process reduces the size of the class from the beginning, rather than waiting until the second step.

Good Wage and Hour Legal Help Will Benefit the Collective Action and Avoid Potential Pitfalls

The new process for certifying who is eligible to participate in an FLSA collective action clearly takes some strategic thinking. Following are only a few of the potential pitfalls of the new process:

  • It seems designed to produce a smaller class of employees at the outset. There is simply a greater risk of missing a group of similarly situated employees by notifying too few.
  • There is a greater risk that potential plaintiffs will see their recoveries limited or may be barred entirely by the statute of limitation. The statute of limitation for FLSA collection actions is two or three years from the date the violation. The time continues to run until an individual opts into the lawsuit. That could be delayed if the initial process of identifying facts and legal considerations becomes protracted.
  • The Swales decision establishes a new process that shifts the costs of initial discovery from the defendant employer to the presumably shallower-pocketed worker-plaintiffs because of the stage of the process in which it occurs.
  • The novel process introduces a new level of uncertainty. With different federal courts interpreting and applying the same federal law differently, challenges are a near certainty. Will other federal Circuits adopt the Swales process? Is a Supreme Court challenge around the corner?

As FLSA collective actions are brought in the Fifth Circuit, other concerns will undoubtedly emerge. Now, more than ever, workers need the help of employment lawyers who have deep experience with wage and hour claims, including overtime and misclassification disputes.

Reach out to our Wage and Hour Lawyers for Legal Help

Our Texas employment lawyers have a depth of experience with wage and hour, overtime compensation, employee rights, tip, and other wage claims. We are well prepared to handle the new changes created by the Swales case to help our clients. Use this link to get started Contact Us. We offer a free evaluation of the facts of your case.

New Final Rule from the DOL Clarifies the Differences Between Employees and Independent Contractors

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On January 6, 2021, the U.S. Department of Labor issued a final rule intended to clarify who is an independent contractor and who is an employee under the Fair Labor Standards Act (FLSA). This rule would supersede all previous federal guidance on the issue but does not affect other state or federal tax laws. The new federal rule was to take effect on March 8, 2021.

On January 20, President Biden reportedly issued a freeze on all new regulations to give the incoming administration an opportunity to review how it should respond. The new administration had been expected to oppose the final independent contractor/employee rule.

The distinction between employees and independent contractors is important, though, because only employees are protected by the FLSA’s minimum wage and overtime provisions. This is even more urgent as questions swirl about initiatives to raise the federal minimum wage to $15. So, how are workers to know whether they are being correctly classified – or more to the point – correctly paid?

Kilgore & Kilgore Employment Lawyers Can Help You Enforce Your Rights

If you have questions about your wages or other workplace issues like discrimination, we are here to help. Click here to learn more about our employment law practice. Our case evaluation is free. Click here Contact Kilgore Law reach out to us.

Employee or Independent Contractor under the FLSA

The FLSA requires covered employers to pay their nonexempt employees at least the Federal minimum wage (currently $7.25) for every hour worked and overtime pay for every hour worked over 40 in a workweek. The FLSA sets a floor for hourly wages. Some states require a higher minimum; but Texas uses the federal rules. The law also mandates that employers keep certain records regarding their employees. None of these requirements apply to independent contractors, whose only legal protections come from the contract under which they work.

The FLSA does not define either “employee” or “independent contractor.” It defines “employ,” however, as “suffer[ing] or permit[ing] to work.” Courts have parsed the meaning of those words according to a multifactor test designed to determine whether, as a matter of economic reality, a worker is dependent on a particular individual, business, or organization for work (and is thus an employee) or is in business for him- or herself (and is thus an independent contractor). Different states have developed their own interpretations of this multifactor inquiry.

In Texas, perhaps the most user-friendly tool for applying this multifactor test is set forth in a chart adopted by the Texas Workforce Commission pursuant to the Texas Payday Law. It sets out 20 factors, including whether:

  • The worker receives instructions from the employer.
  • The worker is trained by the employer or another worker.
  • The worker’s services are integrated into the operation of the business.
  • Services are rendered personally, or whether the worker may delegate them to someone else.
  • The worker may hire, supervise, or pay helpers.
  • The relationship is continuing.
  • There are set hours of work.
  • Full time is required.
  • Services are performed at a location determined by the employer.
  • The employer sets the order or sequence of tasks.
  • The worker must submit oral or written reports.
  • The worker is paid by the period worked (hour, week, or month) or the job.
  • The employer reimburses business expenses and travel expenses.
  • The worker furnishes his or her own tools and equipment.
  • The worker has a significant investment in the business.
  • The worker can realize profit or loss.
  • The worker may work for more than one business at a time.
  • The service is available to the public.
  • The employer may discharge the worker without liability.
  • The worker has the right to quit without liability.

The ultimate results are not uniform from situation to situation, and they are hard to predict. This is a problem the new final rule proposes to fix.

Two Core Factors and Three Guideposts – Pros and Cons – Independent Contractor or Employee

The new guidance replaces the old multifactor test with two core factors for courts to consider. If the result is still unclear, it posits three additional guideposts to ponder.

First, the two core factors examine the control that a person has over his or her own work and second, the opportunity for profit or loss because of personal investment. The three additional factors, which may be applied if necessary, consider the amount of skill required for the position, the permanence of the working relationship, and how integrated the worker’s role is to the organization’s overall operation.

If the DOL’s final rule goes into effect, it would presumably compress the twenty-factor determination that Texas employers and courts now use to five. Proponents argue that this will be simpler than the old test and will produce more uniform results.

Opponents argue that it tips the scale heavily in favor of employers, who would often prefer to consider workers as independent contractors. In particular, the new final rule abandons the analysis of whether the worker has a significant investment in the business (number 15 on the list above). In this way, the January 6 rule makes it easier to classify an individual as an independent contractor. A former DOL official and director of policy at the Economic Policy Institute has suggested that the new rule could cost U.S. wage workers at least $3.7 billion annually.

What about Unemployment Compensation, Workers Compensation and Tax Withholding?

But the guarantee of a minimum wage and overtime are not the only legal protections that workers get when they are classified as employees rather than independent contractors. The new DOL guidance has no effect on the Texas Unemployment Compensation Act (TUCA). The TUCA uses a broadly inclusive test, known as the “direction or control” or “common law” test, for deciding who is an employee. By implication, an independent contractor would be a person whose services do not meet the above test. It is possible, if unlikely, that an individual might be an independent contractor for wage and hour questions but an employee when it came to unemployment compensation.

Texas employers are generally responsible for withholding federal taxes, including Social Security and Medicare tax for employees, but not independent contractors. The Internal Revenue Service has its own criteria for determining who is an employee. This multi-factor test focuses on behavioral control, financial control, and relationship, and looks at some of the same factors considered by the DOL. It would also not be affected by the new DOL guidance.

Texas does not require most private employers to have workers’ compensation. Employers who contract with government entities must, however, provide workers’ compensation coverage for employees working on a project. Independent contractors are generally responsible for their own coverage. Courts generally look at whether the employer has the right to control the progress, details, and methods of operations of the employee’s work.

The issue of who is an independent contractor and who is an employee and for what purpose is clearly complex. But complexity tends to be the problem of employers and those charged with administering the law. Wage workers face the far more immediate problem of how to get paid what they are entitled to.

Reach out to our Employment Lawyers for Wage Help for Independent Contractors and Employees

If you think you are being improperly paid as an independent contractor rather than an employee, call us to talk about your situation. The same is true if you have encountered other workplace problems, such as harassment or unfair hiring practices. Our Texas employment lawyers know the law and understand your situation. We offer a free evaluation of the facts of your case. Use this link Contact Us to get the conversation started.

Supreme Court Decision Interprets Racial Discrimination Litigation Under Prevailing Civil Rights Law

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In a recent decision, the Supreme Court held that to succeed in a racial discrimination claim brought under the Civil Rights Act of 1866, or Section 1981 claim (as opposed to a claim brought under Title VII or under the Texas Human Rights Act), a plaintiff must show that race was the prime cause, not just one of many causes, of the plaintiff’s legal harm. Unlike much recent racial discrimination litigation, this is not an employment case. It rises from the law of contracts and tortious interference with those contracts.

This case is known as Comcast Corp. v. National Association of African American-Owned Media. However, torts and contracts are so fundamental to American law that the decision may have consequences for buyers and sellers of goods and services. For example, in the post-COVID-19 legal landscape, will independent contractors — gig workers who sell their work under the terms of a contract— have fewer legal protections from racial discrimination than employees who do similar work under the protections of common and statutory law? Will the Comcast decision further prompt employers to hire work out rather than building a permanent workforce?

The Future of Gig Workers and Independent Contractors

Whether independent contractor protections will turn out to be the cutting edge of racial discrimination law is anybody’s guess. But employers are already sensible to the benefits of the flexible and contingent workforce that independent contractors present. The disruptions in work and business triggered by COVID-19 containment efforts may make contracting even more attractive to employers once the dust has settled. Independent contractors, however, are far more vulnerable to employer misdeeds than employees are. More than ever, those who face racial discrimination issues should rely on the depth of legal expertise offered by the experienced attorneys at Kilgore & Kilgore.

Our Business and Employment Lawyers May be Able to Help Those Who Experience Racial Discrimination

If you believe that you or your business has suffered from racial discrimination or false allegations of racial discrimination, the Texas lawyers at Kilgore & Kilgore can help you assess your legal situation and fight for your rights. Click this link to learn more about workplace discrimination. We offer a free review of the facts of your case. Use this link to get the conversation started Contact Kilgore & Kilgore.

Comcast Corp. Refused to Contract with ESN – Was It Racial Discrimination?

African American entrepreneur Byron Allen owns Entertainment Studios Network (ESN), the operator of seven television networks. ESN had long sought to have Comcast Corp. carry its channels. Comcast Corp. refused, citing many reasons. ESN finally sued, claiming that Comcast Corp. systematically disfavored African American-owned media companies. ESN conceded that Comcast Corp. had offered legitimate business reasons for refusing to carry its channels but argued that these reasons were pretexts.

The trial court concluded that ESN failed to show that, but for racial animus, Comcast Corp. would have contracted with ESN. It dismissed the case. On appeal, the Ninth Circuit Court of Appeals reversed, on the rationale the plaintiff had to plead only that race played “some role” in the decision-making process. The Supreme Court sided with the trial court, opting for the “but for” test and sent the case back to the Ninth Circuit Court of Appeals for reconsideration under that standard of causation.

That may seem pretty far down in the legal weeds, but the bottom line is that it is much harder for someone claiming racial discrimination in a contract case to win under the “but for” standard than it would be under the “motivating factor” test.

A Tale of Two Racial Discrimination Laws

There are many federal and state anti-discrimination laws and each may have different standards for proving causation. The two laws at the heart of Comcast are 42 U.S.C. §1981, originally enacted during Reconstruction as part of the Civil Rights Act of 1866, and Title VII of the Civil Rights Act of 1964. Actually, only the first is at issue in Comcast, but how we understand its meaning is affected by more recent experience with the latter.

Civil Rights Law and Racial Discrimination

On its face, §1981 relates to rights and responsibilities that are specifically relevant to the conduct of a business, including the right to contract and to access the court system. The Civil Rights Act of 1866 granted citizenship to the freed slaves and provided the following guarantee, now codified as §1981(a):

“All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.”

Title VII Relates to Employment Discrimination

On the other hand, Title VII relates specifically to employment. It prohibits employerment discrimination based on race, color, national origin, sex, and religion. Under the facts of Comcast, Title VII seems inapplicable. Byron Allen was not suing over employment rights. He and other litigants sued because Comcast Corp. refused to carry ESN channels.

There are other differences between the two statutes, including the length of the statute of limitations and the right of private action, but the critical one in Comcast is the standard of causation. In its analysis, the Supreme Court rejected the suggestion, attributed to Comcast Corp., that the “motivating factor” standard of Title VII should be imported into the understanding of §1981. The Supreme Court relied heavily on the historical differences between the two statutes, stating:

“[I]t’s hard to see what [the history of any of Title VII] might tell us about §1981. Title VII was enacted in 1964; this Court recognized its motivating factor test in 1989; and Congress replaced that rule with its own version two years later. Meanwhile, §1981 dates back to 1866 and has never said a word about motivating factors. So, we have two statutes with two distinct histories, and not a shred of evidence that Congress meant them to incorporate the same causation standard.”

The history of the application of the two different standards of causation in the two laws has been anything but a model of clarity. Title VII, for example, uses the “but for” standard for certain causes of action and at certain stages of Title VII lawsuits. Nonetheless, today, the law of the land is that to succeed in a §1981 claim, a plaintiff must show that racial bias is the principal, the “but for,” cause of the legal injury that is the subject of the lawsuit.

Racial Discrimination – How It Plays in Texas

The Texas Commission on Human Rights Act (TCHRA) is the Texas version of Title VII and was closely modeled after federal law. Generally, Texas courts look to federal precedents for guidance in determining the proper interpretation of the statute. Similarly, civil rights law in contexts other than employment also seems to rely on federal law. The big question is what is the impact of the Comcast decision likely to be in Texas courts and in the Fifth Circuit?

Predicting the future is perilous work. But the simple answer to that question appears to be that the bright line distinction between Title VII and §1981 on which the Supreme Court relies may represent a shift in the way §1981 is understood in Texas.

The Distinction Between Contract and Employment Law

Perhaps the distinction is not so clear. At least, that was what federal courts found in the past. An example is a 2005 case known as Johnson v. Crown Enterprises. The Fifth Circuit explicitly rejected the trial court’s rigid distinction between Title VII and §1981. The case turned on the statute of limitations rather than the standard of proof, but it continues to be cited as good law in many contexts.

An amicus brief filed in support of ESN makes a similar argument, grounding §1981 in the history of labor contract issues confronted by newly freed slaves. The brief quotes extensively from a Yale Law Journal note from 2006, which further advances the proposition that, when understood in context, §1981 could provide legal protection from racial discrimination for independent contractors who are not covered by Title VII. That, in fact, was the situation faced by Johnny Johnson in the Fifth Circuit case cited herein.

Learn More about Your Rights and Racial Discrimination

Click this link if you wish to know more about racial discrimination claims. For a free evaluation of the facts of your case, click here and let’s get the conversation started contact Kilgore & Kilgore.

Legal Help for Servers in Texas Restaurants Earning Tips but Not Getting Paid by Owners for What They are Owed

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Talk about complicated compensation schemes, some of the most complex rules of the Fair Labor Standards Act (FLSA) apply to people who work for tips like a waitress, bartender, dishwasher, barber, hairdresser, babysitter, caregiver, housecleaner, etc. In Texas, the minimum wage for tipped workers is $2.13, exactly as it has been for three decades.

Furthermore, when employers abuse, or innocently misapply, the rules for paying tipped workers, such employees often feel powerless. People who receive tips assume they cannot afford legal help. This is not necessarily true. Many tipped workers have valid pay claims under the FLSA, and federal courts in Texas and throughout the country are now hearing more and more of these cases. To make such cases more economic, workers can unite to bring a collective action under the FLSA. If you suspect that something is not right with the way your employer is calculating your wage and tips, our employment lawyers may be able to offer legal help.

Kilgore & Kilgore Employment Lawyers Understand What Tipped Workers Should Get Paid

If you have questions about your wage, tips, or other problems at your job, including discrimination, harassment, wrongful termination, or other employee rights issue, we are here to listen. Click on this link to find out about our employee rights law practice. If you think your employer is not paying you everything you are owed, reach out to us using this link Contact Kilgore Law. We offer free case evaluations.

The Issue of Tips, Salaries, and Compensation is Complicated and Often Requires Legal Help

The recent Fourth Circuit case, Wai Tom v. Hospitality Ventures LLC, is a useful illustration of the kinds of questions that people who work for tips have. The decision is not yet controlling precedent in Texas and is so recent that its implications have yet to fully percolate through Texas courts. The questions it raises are hotly debated, though. They can be expected to come up again.

Mr. Tom, and others who ultimately joined the collective lawsuit, worked as servers and server assistants at Ãn Asian Cuisine, an upscale sushi restaurant in North Carolina. Their pay came from four sources:

  • A guaranteed hourly wage of at least $2.13 plus tips or employer pay to reach at least the federal minimum wage of $7.25 per hour;
  • cash tips;
  • credit card tips; and
  • automatic, non-discretionary gratuities of 20 percent for parties of six or more.

In July 2014, the restaurant instituted a tip pool for its evening shifts, pooling together all tips and automatic gratuities. This pool was distributed among the servers and others, who did several different kinds of jobs. To determine whether the restaurant violated the FLSA minimum wage and overtime requirements, the Fourth Circuit Court looked at several persistent questions:

  • whether the automatic 20 percent gratuity was actually a tip;
  • who should be included in the tip pool;
  • for whom was the restaurant entitled to claim tip credit; and
  • who was entitled to a minimum wage of $7.25 plus overtime, rather than the minimum tipped wage of $2.13 plus tips?

Basic FLSA Rules Regarding Tipped Workers

As with much employment law, the FLSA lays down basic rules, but states may be more generous to employees, as each state chooses. Texas stays close to the federal minimum wage but has developed its own interpretive rules.

The FLSA currently sets the minimum wage at $7.25 an hour. The law permits employers to take a credit towards their minimum wage obligation for amounts above a $2.13 floor for workers who qualify as “tipped workers.” In Texas, some employers choose to pay the $7.25 minimum wage, rather than contend with the accounting challenge of topping up pay to reach $7.25.

To qualify as a tipped worker under the FLSA, an employee must customarily and regularly receive more than $30 per month in tips. If an employee’s tips combined with the employer’s direct wages of at least $2.13 per hour do not equal the $7.25 per hour, the employer must make up the difference. Tipped workers who work more than 40 hours per week are eligible for overtime calculated at one and one-half times $7.25 (NOT $2.13).

Tips are the property of the employee under both the FLSA and the Texas Payday Law. However, an employer may establish a tip pool. A valid tip pool may not include employees who do not customarily and regularly received tips, such as dishwashers, cooks, chefs, and janitors. Only tips received by the employee may be counted in determining whether the employee is a tipped employee and in applying the tip credit.

According to the FLSA, when is a Gratuity not a Tip? If It is Not a Tip, what is It?

As a rule, mandatory gratuities are not considered tips for purposes of the FLSA. Whether a gratuity is actually “mandatory” or just strongly suggested is very dependent on the evidence in a particular situation. In Wai Tom, the Court decided that the gratuity was mandatory, even though the workers presented evidence that it had been waived on occasion.

If gratuities are considered mandatory, they are considered part of the employer’s gross receipts. If an employer pays a portion of the mandatory gratuity to the employee, it counts as wages. This has three consequences:

  • Employers must withhold Social Security and Medicare tax from wages.
  • The mandatory gratuity must also be factored into the calculation of overtime unless it qualifies as a commission – a new argument to which the Fourth Circuit appeared receptive in Wai Tom.
  • If the mandatory gratuity counts as wages, an employer may not count any portion of it toward the tip credit.

In Wai Tom, the restaurant’s argument that the compulsory gratuity was a commission earned by the servers seems to be new and may not have yet been considered by the Fifth Circuit. If successful, it would have other far-reaching implications since workers who receive commissions may not be eligible for overtime. If you are feeling confused, we sympathize.

Legal Help to Determine Who can Participate in the Tip Pool?

This question comes up often in Texas courts. Only workers who customarily receive tips can participate in a tip pool. Ordinarily this would include those who interact with the customer, but not back-of-the-house employees. Managers and owners can never participate in the tip pool, even if they periodically chip in to serve customers or tend bar. This is another very fact-specific inquiry. If a tip pool includes ineligible employees, the entire pool may be found to be invalid.

The consequences for an employer can be serious. In 2016, the District Court for the Northern District of Texas ordered a Japanese restaurant to pay more than $166,000 for including ineligible employees in the tip pool. In 2009, the District Court for the Southern District of Texas ordered Chili’s restaurant to pay $270,000 to workers for a similar infraction. Under a recent U.S. Department of Labor rule, however, an employer may permit non-tipped workers to participate in a tip pool if the employer does not take the tip credit.

Deciding Who is a Tipped Worker in the Court’s Opinion Could Require Legal Help

This is really a two-sided question. To qualify as a tipped employee, a worker must perform certain kinds of jobs and make a certain minimum amount of money each month in tips. An employer can generally claim the tip credit of up to $5.12 per hour only for someone who legally qualifies as tipped worker, and only if it notifies the worker in advance.

In 2015, in a case known as Montano v. Montrose Restaurant Associates, the Fifth Circuit concluded that a worker cannot qualify as a tipped worker solely because he or she participated in the tip pool. That would be circular reasoning. However, in Texas, an employer may claim the tip credit for non-tipped work if the latter work is closely related to the tipped work an employee does. Think about a server who steps to the back of the house briefly to make coffee during a slow time. The credit might not be available if the server picked up extra shifts doing the books.

Reach out to our Employment Lawyers for Legal Help about Wages and Tips

People who work for tips perform difficult and sometimes underappreciated work. You should not also have to have an accounting degree to get paid what you are owed. Our Texas employment lawyers understand your situation and the intricate ins-and-outs of the law. We offer a free evaluation of the facts of your case. Use this link to get started Contact Us.

Long-term Disability Claim Denials Pose Special Problems for Small Business Owners, Doctors, Dentists

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The challenges that doctors, dentists, and others who own small businesses face if an insurance company denies a long-term disability claim are not unique. But such claims can play out differently from claims made by employees of medium and large companies with long-term disability insurance provided through their companies. The consequences may be especially devastating because of the nature of a solo practice or small business.

The good news is that the law has changed in Texas over the past few years, so that people whose claims were denied now have a much better chance of prevailing in court than they would have had as recently as three or four years ago. If your disability claim was denied, or payments were discontinued, it is important to speak with an experienced disability attorney as soon as possible.

If Your Long-Term Disability Claim Has Been Denied, Talk to Our Disability Attorneys

Our experienced disability attorneys may be able to help. We understand what it is like to be the “chief cook and bottle-washer” of your own business. Just as important, we understand the ins-and-outs of the various insurance policies purchased by many small business owners, professionals, doctors, dentists, and those offered by professional organizations.

If you want to know about long-term disability claims denial legal options, click this link Contact Kilgore & Kilgore to connect with us and get the conversation started. We offer a free evaluation of your case. To learn more about our disability claims denied law practice, click here Dallas Long Term Disability Insurance Lawyer – ERISA.

The Disability Claims Picture is Different for a Small Business and Small Office Practice

Running a doctor or dentist office or a small business hardly seems like dangerous work. After all, it is not like operating heavy machinery. But there are health risks, some of which can be disabling. Many of these disabilities are essentially invisible.

Dentists, for example, are particularly at risk for osteoarthritis and spondylosis of the elbow, neck, and other joints because of the amount of time that they spend standing or sitting in awkward positions. A severed finger that would be a nuisance to an investment advisor can end a doctor’s career.

Furthermore, as professionals and business owners who sell a service like medical care or some other personal service know, you ARE the product. If Mary Smith is a renowned dentist, the value of her reputation and skill is not transferable to anyone else. If she is unable to practice as a dentist, she loses her income. Without her, there is no small business. The whole edifice comes crashing down.

Where Disability Claims Go Wrong

There are a couple of inflection points where disability claims go awry. Sometimes insurers routinely deny claims based on certain diagnoses; fibromyalgia is notorious for this. The same is true for other conditions where the diagnosis depends on self-reported symptoms of pain or distress – like back injuries. Claims for mental health disorders are frequently denied, regardless of documentation.

Secondly, some disability insurance policies use one definition of disability for a preliminary period and another thereafter. Claimants may be entitled to disability payments for the first two years if they are unable to work in their own occupation – as a dentist, for example. Thereafter however, the dentist must demonstrate that he or she is unable to work in any occupation – as a medical coder, perhaps. That is known as the “own occupation/any occupation” turn where a lot of claimants lose benefits.

Finally, in some situations, insurers seek out evidence of a “primary occupation” and a “secondary occupation.” Suppose that Dr. Mary Smith, after patients were done and the receptionist went home, did the books and the billings. An insurance company might take this as evidence of Dr. Smith had a second job as a medical office administrator. That could reduce the payout on the loss of her dentist job.

But of course, as entrepreneurs know and as we understand, it is really all the same job.

Good Legal News from the Court

Until 2018, the rule in Texas, and throughout the Fifth Circuit, was that courts would review administrative decisions to deny long-term disability claims in ERISA plans only when those denials demonstrated an abuse of discretion. Courts used to give great deference to the decisions of plan administrators. Zipping past the legal history of the facts of the claim, the net effect was that long-term disability claimants who were denied benefits at the administrative level had little chance of success in court.

That changed in 2018 because of the Fifth Circuit’s decision in a case called Ariana M. v. Humana Health Plan of Texas, Inc. In that case, which involved a denial of health plan benefits rather than disability benefits, the Fifth Circuit overturned longstanding precedent and held that courts may reexamine the evidence afresh when the initial denial was based on a factual determination. In other words, now courts are not limited to looking for gross malpractice on the part of plan administrators. They can delve back into a claimant’s medical records to consider whether the denial was appropriate in the first case. In legal language, this is referred to as “de novo review.”

This decision brings the Fifth Circuit into line with other federal courts in the country. More importantly, it breathes new life into post-2018 ERISA lawsuits brought by individuals whose claims were denied. In 2019, in Pike v. Hartford Accident Ins. Co., the District Court for the Eastern District of Texas explicitly applied this new rule in a disability benefit denial lawsuit.

Our Disability Attorneys Can Help Professionals and Small Business Owners Whose Long-Term Disability Claims Have Been Wrongly Denied

We get what it is like to run your own medical care or dental practice or other small business, and we know the law. Our Texas disability attorneys can help you assess your situation and advise you on the best strategy. If you want legal advice about a denial of a long-term disability claim, or any other insurance benefit claim, we are here to talk to you. Click here to reach a form on our website to submit your contact information so we can get the conversation started Contact Us.

Covid-19 Business Contract Disputes – Contract Law and “Force Majeure” in Texas

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Contract law has come to the forefront of legal disputes in Texas. Covid-19 has scrambled lots of plans in Texas and everywhere. Among the legal areas affected are business contracts where performance of long-standing obligations has become senseless, impossible, or hugely burdensome. The pandemic has roiled the energy sector, bankrupted businesses, shuttered restaurants, and scuttled sales of goods. The Texas Republican Party lost its site for an in-person convention in Houston. More terrifying still, consider the bride who must now unbook a wedding venue planned long in advance.

Enter the concept of “force majeure,” a legal doctrine which refers to unforeseeable circumstances that prevent someone from fulfilling a contract. Force majeure may not only excuse performance but protect the defaulting party from penalties associated with a breach of contract. In Texas, however, there are limits to the circumstances under which the doctrine can be invoked. The related common-law concepts of “impossibility of performance” or “frustration of purpose” may provide some relief to a defaulting party.

Kilgore & Kilgore Lawyers Understand Texas Contract Law

It is important to understand that it is still too early for a specific body of Covid-19 law to have developed. But Texas businesses have had long experience with unprecedented events – from hurricanes to international disruptions in the oil industry. There are certain well-developed rules for applying force majeure in contract disputes. Our commercial litigation attorneys can help those caught between the rock of an international pandemic and the hard place of contract compliance. If you have questions on this topic, reach out to us using this link Contact Kilgore Law.

Contract Law and Force Majeure Basics

Force majeure is an old legal idea (hence the French), but as it has evolved, several limits have become fairly standard. In general, in determining whether force majeure will excuse performance under a contract, courts will look at whether:

  • there was a contract (the doctrine has no common-law equivalent in Texas – if there is no contract, there is no force majeure defense);
  • the cause of the failure to perform was an event specified in the contract and not some other event;
  • the risk of nonperformance was unforeseeable or could not have been mitigated; and
  • performance was truly impossible, not just inconvenient or expensive.

Above all, however, courts will look at the specific language of the contract to determine whether it encompasses the unforeseeable event. A generic force majeure clause may read something like:

“Neither party shall be considered in default in the performance of its obligations under this agreement to the extent that performance of its obligations is prevented or delayed by any cause beyond its reasonable control, including, without limitation, acts of God; acts or omissions of governmental authorities; strikes, lockouts, or other industrial disturbances; acts of public enemy; weather; wars; acts or threats of terrorism; blockades; riots; civil disturbances; war, hurricanes, fires, earthquakes, terrorism and any other similar events, acts, or omissions beyond the control of the parties.”

Some contracts, especially in the shipping industry, may also include “pandemics, epidemics or outbreak of infectious disease” in the list of examples, but these additions are relatively rare. So, when does Covid-19 excuse contract performance in Texas?

In Texas, Force Majeure is Construed Narrowly in Contract Law

Texas courts construe force majeure clauses narrowly. If the event is not listed, performance is generally not excused. Frequently, however, as in the example above, the list of specific events in the contract will be followed by a general, catch-all phrase such as “any other similar events, acts, or omissions.”

When interpreting these non-specific provisions, Texas courts may:

  • fill any contract gaps with common-law concepts, including the requirement of
    unforeseeability, and
  • stress that a contractual obligation cannot be avoided simply because performance has
    become more economically burdensome than anticipated.

The application of Texas law is especially important, since many companies in the energy sector, even those not domiciled in Texas, specify that Texas law will be used to resolve disputes. It also tends to be very industry and very fact specific.

For example, with respect to the energy sector, Texas courts have held in the past that market downturns do not generally constitute force majeure events. In a case called TEC Olmos LLC v. ConocoPhillips Co., the Texas Court of Appeals found that the force majeure defense was not available because “fluctuations in the oil & gas market are foreseeable as a matter of law.” However, in a case called Atlantic Richfield Co. v. ANR Pipeline Co., government actions were deemed force majeure events excusing performance.

Under Texas law, an “act of God” usually will not relieve a party to a contract of its obligations under a commercial lease unless the parties expressly provided so in an applicable force majeure provision. Nonetheless, many commercial tenants are currently seeking relief from their lease obligations due to their inability to occupy their premises and conduct business from those premises and generate revenues.

Contract Law, Covid-19 and Force Majeure Circumstances in Texas

Even if a court determines that force majeure is not available, all is not lost for the hapless defaulter. Three related common-law defenses, impossibility, impracticability, and frustration of purpose may provide some relief. All three defenses focus on unforeseeable events. Usually, they are limited to situations where supervening events, not imagined at the time the agreement was made and not caused by the party claiming the defense has made performance impossible, impracticable, or commercially pointless. In some cases, these doctrines may cover intervening government regulation. The Texas Business and Commercial Code specifically permits the impracticability defense in the sale of goods. The defense is less available, if at all, in the oil & gas industry or commercial leases.

Reach out to Kilgore & Kilgore to Learn More About Force Majeure in Contract Law

Our Texas commercial litigators can help you assess your legal situation and advise on the best strategy for tackling this and related situations. If you would like to know more about how Covid-19 or other unforeseen events may affect your contract expectations and obligations, click this link Dallas Commercial Litigation Attorney. We offer a free evaluation of the facts of your case. To get this process started, use this link Contact Us to reach us.

The New Federal FFCRA Act – Issues and Answers for Employees, Employers and Families

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The Families First Coronavirus Response Act (FFCRA) is a new, temporary federal law that expands paid sick leave and unpaid family and medical leave protections for public employees and most private employees whose employers have up to 500 employees. Because of the way FFCRA interacts with existing federal, state, and local laws, however, some of those who work for larger employers may also benefit. There are also carve-outs for some employers of fewer than 50 employees.

The contours of this new law are not entirely clear, and employees may have questions about whether or how FFCRA can bring relief under trying circumstances. Some employers are still not certain of their obligations. Lawsuits have begun to multiply in Texas and throughout the United States concerning back pay, unpaid employee benefits, wrongful termination, discrimination, required notification in the event of a permanent closure, and so on. Working parents of school-aged children feel a great deal of uncertainty, caught in the confusion as schools have re-opened under a variety of plans that may include online learning and alternate days of attendance.

Our Employment Benefits Lawyers Can Help Sort Out the Provisions of FFCRA and Other Legal Protections in the Workplace

If you have questions about FFCRA, we have answers. Click here to find out about basic Family Medical Leave Act protections. Click this link to learn more about your employee safety and whistleblower protection in the workplace during the COVID-19 pandemic and beyond. If you believe your employer has not accommodated your request for FFCRA benefits, reach out to us using this link Contact Kilgore Law. The way that FFCRA may apply to you depends on the details of your situation.

The Basics of the New FFCRA Law

The FFCRA requires covered employers to provide up to 80 hours of paid leave to employees for certain COVID-19-related reasons under the Emergency Paid Sick Leave Act (PSLA) and expands the Family Medical Leave Act (FMLA) to provide employees with up to 12 weeks of emergency paid leave to care for a child as a result of school or childcare closings due to a public health emergency. By its terms, the requirements of the FFCRA expire on December 31, 2020.

Things Can Get Complicated with the New FFCRA Law

Which employers and employees are covered by FFCRA?

  • Employers of more than 500 employees are not covered — FFCRA is intended to work by providing tax credits to small (but not the smallest) employers. In theory, under the FFCRA, employers with under 500 employees could afford to provide extended paid leave to their employees. Employees of larger businesses, however, may also be eligible for benefits under other provisions of federal, state, and local law.
  • Most private employers of between 50 and 500 employees are also covered by FFCRA — The 500- employee threshold counts full-time and part-time employees within the United States, employees on leave, as well as temporary workers and day laborers supplied by a temporary agency. It does not cover independent contractors or gig workers.
  • Most employees of the federal government are covered by Title II of the FMLA, which was not amended by FFCRA, and are therefore not covered by the extended family and sick leave provisions. However, federal employees covered by Title II of FMLA are also covered by the sick leave provisions in the FFCRA.
  • Healthcare providers and emergency responders, some of whom are also public employees, may be excluded from the paid sick leave or extended family and medical leave entitlements.
  • Employers with fewer than 50 employees may not have to offer emergency paid sick leave and extended FMLA leave to their employees if they can demonstrate that doing so would “jeopardize the viability of the business as a going concern.”

Are part-time workers, independent contractors, and furloughed employees covered by FFCRA?

Part-time workers are generally covered, but the calculation of their entitlement is adjusted to reflect the fact that they work fewer hours. Most employers do not cover independent contractors and gig workers under their existing employee benefits. These workers are not covered by FFCRA either. If you are a furloughed employee because your employer does not have enough work for you, you are not entitled to take paid sick leave or paid expanded FMLA benefits. However, you may be eligible for unemployment insurance benefits.

When taking paid sick leave, can I get my full pay?

Benefits are capped, depending on your reason for being away from work and the length of time you plan to be off. The calculation of your benefit is something that our employee benefits lawyers would be glad to explore with you individually. If you are taking paid sick leave, how much you can get paid will depend on several factors, including:

  • Your regular rate of pay;
  • The reason why you are taking paid sick leave – whether for yourself or to care for another, and whether you have been advised to self-quarantine, or have symptoms; and
  • How much sick leave you have already used.

What if my employer just says no? What can I do?

At best, you may have been denied because of a documentation issue. The Department of Labor issued detailed guidance that may provide a way to solve this problem. To find this information online, enter the following URL into your browser: federalregister.gov/documents/2020/09/16/2020-20351/paid-leave-under-the-families-first-coronavirus-response-act. Beyond that, it is important to remember that HR or accounting personnel at smaller businesses may be struggling with the onslaught of new requirements. Oftentimes, having an employee benefits attorney explain your request regarding FFCRA qualification requirements is a better way to go. To get this started, use this link Contact Us to reach the employee benefits attorneys at Kilgore & Kilgore.

FFCRA Lawsuits Are Multiplying

The Department of Labor has already pursued several investigations. Then, of course, there is the option of an employee benefits lawsuit. FFCRA compliance problems have already spawned many of them in Texas and elsewhere. There will certainly be more. These lawsuits are not always brought under the terms of FFCRA. They may appear as wage and hour claims, retaliation claims, discrimination claims, or wrongful termination claims. It may be too early to discern trends in these lawsuits, except an uptick trend in Covid-19 and FFCRA lawsuits, that there will be more of them in the future. Here are a few examples:

  • In Texas, DOL investigators found that West Texas Paving failed to pay an employee for FFCRA-qualifying paid sick leave after he informed the company about his COVID-19 medical diagnosis and was hospitalized.
  • A Texas attorney who worked as general counsel at a commercial real estate firm near Dallas reportedly filed a lawsuit against her former employer for firing her for refusing to violate a local stay-at-home order during the COVID-19 pandemic.
  • In Michigan, a senior living facility employee claimed that she was terminated after using her approved FMLA leave following a positive COVID-19 test.
  • In Pennsylvania, an employee alleges that he was the victim of a wrongful termination after he told other employees that a co-worker had been exposed to COVID-19.

Parents of School-Aged Children Face Special Challenges

Parents of school-aged children whose schools may be open, or online only, or some variation of both options, or just subject to sudden school changes face particularly bewildering choices. In late August, the DOL released additional guidance under the FFCRA that clarified several issues including the following:

  • If a school is operating on an alternate day or other hybrid- attendance basis, employees are eligible under the law for FFCRA paid leave on days when the child is not permitted to attend school in person and must instead engage in remote learning, as long as an employee needs leave to care for the child during that time, and only if no other suitable person is available to do so. Conversely, FFCRA paid leave is not available to take care of a child whose school is open for in-person attendance, even if the parent is hesitant to send the child to school because of the risk of infection.
  • If a child is under a Covid-19 quarantine order or has been advised by a health care provider to self-isolate or self-quarantine, an employee may be eligible to take paid leave to care for the child.
  • FFCRA leave is not generally available to care for someone else’s child.

Reach out to our Employee Benefits Lawyers for Advice About FFCRA – What You Are Entitled to and How to Get Your FFCRA Benefits

We are living through a time of great uncertainty. This affects our work, our jobs, our families, and our health. Our Texas employment benefits lawyers can help you assess your FFCRA and FMLA benefits situation and advise you on the best way to go forward. We offer a free evaluation of the facts of your case. To get this started, use this link Contact Us to reach out to us.

Whistleblowers Who Report Fraud in Federal Contractor and State Contractor Work Are Protected by Law

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Fraudsters seem to find federal and state contracts especially tempting because of the size of the potential payoff and the scale of federal or state contracts, making tight oversight seem almost impossible. Defense contractors, highway contractors, and contractors working on oil and gas leases are no exception. Employees who see federal and state contract fraud and raise the alarm are the taxpayer’s first defense. Being a whistleblower is a perilous endeavor. Whistleblowers risk being fired, blackballed, sued, harassed, and may experience retaliation. Fortunately, whistleblowers have many protections provided by federal and state law.

The federal False Claims Act (FCA) does more than protect employee rights. In recognition of the essential role whistleblowers play, whistleblowers may sometimes share in the government’s financial recovery. A successful FCA claim may take painstaking and meticulous work, however.

Whistleblower Lawyers Can Explain Federal and State Whistleblower Procedures

In 1983, the Texas Whistleblower Act was passed for employees of state and local governments. It protects public employees from retaliation, termination, or other adverse actions by their employers. Our whistleblower lawyers help employees who may wish to be whistleblowers assert claims under whistleblower protection laws including the FCA and the Texas Whistleblower Act. Click here to read more about Whistleblower Protection. If you believe your employer is engaged in federal or state contract fraud, reach out to us using this link Contact Kilgore Law.

Fraudsters Find Many Ways to Cheat

It may help to take a clinical eye to shady practices, especially if they happen where you make your living. Federal contract and state contactor fraud can take a variety of forms, as described in part below.

Contractors or subcontractors may deliberately deliver substandard goods or services that are not what is called for in the contract.

One of the most common violations of the FCA involves overbilling the government for the cost of services and goods or charging the government for labor and materials that were not delivered.

At the beginning of the contracting process, contractors may engage in fraud by providing false information about their or their subcontractors’ qualifications or misrepresenting other critical information to win a contract. This practice is commonly known as false certification. It involves deliberately failing to disclose noncompliance with a material statutory, regulatory, or contractual requirement.

Falsely certifying compliance with certain labor standards is a closely related problem. This may involve failing to pay construction workers at least the prevailing wage in the same locality. Contractors are also responsible for submitting wage certifications of payroll for all their subcontractors, commonly known as payroll certification.

Bid rigging and price-fixing involve schemes between ostensible competitors to manipulate the bidding process. These generally involve unlawful agreements not to compete for government contracts or to limit the price on the bids submitted.

Whistleblowers Often Feel the Risk is Worth It

Many whistleblowers embrace the risk to their employment out of a sense of altruism. Their sense of self-sacrifice may be considered unselfishness. Whistleblowers sometimes share in the fines paid by government contractors who were found guilty, but a financial reward may not be a motivating factor.

These types of contractor claims are sometimes referred to as qui tam claims, which is the shortened version of the Latin phrase, “qui tam pro domino rege quam pro se ipso in hac parte sequitur,” meaning “[he] who sues in this matter for the king as well as for himself.” The whistleblower essentially acts on behalf of the government because he or she is often the only person in a position to know about the fraud.

As another oddity of language, the whistleblower is technically known as the relator, as in the one who can tell or relate the facts.

An FCA claim must involve knowing fraud on the part of the contractor or subcontractor. The accidental delivery of nonconforming goods or a good-faith mistake about a subcontractor’s pay scale might give rise to a breach of contract or some other lawsuit, but it would not qualify as an FCA claim. A variety of federal and Texas laws may apply to facts initially brought forward as a potential FCA claim. Even if an FCA claim proves unworkable, that is not necessarily the end of legal options available to an employee who has taken on the task of reporting wrongdoing.

When a whistleblower decides to proceed, a qui tam claim must be filed with the court under seal. The complaint and disclosure of all relevant information about the claim are initially served on the U.S. Attorney for the judicial district where the qui tam claim was filed and on the Attorney General of the United States. The complaint is sealed for a period of 60 days. This means that the identity of the whistleblower is protected. It also protects the alleged fraudster from public disclosure in the event the government decides not to proceed.

During that 60-day period, the government investigates the allegations in the complaint; thereafter, it will notify the court whether it has decided to proceed or not. If the government chooses to intervene in the claim, it takes over the primary responsibility for prosecuting the action. It can dismiss or settle the action even if the whistleblower objects, as long as the whistleblower has a hearing and the court determines that the settlement is fair. If the government chooses not to proceed, the whistleblower may continue alone in the pursuit of justice.

If the government intervenes, the whistleblower can receive between 15 and 25 percent of the amount recovered by the government. If the government declines to intervene in the action, the whistleblower’s share may be larger, but there are also circumstances in which the share may be reduced. If a qui tam action is successful, the whistleblower may also recover legal fees and other expenses.

Other Texas Laws Protect Whistleblowers from Retaliation

Even if the situation an employee brings forward for investigation does not ultimately qualify as an FCA claim, many Texas laws protect whistleblowers from retaliation, including unjust termination of employment. The best recourse for someone who is troubled by questionable workplace practices, especially those involving federal contractors and Texas state contractors, is to reach out to a whistleblower lawyer for a confidential consultation.

Potential Whistleblowers Should Contact Us Before They Take the First Step

Our Texas whistleblower lawyers can help you assess your legal situation and advise on the best strategy for tackling this and related situations. If you would like to know more about whistleblower protection laws, please click this link Dallas Whistleblower Protection Attorney. Here is another article that may be useful to your understanding of whistleblower and retaliation law that you may find interesting, just click here Sabine Pilot Rule Expands Whistleblower Causes of Action. We offer a free evaluation of the facts of your case. To get this started, use this link Contact Us to reach us.

Whistleblowers Can Help Stem Healthcare Fraud and Are Protected Under Texas and Federal Laws

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Law enforcement authorities estimate that healthcare fraud, including Medicare fraud, costs taxpayers more than $11 billion a year. Texas hospitals and medical treatment facilities are far from immune. But the eyes of the law are not everywhere. Sometimes the only person who knows about a scam is the hospital administrator or a small cadre of employees who sees where the money goes. We can help you understand what you should do if you suspect that something is not right at your hospital or treatment facility.

But there is a dilemma for the potential whistleblower. The Texas Health & Safety Code creates a legal duty for someone who knows about a violation of law to report it to authorities. But whistleblowers can find themselves fired, demoted, harassed or re-assigned to a desk in the basement next to the trash compactor. Employees can be sued in retaliation. Fortunately, federal law and the Texas Health & Safety Code protect employees who report billing malfeasance if the reporting is done in good faith. It is a tricky situation. Failure to report can be a misdemeanor, but a misstep can destroy the protection the law offers whistleblowers.

On the other hand, a successful whistleblower lawsuit can help you get your job back while paying you damages and a share of the financial recovery. The bottom line is that you should speak with a whistleblower attorney before you do anything.

Step One for a Potential Whistleblower: Get Help

The employment lawyers at Kilgore & Kilgore may be able to counsel you on what to do if you believe that you have witnessed Medicare fraud at the hospital or treatment facility where you work. Click this link Contact Kilgore Law to get the conversation started. We offer a free evaluation of the facts of your case. To learn more about whistleblower law, click this link Employee Whistleblower Law.

Houston Whistleblower Reports Malfeasance and Wins Big

Robert McCaslin, a hospital billing department employee in Houston, realized that his employer was billing Medicare for accident victims, even though they had private insurance. The hospital also billed Medicare for prisoners, even though they are not covered by Medicare. When he alerted his boss, McCaslin was told not to bother and assured that that was normal procedure. With his help, the U.S. Department of Justice was able to pursue the case and the Houston Hospital District paid back approximately $15 million. McCaslin received $3 million. For another example of a Texas whistleblower and the Texas Whistleblower Act, click this link Whistleblower Claimant in Texas.

Another Texas Hospital Whistleblower Loses Case

Another whistleblower case involving a medical treatment center in Dallas reported in 2019 tells a more complicated story. The whistleblower filed a lawsuit in 2017 claiming that Baylor Scott & White Health submitted more than $61.8 million in false claims to Medicare over a seven-year period. The whistleblower accused the hospital of inflating Medicare charges by adding secondary diagnosis codes to make treatments appear more medically significant than they were. The federal court dismissed the complaint, finding that there was nothing inappropriate in the hospital’s attempt to take full advantage of coding opportunities to maximize Medicare payment. There was no allegation that the hospital knew that using a particular code was incorrect. In this case, the whistleblower lost.

Fifty Shades of Medicare Fraud

The variety of scams perpetrated at hospitals and other treatment facilities is testimony to the creativity of fraudsters. Federal and state laws, including the False Claims Act, make a wide range of bad actions illegal. The law imposes civil liability on anyone, including corporations, who intentionally uses a false record or statement to get money from the government via fraud, or who conspires to do so. The qui tam provisions of the law allow a whistleblower to act in the place of the U. S. government. A few of the most common scams include:

  • Billing for services not performed – Billing scams are the most common types of Medicare fraud. Think about x-rays and blood tests that were never taken or home healthcare hours never provided. Providers have been known to pad their Medicare claims with personal expenses.
  • Rendering of services not actually needed – Some of the most stomach-churning stories involve elderly, frail patients who are not able to object to or resist treatments that may actually be harmful. Sometimes the nurse or therapist administering the “therapy” can tell that it is wrong, but feels pushed to follow doctor’s orders.
  • Double billing – These are scams whereby a provider bills more that one source such as the patient, Medicare, and private insurance for the same treatment, or alternatively, bills the treatment to the same payers more than once.
  • Unbundling – In this scheme, each component of a medical procedure is billed separately. Think of the difference between ordering a meal and ordering the meal’s components a la carte. Medicare sets reimbursement rates for certain groups of procedures that should be performed together. Medical providers may unbundle the procedures and bill each component of the group separately to increase profits.
  • Upcoding – This is a method of billing for a more expensive service than what was rendered. The Baylor Scott & White Health case described above is example of apparent upcoding.

Texas State and Federal Laws Cast a Wide Net for Malfeasance

By far, the most common form of malfeasance involves Medicare fraud. It may be because Medicare processes a huge number of claims and exercises relatively little scrutiny. It is important to know, however, that federal laws apply to many kinds of violations, including patient abuse.

Most people who bring whistleblower lawsuits act out of a basic desire to work for justice. This is especially true in healthcare. But there is the possibility of a reward, as well. Like Robert McCaslin, the plaintiff in a successful whistleblower lawsuit can receive a reward of up to 30 percent of the proceeds, plus reimbursement for attorney fees, costs, and expenses. But there can be risks. That is why it is so important to work with a whistleblower attorney. To learn more about the protections and benefits that whistleblowers enjoy under the law, click this link False Claims Act Law Benefits Whistleblowers.

Texas Health & Safety Code Protection for Whistleblowers

What happened to the whistleblower at Baylor Scott & White Health mentioned above? The importance of the process of whistleblowing may be the key. Different states have varying requirements. It is important that a whistleblower follow a certain procedure for revealing the malfeasance. This is another reason why it is important to consult with a whistleblower attorney before acting AND not to wait too long to make a report, as there may be a time limit.

In Texas, however, there are protections for good faith whistleblowers. Chapter 161 of the Texas Health & Safety Code makes it unlawful for an employer to act against a whistleblower employee with termination or retaliation for reporting a violation of law. It covers volunteers and contractors as well as employees. An employee who suspects wrongdoing, including but not limited to Medicare fraud, may report the situation to a supervisor, to the agency that licenses the treatment facility, or to the appropriate state health care regulatory agency. The report may be verbal or in writing, but it must be documented. It is best to learn how to make a whistleblower report in Texas before taking the first step.

The person who reports in good faith is immune from civil or criminal liability arising from the report. That immunity does not extend to the individual who caused the abuse or neglect or who engaged in the illegal, unprofessional, or unethical conduct. In addition, a hospital, mental health facility, or treatment facility may not terminate the employment of, or discipline or otherwise discriminate against, an employee who made an appropriate report.

The critical issue is not whether the whistleblower was ultimately right about the existence of a violation of law, but whether he or she acted in good faith. It is important to be able to prove good faith.

Our Employment Lawyers Can Help Employees Who Wish to Report Medicare Fraud

The Texas employment lawyers at Kilgore & Kilgore can help you assess your legal situation and advise on the best strategy for approaching this difficult situation of a potential whistleblower. To learn more about Sabine Pilot, a situation wherein an employee suffers retaliation or termination from refusing to perform an illegal act, click here At Will Employment-Whistleblower. If you find yourself in need of legal advice in a matter involving blowing the whistle on your employer, click here to reach a form for submitting your contact information Contact Us. We offer a free evaluation of the facts of your case.

Supreme Court Rules That LGBTQ People Have Employment Protections Under Federal Title VII Law

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On June 15, 2020, the U.S. Supreme Court made it unequivocally clear that Under Title VII of the Civil Rights Act of 1964, it is against the law for employers to discriminate against lesbian, bisexual, gay, transgender, and queer employees. This includes firing, harassing, or otherwise retaliating against these employees. This is the law in Texas; it is the law in New York; it is the law throughout the United States. While this is a most welcome Big Win for LGBTQ workers everywhere, we are still not yet out of the woods on employment of LGBTQ people.

Another shoe is about to drop in the U. S. Supreme Court. On the docket is a related matter concerning the ministerial exception of employment claims against churches and religious institutions. This decision is expected within months. While it is good to celebrate the victory for many LGBTQ employees, other LGBTQ employees are still experiencing harassment, discrimination and wrongful termination in workplaces defined as religious organizations.

Our Employment Lawyers Can Help You Fight Employment Discrimination, Retaliation, Harassment and Wrongful Termination

If you believe that you are or were being harassed or discriminated against on the job, or if you were fired because you are lesbian, bisexual, gay, transgender or queer, our employment attorneys will defend your rights so you get the outcome you deserve. To learn about the range of legal options available to you, click this link and get the conversations started Contact Kilgore Law for a Free Discussion of the Facts of Your Case. We have decades of employment law experience that will help you understand your employment rights.

Three Discrimination and Wrongful Termination Cases Heard Together by the Supreme Court

This Supreme Court decision refers to three cases that were considered together. The first case is known as Bostock v. Clayton County. Gerald Bostock ran a program that recruited volunteers to advocate for abused and neglected children. He joined a gay recreational softball league, and then recruited for the league from among his co-workers. Someone complained and Bostock was fired. In his lawsuit, he asserted that he was fired for being gay. His lawsuit was dismissed because lower courts ruled, and the 11th Circuit Appeals Court affirmed, that Title VII of the Civil Rights Act does not cover sexual orientation.

In Zarda v. Altitude Express, Inc., the second case considered, Donald Zarda, a skydiving instructor, told a female client that he was gay in order to make her more comfortable while they were strapped together in preparation for a tandem skydive. After the jump, this female client told her boyfriend about the instructor’s statement, and the boyfriend told Zarda’s boss. He was fired for being gay. Mr. Zarda filed a Title VII lawsuit and the full Appeals Court for the 2nd Circuit ultimately ruled for him.

In the third case, known as R.G. and G.R. Harris Funeral Homes v. EEOC, Aimee Stephens, who had presented as a man prior to 2013, was a funeral director at the Harris Funeral Homes. She suffered from gender dysphoria and, on the advice of her doctors, chose to live entirely as a woman before making the decision to transition. She informed her employer that, on her return from vacation, she would present as a woman in appropriate women’s business attire. She was fired before she could return. Ultimately, the 6th Circuit Appeals Court held that Title VII protects transgender people.

The Supreme Court took the cases together to resolve a split among the Circuits. The Supreme Court’s goal was to make the interpretation of federal civil rights law uniform throughout the United States.

The Supreme Court Justices Wrote Opinions Regarding the Language of Title VII

The Supreme Court’s decision is rooted firmly in the language of Title VII, which states that:

“[it is] unlawful . . . for an employer to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.”

The question is whether the term “sex” covers issues of sexual orientation or gender identity. It is clearly not what Congress meant in 1964, when the statute was drafted. The Court finds that no impediment, however. When an employer fires an employee for being homosexual or transgender, the Court reasons, it necessarily discriminates against that individual in part because of sex. Further, the plaintiff’s sex need not be the sole or primary cause of the employer’s adverse action. By way of example, the opinion offers this simple observation:

“Consider, for example, an employer with two employees, both of whom are attracted to men. The two individuals are, to the employer’s mind, materially identical in all respects, except that one is a man and the other a woman. If the employer fires the male employee for no reason other than the fact he is attracted to men, the employer discriminates against him for traits or actions it tolerates in his female colleague.“

Supreme Court Blows Apart Employer Arguments About Discrimination

This Supreme Court opinion also pre-emptively demolishes the arsenal of possible counterarguments on which employers frequently rely. First, it is irrelevant what an employer might call its practice of discrimination, how others might label it, or what else might motivate it. If the worker’s sex is a cause without which an action would have been taken, the practice violates Title VII.

Also, the plaintiff’s sex need not be the sole or primary cause of the employer’s adverse action. It is of no significance if another factor, such as the plaintiff’s attraction to the same sex or presentation as a different sex from the one assigned at birth, might also be at work, or even play a more important role in the employer’s decision.

Finally, an employer cannot escape liability by demonstrating that it treats males and females comparably as groups. An employer who intentionally fires a lesbian, bisexual, gay, transgender, or queer employee subjects all male and female lesbian, bisexual, gay, transgender, or queer employees to the same rule.

Future Supreme Court Decisions on Discrimination Against LGBTQ Employees

The Supreme Court’s recent decision does not affect the “ministerial exception” that it put into place in 2012. This leaves many LGBTQ employees of religious institutions unprotected from employer harassment, discrimination, and wrongful termination. But the high court will take up this matter soon under two cases that it accepted involving employment discrimination brought by two different teachers at different religious institutions. In both cases, the 9th Circuit Appeals Court ruled against the schools because the plaintiffs are not ministers but teachers. Stay tuned to learn the outcome of this hearing.

We Have Answers to Your Questions about Workplace Discrimination, Harassment and Wrongful Termination of LGBTQ Employees

If you believe that your employment rights were violated because you are lesbian, bisexual, gay, transgender, or queer, take heart, because a lot has just changed. To learn more about our employment discrimination practice click this link Our Dallas Discrimination Lawyers Hold Employers Liable for Employee Rights Violations. We recently discussed illegal harassment, discrimination, and LGBTQ people in Texas.