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The current prominence of the multi-entity workplace—where so-called “host” employers rely on third-party staffing agencies to perform various functions—makes a clear determination of statutory “employer” status critical in a variety of contexts.  Oftentimes, a host employer will argue that a worker is an independent contractor rather than employee.  This approach typically leaves the staffing agency responsible for classification decisions under the Fair Labor Standards Act and for Occupational Safety and Health Act compliance.

In April 2021, the Texas Supreme Court greatly expanded the responsibility of host employers in the context of workplace injuries.  Specifically, in Waste Management of Texas, Inc. v. Stevenson, the Court held that a worker who was injured on the job while employed by a temporary staffing agency was the host employer’s employee for workers’ compensation purposes, notwithstanding a contract between the host employer and staffing agency that expressly stated workers were independent contractors.

In Waste Management, the plaintiff, Robert Stevenson, was hired by Taylor Smith Consulting, LLC and assigned to work for Waste Management of Texas, Inc. on a temporary basis.  No. 19-0282, 2021 Tex. LEXIS 348, at *3 (Apr. 30, 2021).  In May 2014, Stevenson was working on a Waste Management garbage truck on a garbage-collection route when the driver of the truck accidentally backed over Stevenson’s leg and foot.  Both Waste Management and Stevenson’s staffing agency employer carried workers’ compensation insurance.  Stevenson applied for benefits under the staffing agency’s policy and separately filed suit against Waste Management and the driver, alleging common-law negligence.  Waste Management won summary judgment, successfully arguing that, because it was Stevenson’s employer, the Texas Workers’ Compensation Act barred Stevenson’s claims against it and the driver.  Stevenson unsuccessfully argued that the staffing contract, which expressly stated that temporary workers like Stevenson “shall be independent contractors in respect of Waste Management”, should govern.  The Fourteenth Court of Appeals reversed and remanded, holding there was a genuine fact issue as to whether Stevenson was Waste Management’s employee.
Continue Reading Texas Supreme Court finds injured contract worker was an employee for workers’ compensation purposes

The enforceability of employment non-competes in Texas is governed by the Texas Covenants Not to Compete Act.  If a non-compete covenant is found to be overbroad, “the court shall reform the covenant to the extent necessary to cause” the covenant to be reasonable.  Tex. Bus. & Com. Code § 15.51(c).  The Texas Supreme Court has yet to address whether reformation of an overbroad non-compete restriction is appropriate at the temporary injunction stage or whether reformation is only a final remedy after a trial on the merits.  In a recent published opinion, the Fifth Circuit squarely examined this issue.  Calhoun v. Jack Doheny Companies, Inc., No. 20-20068, — F.3d —, 2020 U.S. App. LEXIS 25001 (5th Cir. Aug. 7, 2020).
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Continue Reading Fifth Circuit says Texas trial court should have considered reforming an overbroad non-compete at the preliminary injunction stage

As of March 28, 2020, there are over 103,000 reported cases of COVID-19 in the United States. In Dallas County, there are 439 confirmed cases—an increase of 72 cases from the prior day—and the number of cases is expected to rise. Given the current environment, employers should be cognizant of Dallas’ Earned Paid Sick Time Ordinance (the “Ordinance”), which takes effect on April 1, 2020. While there has been significant question as whether the Ordinance violates the Texas Constitution, the City of Dallas recently has suggested it intends to enforce the statute after the effective date of April 1, 2020.

The Ordinance originally took effect on August 1, 2019 (for employers with 6 or more employees) and mirrors the paid sick leave ordinances passed by Austin on February 15, 2018 and San Antonio on October 3, 2019. The Austin ordinance is currently enjoined and is before the Texas Supreme Court. See City of Austin, Texas, et al. v. Tex. Ass’n of Bus., et al., No. 19-0025 (Tex. filed Jan. 10, 2019). The San Antonio ordinance is also enjoined, and the Dallas ordinance, while not enjoined, is the subject of a lawsuit pending in the Eastern District of Texas. See ESI/Emp. Sols., LP, et al. v. City of Dallas, No. 4:19-CV-00570-ALM (E.D. Tex. filed July 30, 2019).
Continue Reading Employers should be ready to comply with Dallas’ paid sick leave ordinance during the COVID-19 pandemic

Employers in three major cities in the Lone Star State should begin preparing for compliance with paid sick leave ordinances. Joining a number of other states and cities to have enacted paid sick leave laws, the cities of San Antonio, Austin, and Dallas passed ordinances requiring private employers to provide employees with paid sick leave. While the Austin ordinance has been blocked due to litigation regarding its constitutionality, which is now before the Texas Supreme Court, the San Antonio and Dallas ordinances are set to go into effect on August 1, 2019 (except as to employers with five or fewer employees in the preceding year, for which paid sick leave obligations will not go into effect until August 1, 2021).

The paid sick leave ordinances – which largely mirror each other – require all private employers to provide employees who perform at least 80 hours of work per year in the applicable city with one hour of paid sick leave for every 30 hours worked. Employees working for employers with 15 or more employees may accrue a maximum of 64 hours of paid sick leave annually. Employees who work for employers with fewer than 15 employees at all times during the preceding 12 months may accrue a maximum of 48 hours. Employees may carry over accrued, unused paid sick leave up to the maximum except where the employer makes sick leave equal to the maximum amount available to employees at the beginning of the year.…

Continue Reading Paid sick leave to take effect soon for employers in three cities in the Lone Star State