Thursday, September 25, 2014

TEXAS’ NEW PARTNERSHIP PARADIGM: “GONNA MAKE YOU AN OFFER YOU CAN’T REFUSE.”

In line with the strict contract construction in The Godfather, the Texas Supreme Court recently issued a ruling in Ritchie v. Rupe, 57 Tex. Sup. J. 771 (Tex. 2014), which eliminates an equitable cause of action against a controlling shareholder who freezes out minority interest shareholders in the company. In blindly relying on the notion that every contract is a result of an arms-length, bargained for negotiation, the Texas Supreme Court held that if a minority shareholder signs a shareholder agreement that vests one of the shareholders with majority interest – and thus controlling interest, the majority shareholder has considerable sway over the direction of the company. While a controlling shareholder does, and should, have control of business matters at the company, the Rupe ruling does not consider situations where the controlling shareholder takes steps to shut out minority shareholders from management and operational decisions, including decisions that differentially benefit the majority shareholder. Essentially, with the ruling, a majority shareholder is free to act with near impunity, and the minority shareholder may not complain about the dismissive and freeze-out actions of the majority shareholder, if those actions have an ostensible business justification.

The problem with Rupe is that it ignores the reality of a closely held Texas corporation. The shareholders of a close corporation are typically involved and not passive investors. They are employees or managers of the corporation, which also provides them with their livelihood. The decision of a majority shareholder affects both the growth of the company and the livelihood of the minority shareholders. Allowing the majority shareholder to make decisions that differentially benefit him or her, prevents timely distribution of profits to all shareholders, or implements a roughshod management strategy, effectively freezes out minority shareholders. Under Rupe, there is no longer any realistic remedy for a minority shareholder.

So the takeaway from this decision is that the initial structure of the corporation, including allocation of interests and decision making powers must be fully negotiated. Settle all matters at the time the shareholder agreement is crafted, and carefully delineate rights and responsibilities. Yes, this should be done even though the company is little more than a hope or aspiration at the time the shareholders agreement is first crafted. Unfortunately this forces a minority shareholder to presuppose that his or her business partner, and fellow shareholder, will not act in a manner consistent with the minority shareholder’s best interest. Or, as Michael Corleone would state “Today I settled all Family business, so don’t tell me you’re innocent, Carlo.”

Tuesday, September 16, 2014

Getting What You're Owed Part IV: When Is It Time To Contact an Overtime Pay Attorney?

Getting what you’re owed isn’t greedy or demanding. Getting the pay you deserve is not only fair, it’s required by law. Part of getting what you are owed is receiving any compensation you deserve for putting in overtime.

The Fair Labor Standards Act states that after 40 hours of work in a workweek, employee’s are to be paid at a rate of one and one-half times their regular rate. So if you happen to work 42 hours in a workweek, the two hours extra you put in should pay out at one and one half times your regular hourly pay rate.

This overtime pay applies to any covered, nonexempt employees. So if you’re paid on an hourly basis, overtime usually applies. For salary workers, overtime pay does not apply.

Knowing how overtime pay works is important so that you know what pay you deserve.

So when should you contact an attorney about overtime pay? Anytime you feel that you feel that you have worked overtime but are not being paid for it. Overtime pay is usually included in your standard check, sometimes a different line item in the breakdown. If you worked overtime in the last pay period and it is not showing up on your check, it is definitely the time to reach out to an attorney.

Some employers may even try and sneak their way out of paying overtime. They might classify you as “exempt” or have you work “off the clock” for cash. This “off the clock” work is often a side deal made between you and your employer where they offer cash or tips to continue work after you have reached the 40 hours in the work week.

Under the Fair Labor Standards Act employees cannot waive their right to overtime pay. This means that even though your employer has made a side deal with you, they are still required to pay wages fitting of the work. Therefore you are still entitled to overtime pay if the side deal puts you at over 40 hours within the workweek.

Understanding your rights to overtime pay is the first step to getting what you’re owed. The next step is to contact an overtime pay attorney if you are having pay withheld.

For more information about overtime pay, contact Vethan Law Firm online or call our Houston office at 713-526-2222 or our San Antonio office at 210-824-2220Visit overtime-legal.com for more information

Getting What You're Owed Part III: Are Illegal Deductions Being Made From Your Paycheck?


When getting your first paycheck it may seem like your employer deducted a sizeable portion. Unfortunately this is somewhat true with the various taxes and deductions they are legally required to take out.

Your take home pay will be much less than your gross income, however your employer’s are not allowed to deduct whatever they feel like. As an employee it is in your best interest to know if your employer is taking illegal deductions out of your paycheck.

First, let’s take a look at what your employer is legally require to and legally allowed to take out of your paycheck.

Required Deductions

Your employer is legally required to take out State and Federal income taxes from your paycheck. They are also required to deduct Social Security and Medicare contributions These make up the bulk of all employee’s wage paycheck deductions.

Optional Deductions

Your employer is allowed to make additional deductions to your paycheck with your consent. These optional deductions are for things such as insurance premiums, credit union payments, pension contributions, charitable contributions, and employer sponsored retirement contributions.

Gross Negligence

If your employer finds that you damaged company property or purposefully stole from them they can request that the cost come out of your paycheck or they can take you to court.

Property damage is a fine line for an employer to walk. Without proof of negligence it is hard for an employer to state that you damaged the property with intent. General wear and tear to the company property does not constitute the need for a paycheck deduction.

All Other Deductions

If you begin finding deductions on your paycheck that don’t fall into one of the categories above, ask your employer for an explanation. There could be an explanation for them but more than likely the deduction is illegal. If it’s not legally required or consented to by you, it is most likely illegal.

If illegal deductions are being made from your paycheck, it is recommended that you hire a labor lawyer to dispute these deductions and get you what you’re owed.

For any questions regarding your paycheck or to seek help, contact Vethan Law Firm by calling our Houston office at 713-526-2222 or our San Antonio office at 210-824-2220.

 
Visit Overtime-legal.com for more information

WITH THE STROKE OF A PEN - THE TEXAS SUPREME COURTS UPENDS FOUR DECADES OF NON COMPETE POLICY


The script could not have been written better, whether as political theater or a jaunty summer read. On the Friday before the labor-day weekend, the Texas Supreme Court laid the groundwork to dispense with anti restraint of trade labor law policy that has stood in Texas for almost four decades. In a stunning decision in Exxon Mobil Corp. v. William Drennen, III, the Texas Supreme Court openly stated its policy shift to accommodate for the changing Texas market, affected by the presence of global players. With Texas now home to more fortune 500 companies than any other state, even New York and Delaware, this decision is an ominous wind across Texas’ pro competitive landscape.

The facts in Drennen are as follows: a long time employee (31 years) of Exxon Mobil was told in 2006 that he was going to be replaced, but that they were looking for another position for him. Thereafter, rather than be let go, Mr. Drennen found a new position at Hess and gave his notice. Exxon Mobil then informed him that if he left for Hess, they would terminate his unvested incentive awards. Mr. Drennen ignored the warning and Exxon Mobil revoked his unvested shares. Thereafter, Mr. Drennen instituted a lawsuit to recover his shares. He lost at the trial court, which was reversed by the Court of Appeals, and now reversed against by the Texas Supreme Court, which also alters this state’s public policy.

Any discussion regarding non-competes must start with what Texas courts have routinely held, and what lawyers in the non-compete arena spout as their mantra: Texas courts disfavor restraints on trade, and restraints on trade are viewed under the same filter as the rules applicable to covenants not to compete.

The contract in Drennen was governed under New York law. The lower appellate courts in Texas held that even if it was governed by the laws of a foreign jurisdiction, Texas will not abrogate its public policy favoring employees’ right to work. The Texas Supreme Court went out of its way to hold that Texas has to move away from its patriarchal approach in this area of the law. The Texas Supreme Court never states why upholding this state’s public policy is patriarchal, but that’s a topic for another post.

The rationale for the decision was that with Texas now hosting many of the world’s largest corporations, our public policy has shifted from a patriarchal one in which we valued uniform treatment of Texas employees from one employer to the next above all else, to one in which we also value the ability of a company to maintain uniformity in its employment contracts across all employees, whether the individual employees reside in Texas or New York. This prevents the “disruption of orderly employer-employee relations” within those multistate companies and avoids disruption to “competition in the marketplace.”

Signing a decision in which two of the justices sat out, the high Court held that freedom of contract should, would and now does trump even our stated public policy.

Thursday, September 4, 2014

Texas Supreme Court holds Forfeiture Provision is not a Covenant Not to Compete; Enforces Governing Law Provision


On August 29, 2014, the Texas Supreme Court handed down its decision on Exxon Mobil Corp. v. William Drennen, III Case No. 12-0621.  The essential facts are these: a long time (31 years) employee of Exxon Mobil was told in 2006 that he was going to be replaced, but that they were looking for another position for him.  Thereafter, rather than be let go, Mr. Drennen found a new position at Hess and gave his notice.  Exxon Mobil then informed him that if he left for Hess, they would terminate his unvested incentive awards. Mr. Drennen ignored the warning and Exxon Mobil revoked his unvested shares.  Thereafter, Mr. Drennen instituted a lawsuit to recover his shares.

While restraints on trade are generally held to be subject to the same rules as noncompetes the Court interestingly held that:

While we ultimately determined that the provision in Haass was an unreasonable restraint of trade, notably, we never concluded that the damage provision was, itself, a covenant not to compete. See id. at 385–87. Further, we did not provide a definition of a covenant not to compete. See generally id. at 385–88. The Covenants Not to Compete Act likewise does not define what it is to be a covenant not to compete. See TEX. BUS. & COM. CODE §§ 15.50–.52.
 
The Court based its reasoning on the practical reality that “[f]orfeiture provisions [are] conditioned on loyalty, [but] do not restrict or prohibit the employees’ future employment opportunities. Instead, they reward employees for continued employment and loyalty.  Further, the Court explained, “[t]here is a distinction between a covenant not to compete and a forfeiture provision in a non-contributory profit-sharing plan because such plans do not restrict the employee’s right to future employment; rather, these plans force the employee to choose between competing with the former employer without restraint from the former employer and accepting benefits of the retirement plan to which the employee contributed nothing.”

This holding, combined with the Court’s holding that a Governing Law clause (which stated that New York law applied) meant the employee was out of luck and the employer with careful forethought and a properly drafted contract could skirt what would most likely contravene Texas law (though ultimately the Court left that question open).

The takeaway from Drennan that both employers and employees should keep in mind is the Court’s musings on Texas public policy.  As the Court states:

With Texas now hosting many of the world’s largest corporations, our public policy has shifted from a patriarchal one in which we valued uniform treatment of Texas employees from one employer to the next above all else, to one in which we also value the ability of a company to maintain uniformity in its employment contracts across all employees, whether the individual employees reside in Texas or New York. This prevents the “disruption of orderly employer-employee relations” within those multistate companies and avoids disruption to “competition in the marketplace.” Citing DeSantis v. Wackenhut, 793 S.W.2d 670 (Tex. 1990).

The Court decided last Friday that freedom of contract trumps protecting employees.  This echoes of another recent Supreme Court decision Ritchie v. Rupe wherein the Court held shareholders should protect themselves in contracts and not depend on equitable litigation claims.

http://thevethanlawfirm.blogspot.com/2014/07/texas-supreme-court-removes-shareholder.html

It will be interesting to see if the Texas Supreme Court shakes up any other areas of law based on this “shifting public policy.”

Friday, August 22, 2014

Getting What You're Owed: Know The Minimum Wage in Texas


Getting What You're Owed: Know The Minimum Wage In Texas


 Every worker in the United States is entitled to a minimum wage. Minimum wage increases periodically and is dictated by the federal government. The federal minimum wage is $7.25 per hour. This rate is effective for the first 40 hours per week that an employee works. If the employee works over 40 hours then overtime pay is required.

Minimum Wage in Texas
Each state has its own minimum wage amount but the starting minimum wage has to be at least $7.25 per hour. Some states have a higher required minimum wage. Texas has a minimum wage of $7.25, which is the required federally mandated amount of wages. They do not have their own minimum wage law but instead, they defer to the federal amount.

Who Makes Minimum Wage?
There are many positions that pay minimum wage like store clerks, secretaries, janitors or security guards. Wait staff has a lower minimum wage because the position has the perks of tips generated by servicing customers. The minimum wage for wait staff is $2.13. The employee keeps all his or her tips, but if the amount doesn't equal the overall, federal minimum wage of $7.25 then the employer has to make up the difference.

What is Overtime?
When a worker is required to work past their standard 40 hours per week, they are entitled to overtime pay. This pay applies to every hour worked above the 40 per week. The first 40 hours are often referred to as straight time, and must be calculated separately from overtime. Overtime cannot be averaged over several weeks. For example, a worker that has 35 hours one week and 45 the next has to be paid the five hours overtime for that second week. It cannot be averaged over the two weeks or applied to the previous weeks missed time. A San Antonio overtime attorney knows exactly how overtime should be calculated as well as the laws designed to protect employees.

How is Overtime Calculated?
Only actual hours worked are calculated when adding up a full, 40-hour work week. Overtime doesn't apply to weeks that the employee had days off for vacation or sick leave. Overtime pay is calculated at one and one-half times the wage paid to the employee. If the employee makes the minimum wage of $7.25 then that employee is entitled to $3.63 on top of their regular pay. This amount is $10.88 for overtime hours.

A Houston overtime lawyer will be able to help if you believe that an employer hasn't paid you the amount required by law. No employee should worry about getting the money they are entitled to receive.

Getting What You're Owed Part II: What Counts as Overtime?


Getting What You're Owed Part II: What Counts as Overtime?



Employees in Texas who work for an hourly wage have a right to be paid every penny that they have coming to them. Unfortunately, some employers don't always calculate and pay overtime pay to their employees who have earned it. Employees who are paid by the hour, matter what their job title is, are entitled to overtime pay according to the law. In order to protect themselves and their income, it's crucial that employees know exactly what counts as overtime and how they should be paid for it.

The law that governs overtime pay states that every employee who works more than 40 hours in a week must be paid overtime in the amount of time and a half for the time exceeding 40 hours. That means that an employee whose hourly wage is $10 an hour will have an overtime pay rate of $15 per hour. On a week that contains overtime, the employee should be paid $10 an hour for the first 40 hours and $15 an hour for any hours over 40.

A simple calculation shows that a 45-hour week would cause the employee to have a gross wage of $475. The first 40 hours times $10 an hour earns the employee $400. The five overtime hours multiplied by $15 an hour -- the overtime rate -- would add an additional $75 to the employee's paycheck, resulting in a grand total of $475 for that week. Anything less is unacceptable and illegal.

Employees who suspect that they're being shorted on overtime pay should contact a Houston overtime lawyer or a San Antonio overtime attorney to protect their rights, particularly when the employer refuses to honor the law.

Some employers may try to get around the overtime law by informing employees that Texas has no laws requiring them to pay their employees overtime. While it is true that Texas does not have any laws requiring the payment of overtime, Texas employers are subject to the federal overtime law that requires payment of time and a half for any hours that exceed the 40-hour work week. Employees who encounter employers who try to confuse on this fact should contact a San Antonio overtime attorney immediately for a professional opinion on their case.

Even though there are exceptions to the federal overtime law, they are rare. Rather than trying to figure out those exceptions themselves, employees should always err on the side of caution and contact a qualified overtime attorney for a reliable opinion on their right to overtime pay.

When an employee has approached the employer about overtime pay which they've not received and have been given a complicated explanation that they're unable to understand, this is the perfect time to seek counsel from a lawyer who specializes in overtime issues. Every employee should know their rights when figuring what does and does not count as overtime on the job.