Posts By: Gregory Cokinos

On May 25, 2018, the Texas Supreme Court held that an individual taking unpaid leave under the Family & Medical Leave Act qualifies as “unemployed” for purposes of the Texas Unemployment Compensation Act.  This expansive definition of “unemployed” potentially allows individuals on unpaid leave to obtain unemployment benefits – even though they remain employed.  Consequently, employers should review and update leave and outside work policies immediately to avoid exposure from this potentially far-reaching decision.

In TWC v. Wichita County, employee Julia White went on FMLA leave for severe anxiety and depression.  The County continued to provide benefits during her unpaid leave.  Before White returned to work, she filed a claim for unemployment benefits.  The Texas Workforce Commission (“TWC”) determined at the administrative stage that White was “unemployed” while on her unpaid leave of absence and that it could pay her benefits if she met all other requirements.  A Texas trial court reversed and the court of appeals affirmed that reversal, concluding that it would be “absurd” for an individual to be entitled to unemployment benefits during FMLA leave.  TWC appealed the ruling, arguing that the application of the “absurdity doctrine” should not override the plain language of the Unemployment Act – which provides income benefits to individuals not earning wages.

The Supreme Court agreed with the TWC, and found that the Unemployment Act “expressly and unambiguously defines ‘unemployed’ in a manner that does not require severance of the employer–employee relationship.”  An individual qualifies as “unemployed” so long as the individual’s wages are low enough (below $5 or 25% of the benefit amount during the period).  Thus, an individual on unpaid medical leave satisfies the Act’s definition of “unemployed” and may qualify for unemployment benefits if the Act’s eligibility requirements are met.

On its face, this finding that an employee is “unemployed” is illogical.  This decision, however, is limited because an individual also must establish eligibility for unemployment to receive benefits.  As the Act is structured, to receive benefits an individual must be “unemployed” and “eligible,” as well as not otherwise statutorily excepted or disqualified.  An unemployed individual’s eligibility to receive benefits for a benefit period hinges on satisfaction of several statutory requirements, including being able to work; being available for work; and actively searching for work.  Tex. Lab. Code § 207.021(a) (3)–(5).

The application of this decision will be determined on a case-by-case basis and there are many instances in which an employee on leave could still be part of the workforce, able to work and thus “eligible” under the Act.  For example, employees that require unpaid leave to care for a family member with a serious health condition could potentially be able and available to work; and represent that they have satisfied the statutory requirements to be eligible for benefits.  Under the Wichita County case, those employees would receive unemployment benefits during leave.

There are several ways to protect against this situation.  First and foremost, employers should involve counsel in all issues related to employee leave and in opposition to claims for unemployment.  Additionally, the potential impact for employers can be diminished with carefully crafted policies, such as a valid, uniformly-applied policy governing outside employment.  Under the FMLA, an employer can continue to enforce a supplemental work policy with respect to an employee on FMLA leave.  See 29 C.F.R. § 825.216(e).  Properly drafted policies putting limitations on moonlighting for all employees regardless of leave status will help protect against employees on leave from being deemed eligible for unemployment benefits, and also prevent leave abuse.  Texas employers should contact an employment law attorney to review leave and outside work policies – or risk paying unemployment to current employees!

For more information regarding this development and other employment-related issues, contact Cokinos | Young’s Board Certified Labor & Employment Law Specialist Team:  
Shannon Gatlin
Wilson Stoker

On May 3, 2018, the Houston First District Court of Appeals reversed a $17,720,000 verdict against Austin Bridge & Road, LP (“ABR”) and rendered a take nothing verdict based on the exclusive remedy defense (commonly referred to as the “comp bar”) under the Texas Workers Compensation Act. The case, Austin Bridge & Road, LP v. Suarez, et al., No 01-16-00682-CV, involved a jobsite death during the construction of McLane Stadium at Baylor University. ABR was a subcontractor on the McLane Stadium project for the general contractor, Austin Commercial. The deceased was working for an ABR subcontractor on a pedestrian bridge over the Brazos River, when his man-lift tipped, falling off a barge and into the Brazos River. The plaintiff drowned as a result of the accident.

ABR was not the plaintiff’s direct employer. However, as we detailed in a related postlast December, § 406.123 of the Texas Workers Compensation Act extends comp bar protection to all participating tiers of contractors and their employees when the general contractor “provides” workers compensation insurance through a project-specific “wrap”—either in the form of an Owner Controlled Insurance Program (“OCIP”) or Contractor Controlled Insurance Program (“CCIP”). In this instance, Baylor purchased an OCIP including workers compensation for the McLane Stadium project. Accordingly, Austin Bridge & Road moved for summary judgment on the basis of the exclusive remedy as extended by § 406.123. The trial court denied summary judgment and, in fact, awarded plaintiff a “no evidence” summary judgment on this issue.

ABR appealed, and Cokinos | Young submitted an amicus brief in support of ABR, urging the court to apply the exclusive remedy. The amicus brief was sponsored by Texas Building Branch of the Associated General Contractors of America (“TBB – AGC”); Associated Builders and Contractors (“ABC”) of Texas; TEXO – The Construction Association (“TEXO”); Associated General Contractors – Houston Chapter; and American Contractors Insurance Company Risk Retention Group (“ACIG”).

On appeal, the court relied on the Texas Supreme Court’s decision in HCBeck, Ltd. v. Rice, 284 S.W.3d 349, 350 (Tex. 2009), where the Texas Supreme Court held that a general contractor on a project with an OCIP (negotiated and purchased by the owner) nonetheless “provides” workers compensation insurance as required by Section 406.123 when its downstream contracts require all subcontractors on site to enroll in the OCIP, and coverage is in fact in place. The court found that, under the HCBeckanalysis, Austin Commercial “provided” workers compensation through its prime contract with Baylor, which incorporated the OCIP and required enrollment by all contractors and subcontractors on site.

In this instance, however, because ABR was a subcontractor, not the general contractor, the court’s analysis did not end with HCBeck. The court relied on its previous holding in Etie v. Walsh & Albert Co., 135 S.W.3d 764 (Tex. App.—Houston [1st Dist.] 2004, pet. denied) andthe Texas Supreme Court’s most recent OCIP exclusive remedy decision n TIC Energy & Chem. Inc. v. Martin, 498 S.W.3d 68 (Tex. 2016) to find that when the general contractor provides workers compensation in compliance with § 406.123, “the statutory employer/employee relationship extends throughout all tiers of subcontractors and that all covered employees are fellow servants who are equally entitled to workers compensation benefits and equally immune from suit.” Thus, ABR and the plaintiff were fellow servants engaged in a common endeavor and were each entitled to mutual protection from tort claims. Based on that finding, the court reversed the judgment on plaintiff’s negligence claims and entered a take nothing judgment in favor of ABR.

This case provides further clarification that when a wrap is in place, tort immunity extends through all tiers of participating contractors on site. As a practical takeaway, properly crafted OCIP contractual provisions, complying with the Texas Workers Compensation Act and relevant recent Texas Supreme Court case law, particularly HCBeck, can shield all tiers of enrolled contractors from injury claims by employees of other contractors and subcontractors.

Wilson Stoker, Esq.
Board Certified Labor & Employment Law Specialist
Cokinos | Young
View Bio

Construction contractors and subcontractors that hold a federal construction contract or subcontract for $10,000 or more have certain specific affirmative action requirements under federal law.  When entering into a federal contract or subcontract, construction contractors agree to affirmative action obligations with regard to females, minorities, individuals with disabilities and veterans.  Uniquely, construction contractors must take specific affirmative actions to ensure equal employment opportunities in recruitment, training, policies and record-keeping.  Compliance is measured by the contractor’s good faith efforts to achieve results – not the actual results.

A federal contract that triggers these obligations will likely have an EEO clause, Notice of Requirement for Affirmative Action, and EEO Contract Specification. It is, however, not always clear and many times contractors are unaware of these statutory obligations until it is too late, and an audit has been initiated by the government.  Even contractors that are aware of these obligations are sometimes caught off guard regarding the particular obligations created when entering a federal construction contract. For instance, companies with multiple facilities require an Affirmative Action Program (“AAP”) for each physical location with 50 or more employees, even if only one site holds a federal contract. Thus, if a company has one federal contract it must meet these obligations company-wide.

As discussed below, there are potential severe consequences for a contractor if it does not meet its obligations –including losing its federal contracts.  Accordingly, if a contractor does not know whether it is a federal contractor covered by these rigorous regulations or what legal obligations it has, it should contact an employment lawyer with experience in this specialized area of law.

SUMMARY OF APPLICABLE LAWS

• Executive Order 11246 – Females & Minorities

Executive Order 11246 prohibits federal contractors and federally–assisted construction contractors and subcontractors from discriminating in employment decisions on the basis of race, color, religion, sex, sexual orientation, gender identity or national origin.  The Executive Order also requires government contractors to take affirmative action to ensure that equal opportunity is provided in all aspects of their employment.  Executive Order 11246 applies to all contractors and subcontractors holding federal and federally-assisted construction contracts exceeding $10,000.

• Section 503 – Individuals With Disabilities

Section 503 of the Rehabilitation Act of 1973 requires affirmative action for qualified individuals with disabilities for all federal contracts over $10,000. Section 503 prohibits federal contractors and subcontractors from discriminating in employment against individuals with disabilities, and requires these employers to take affirmative action to recruit, hire, promote, and retain individuals with disabilities.  Section 503 also stipulates that contractors and subcontractors who hold contracts over $50,000 or who have 50 or more employees must develop and maintain a written Affirmative Action Program.

• VEVRAA – Veterans

The Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”) requires that federal construction contractors and subcontractors take affirmative action to employ and advance in employment qualified covered veterans.  VEVRAA requires contractors and subcontractors to list their employment openings with the appropriate employment service, and, in some instances, veterans must receive priority in referral to job openings.  Further, contractors must submit an annual report on the number of current employees who are covered veterans.  Covered contractors and subcontractors with 50 or more employees must develop and maintain a written VEVRAA Affirmative Action Program.

Sixteen Good Faith Effort Requirements
For Federal Construction Contractors

These laws are governed by the Office of Federal Contract Compliance Programs (“OFCCP”), a division of the U.S. Department of Labor.  If audited, the OFCCP will request documentation from the contractor demonstrating good faith efforts towards compliance with the sixteen steps under Executive Order 11246, as amended, Section 503, as amended, and VEVRAA. Contractors should make “efforts fully, and shall implement affirmative action steps at least as extensive as the following” sixteen record-keeping and recruiting requirements:

1. Harassment Free Sites 41 CFR 60-4.3(a)(7)(a)

“Ensure and maintain a working environment free of harassment, intimidation, and coercion at all sites, and in all facilities at which the Contractor’s employees are assigned to work. The Contractor, where possible, will assign two or more women to each construction project. The Contractor shall specifically ensure that all foremen, superintendents, and other on-site supervisory personnel are aware of and carry out the Contractor’s obligation to maintain such a working environment, with specific attention to minority or female individuals working at such sites or in such facilities.”

2. Identify Recruitment Sources 41 CFR 60-4.3(a)(7)(b)

“Establish and maintain a current list of minority and female recruitment sources, provide written notification to minority and female recruitment sources and to community organizations when the Contractor or its unions have employment opportunities available, and maintain a record of the organizations’ responses.”

3. Track Applicants41 CFR 60-4.3(a)(7)(c)

“Maintain a current file of the names, addresses and telephone numbers of each minority and female off-the-street applicant and minority or female referral from a union, a recruitment source or community organization and of what action was taken with respect to each such individual. If such individual was sent to the union hiring hall for referral and was not referred back to the Contractor by the union or, if referred, not employed by the Contractor, this shall be documented in the file with the reason therefor, along with whatever additional actions the Contractor may have taken.”

4. Union Relationships41 CFR 60-4.3(a)(7)(d)

“Provide immediate written notification to the Director when the union or unions with which the Contractor has a collective bargaining agreement has not referred to the Contractor a minority person or woman sent by the Contractor, or when the Contractor has other information that the union referral process has impeded the Contractor’s efforts to meet its obligations.”

5. Training Requirements 41 CFR 60-4.3(a)(7)(e)

“Develop on-the-job training opportunities and/or participate in training programs for the area which expressly include minorities and women, including upgrading programs and apprenticeship and trainee programs relevant to the Contractor’s employment needs, especially those programs funded or approved by the Department of Labor. The Contractor shall provide notice of these programs to the sources compiled under 7b above.”

6. Internal Dissemination of EEO Policy41 CFR 60-4.3(a)(7)(f)

“Disseminate the Contractor’s EEO policy by providing notice of the policy to unions and training programs and requesting their cooperation in assisting the Contractor in meeting its EEO obligations; by including it in any policy manual and collective bargaining agreement; by publicizing it in the company newspaper, annual report, etc.; by specific review of the policy with all management personnel and with all minority and female employees at least once a year; and by posting the company EEO policy on bulletin boards accessible to all employees at each location where construction work is performed.”

7. Management Training 41 CFR 60-4.3(a)(7)(g)

“Review, at least annually, the company’s EEO policy and affirmative action obligations under these specifications with all employees having any responsibility for hiring, assignment, layoff, termination or other employment decisions including specific review of these items with onsite supervisory personnel such as Superintendents, General Foremen, etc., prior to the initiation of construction work at any job site. A written record shall be made and maintained identifying the time and place of these meetings, persons attending, subject matter discussed, and disposition of the subject matter.”

8. External Dissemination of Policy41 CFR 60-4.3(a)(7)(h)

“Disseminate the Contractor’s EEO policy externally by including it in any advertising in the news media, specifically including minority and female news media, and providing written notification to and discussing the Contractor’s EEO policy with other Contractors and Subcontractors with whom the Contractor does or anticipates doing business.”

9. Outreach and Recruitment 41 CFR 60-4.3(a)(7)(i)

“Direct its recruitment efforts, both oral and written, to minority, female and community organizations, to schools with minority and female students and to minority and female recruitment and training organizations serving the Contractor’s recruitment area and employment needs. Not later than one month prior to the date for the acceptance of applications for apprenticeship or other training by any recruitment source, the Contractor shall send written notification to organizations such as the above, describing the openings, screening procedures, and tests to be used in the selection process.”

10. Employee Referrals of Minority & Female candidates 41 CFR 60-4.3(a)(7)(j)

“Encourage present minority and female employees to recruit other minority persons and women and, where reasonable, provide after school, summer and vacation employment to minority and female youth both on the site and in other areas of a Contractor’s work force.”

11. Test Validation 41 CFR 60-4.3(a)(7)(k)

“Validate all tests and other selection requirements where there is an obligation to do so under 41 CFR Part 60–3.”

12. Annual Evaluation of Promotional Opportunities 41 CFR 60-4.3(a)(7)(l)

“Conduct, at least annually, an inventory and evaluation at least of all minority and female personnel for promotional opportunities and encourage these employees to seek or to prepare for, through appropriate training, etc., such opportunities.”

13. Review Seniority Practices 41 CFR 60-4.3(a)(7)(m)

“Ensure that seniority practices, job classifications, work assignments and other personnel practices, do not have a discriminatory effect by continually monitoring all personnel and employment related activities to ensure that the EEO policy and the Contractor’s obligations under these specifications are being carried out.”

14. Non Segregation 41 CFR 60-4.3(a)(7)(n)

“Ensure that all facilities and company activities are nonsegregated except that separate or single-user toilet and necessary changing facilities shall be provided to assure privacy between the sexes.”

15. Minority & Female Subcontract Solicitation 41 CFR 60-4.3(a)(7)(o)

“Document and maintain a record of all solicitations of offers for subcontracts from minority and female construction contractors and suppliers, including circulation of solicitations to minority and female contractor associations and other business associations.”

16. Annual Review of Supervisor Performance41 CFR 60-4.3(a)(7)(p)

“Conduct a review, at least annually, of all supervisors’ adherence to and performance under the Contractor’s EEO policies and affirmative action obligations.”

Additional Requirements For Construction Contractors & Subcontractors

Many times, contractors have ancillary and additional obligations that extend beyond the sixteen requirements.  These obligations may include:

1. Participation goals for Females & Minorities;
2. Maintain federal projects list with certain items;
3. Equal Pay Act and Davis Bacon Act compliance;
4. Construction contract notifications to OFCCP;
5. Recordkeeping obligations;
6. Section 503 and VEVRAA written Affirmative Action Programs;
7. EEO-1 Report;
8. VETS-4212 Report.

Overview Of An OFCCP Audit

Executive Order 11246, Section 503 and VEVRAA collectively make it unlawful for contractors and subcontractors doing business with the federal government to discriminate in employment on the basis of race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or status as a protected veteran.  The OFCCP is responsible for enforcing these laws, and has the authority to conduct compliance audits to determine if a contractor is maintaining nondiscriminatory hiring and employment practices, as well as taking requisite affirmative action to ensure that applicants and employees are not unlawfully discriminated against.

If a contractor is selected for an OFCCP audit, the contractor will receive a letter from the OFCCP notifying it of a desk audit in which the OFCCP will review the contractors’ programs, including personnel activity, compliance efforts, and compensation data within 30 days.  The OFCCP’s position is that it will notgrant extensions for “routine business reasons” and any extension granted will not exceed fifteen days.

After a desk audit, the next phase of an OFCCP investigation is an onsite audit.  Many times, however, construction contractors are not provided with notice of a desk audit, and instead, the contractor may be first notified that the OFCCP is jumping directly to an onsite audit without a desk audit.

An onsite audit can last days, if not weeks. During the onsite audit, the OFCCP will interview employees, as well as management.  The OFCCP will collect data and review compliance with the sixteen steps outlined above.

Penalties For Non-Compliance

If the OFCCP determines, after a compliance audit, that the contractor or subcontractor did not meet its obligations, severe punitive sanctions and penalties can be imposed, as well as potential civil and criminal liabilities. Among the penalties for non-compliance are the following:

1. Contract may be canceled, terminated, or suspended in whole or in part;
2. Ineligibility for any future government contracts;
3. OFCCP may sue for discrimination as a result of a missing or deficient affirmation action program;
4. Where a violation is material, the Department of Justice (“DOJ”) may bring suit to enforce the regulations or enjoin noncompliance. The DOJ is also authorized to bring a criminal action for the furnishing of false information to DOL.

Takeaways

Construction contractors with federal contracts should review their contracts to determine if they may be covered and have statutory affirmative action obligations.  If so, contractors should be proactive and take the necessary steps immediately – contractors will not be able to adequately prepare the necessary AAP information and data after the initial audit notice is received from the OFCCP. Additionally, contractors should conduct periodic self-audits to gauge exposure related to affirmative action.

About The Author

Wilson Stoker is an employment law counselor who is Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization. Wilson has particular experience assisting government contractors with all aspects of OFCCP affirmative action compliance including developing and maintaining affirmative action plans and defending employers in DOL and OFCCP audits. View bio.

In a January decision out of the Northern District of Texas, Southwest Airlines escaped liability in a class action lawsuit over the company’s background check documents. Lewis v. Southwest Airlines Co., No. 3:16-cv-01538 (N.D. Tex. Jan. 11, 2018). What is easily overlooked from that victory, however, is that Southwest’s win likely reduces the chances that another Texas company will be so lucky.

In the Lewis case, Southwest was accused of violating the Fair Credit Reporting Act (FCRA) by incorporating the disclosure required by the FCRA into a two-page “Consent Form” that contained additional information, rather than in a separate document containing only the disclosure.  The FCRA is the primary federal law that governs an employer’s ability to conduct background and credit checks on job applicants and employees, and contains numerous restrictions and requirements before an employer can legally obtain or use such checks.  The Lewis plaintiffs alleged that Southwest’s failure to provide the disclosure in a “stand-alone” document was a willful violation of the FCRA.  The Court had ruled earlier in the case that the plaintiffs had abandoned their claims that Southwest had negligently violated the FCRA.

The Lewis Court, following guidance from a 2015 decision out of the Southern District of Texas, held that the FCRA required that the disclosure called for in the federal statute must be in a separate document that includes nothing except the disclosure itself.  By including additional information – and language that the plaintiffs claimed amounted to a release of liability – in the same document as the legally required disclosure, Southwest in fact had violated the FCRA.  However, because the plaintiffs’ case at this point required a willful violation to establish liability, rather than a negligent violation, the Court held that Southwest could not be held liable because it did not willfully violate the law.

The Court’s ruling on willfulness was based, in large part, on the fact that when plaintiff Lewis received the faulty FCRA disclosure in January 2015 there was very little case law or administrative guidance addressing just what the FCRA’s “stand-alone” provision actually required, including no case law from any federal appeals court.  However, the Lewis Court acknowledged that, in 2017, the Ninth Circuit Court of Appeals ruled that a violation of the “stand-alone” provision could be a willful violation of the FCRA. Syed v. M-I, LLC, 853 F.3d 492, 503 (9th Cir. 2017). And while the Southern District of Texas had twice ruled that “stand-alone” violations were not willful, both of those rulings came before the Ninth Circuit’s ruling, as noted by the Lewis Court.

While it is far from certain that Texas federal courts or the Fifth Circuit Court of Appeals will follow the Ninth Circuit’s Syed ruling on willfulness going forward, one thing that Texas employers likely cannot rely on any longer is an open question regarding whether inclusion of additional language beyond the FCRA-required disclosure within the disclosure document violates the law.  With both the Northern and Southern District courts now having ruled that the disclosure document may not contain any other language, employers facing future legal challenges in Texas over additional language in their FCRA disclosure documents face a greatly increased risk that such violations will be deemed willful and that they will owe liability for those violations accordingly.

In light of the changing landscape of how Texas (and other) courts view the disclosure requirements of the FCRA, employers who use background or credit checks in the hiring process should consult with qualified labor and employment counsel to review their documents related to such checks for compliance with the latest legal developments.

About the Author:  J. Shannon Gatlin is Senior Counsel in the Houston office of Cokinos | Young, P.C (View Bio).  Mr. Gatlin has been Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization since 2014, and has practiced labor and employment law on behalf of companies nationwide since 2009.  Mr. Gatlin also spent one year as a Briefing Attorney for the Texas 14th Court of Appeals.

A growing theory of liability that plaintiffs’ attorneys are pursuing against companies nationwide, including in Texas, is that employers should be held financially responsible for negligently failing to prevent injuries caused by the wrongful acts of employees.  These claims are typically brought under the names of negligent supervision, negligent retention, negligent hiring, negligent training, or some similar term.  Regardless of the specific name, these actions are basically the same: negligence claims brought directly against the company for its alleged failures as an employer, as opposed to vicarious liability actions that would ordinarily require the plaintiff to prove that the offending employee was acting within the scope of his employment when acting wrongfully.

Within the past year, the Texas Supreme Court reversed a nearly $2,000,000 jury award largely against ExxonMobil that shed some much-needed light on how Texas courts are to handle such negligence-based direct claims against employers. Pagayon v. Exxon Mobil Corp., No. 15-0642 (Tex. June 23, 2017). While the Court ruled that an employer’s duty to prevent harm in these cases is rather narrow, such a duty does exist and liability can still be imposed on employers under the right circumstances.

Because the Texas Supreme Court expressly declined to establish a generally applicable duty rule for employers, instead instructing lower courts to apply a variety of factors and assess claims on a case-by-case basis, Texas employers would be wise to consult with an employment law attorney to review their personnel policies and practices, including those related to hiring, training, and discipline, to best prepare for preventing and defending against such negligence claims.  Even though Exxon ultimately won its case, the company had to spend tens (if not hundreds) of thousands of dollars and appeal all the way to the Texas Supreme Court to do so; few companies can afford such a fight.  For a brief summary of the Pagayon case and the Texas Supreme Court’s ruling, please see below.

The Case: Pagayon v. Exxon Mobil Corp., No. 15-0642 (Tex. June 23, 2017) 

• The underlying wrongful conduct of the employee, Carlos, was engaging in a fistfight with a co-worker, J.R., and the co-worker’s father, Alfredo, inside an Exxon-owned convenience store. The fight stemmed from a heated phone call Alfredo and Carlos had three days earlier about J.R.’s complaints that Carlos was harassing him at work.  Sadly, Alfredo died from complications in the treatment of his injuries from the fight.
• While Carlos made verbal threats to J.R. on the day of the fight, telling J.R. that he wanted to “beat up” both J.R. and Alfredo, Carlos previously had not made threatening statements or acted violently toward co-workers or customers. R.’s only complaints to Exxon management about prior harassment from Carlos had not involved anything physical or any threats of violence.  Carlos’s background check before hiring also did not reveal any history of violence or any criminal record.
• Roce, Carlos’s and J.R.’s manager, was not present during the fistfight but, upon receiving a call from the supervisor on duty when Carlos began making verbal threats, instructed the supervisor to tell J.R. to stay away from Carlos since Carlos’s shift was scheduled to end within the next half-hour. Carlos ended up working later, which resulted in him still being present when Alfredo arrived to pick up J.R. from work.
• A jury originally awarded the Pagayon family nearly $2,000,000 in damages and apportioned 75% of the fault to ExxonMobil for negligent supervision of Carlos. The 14th Court of Appeals in Houston affirmed the finding of liability against ExxonMobil.
• The Texas Supreme Court reversed the lower courts and rendered judgment in Exxon’s favor, based on its view that the lower courts had held ExxonMobil to a duty standard that was far too broad. The Court refused to announce a generally applicable duty rule for employers, instead providing lower courts with a list of factors they must consider on a case-by-case basis to determine an employer’s duty in such negligence cases.
• The Court rejected the theory of employer duty found in the Second Restatement of Torts and applied by the 14th Court of Appeals, instead preferring the duty theory of the Third Restatement of Torts and the caveats it includes that allow courts to consider a variety of principles and policies to find that no duty exists under certain circumstances.
• The Court identified several factors for lower courts to consider in determining whether an employer owes any duty to prevent harm in such direct negligence cases: (1) the risk of wrongful employee conduct; (2) the foreseeability of harm; (3) the likelihood of harm; (4) the burden on the employer; (5) the severity of harm; and (6) the social utility gained. Upon weighing these factors in the instant case, the Texas Supreme Court held that, as a matter of law, ExxonMobil owed no duty and could not be held liable for negligent supervision.

About the Author:  J. Shannon Gatlin is Senior Counsel in the Houston office of Cokinos | Young, P.C (View Bio).  Mr. Gatlin has been Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization since 2014, and has practiced labor and employment law on behalf of companies nationwide since 2009.  Mr. Gatlin also spent more than two years assisting in the research and drafting of the Third Restatement of Torts, cited by the Texas Supreme Court in the Pagayon opinion, as well as one year as a Briefing Attorney for the Texas 14th Court of Appeals in Houston.