Liar! Liar! - Employee Polygraph Tests in Texas

Parker Puppy Professionals Inc. employed Fifi as a salesperson at its dog clothing and gourmet food boutique. Boomer, the store manager, noticed that dog biscuits, rhinestone dog collars and money from the cash register were “short” on days that Fifi worked. Boomer asked Fifi about the missing biscuits, collars and money, but Fifi denied knowing about any “shortages.” Management wants to subject all employees, including Fifi, to polygraph lie detector tests.

Can the employer require the employee to take a lie detector test?

The federal Employee Polygraph Protection Act (EPPA) ) has such broad prohibitions, it virtually eliminates polygraph exams from the workplace. For that reason, there is little case law interpreting the statute. The EPPA narrowly limits when private employers can administer a polygraph lie detector test to any current or prospective employee. More importantly, the federal act prohibits private employers from

(1) directly or indirectly requiring, requesting, suggesting, or causing any employee or potential employee to take or submit to a polygraph lie detector test, or

(2) relying upon (or even asking about) the results of any lie detector test.

Finally, an employer may not terminate or discriminate against an employee or potential employee who takes or refused to take a polygraph lie detector test.

One exception to the general rule is that an employer can request an employee to take a polygraph lie detector test in connection with an ongoing investigation of economic loss or injury to the employer’s business, such as theft, embezzlement, misappropriation, or an act of unlawful industrial espionage or sabotage. If a request is made, the employer must execute a signed statement and deliver it to the examinee before the test stating

(1) the event

(2) the specific economic loss or injury

(3) the employee’s access to the property, and

(4) the basis of reasonable suspicion that the employee was involved

Even if the employer reasonably identifies an employee who may be involved with a specific incident of economic loss and takes the proper procedural steps, the employer still cannot discharge or otherwise discriminate against the employee solely on the basis of the polygraph test results. The employer must have additional supporting evidence before taking adverse employment action.

Given all these requirements and pitfalls, an employer might be better off discharging an employee prior to a polygraph examination, simply based on the mere suspicion of theft or other criminal involvement.

Failure to follow all federal statutory requirements risks statutory liability under the EPPA, including liability to the employee and possible civil penalties. An employee’s possible remedies include employment reinstatement, lost wages and benefits, emotional distress, costs, and attorneys’ fees. The Act also subjects employers to possible civil fines up to $10,000.

For more information, see Employee Polygraph Protection Act, 29 U.S.C. §§ 2001-2009 (1999); 29 C.F.R. pt. 805, or read these interesting links:

Article 1

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Sure, fireworks are fun, but be cautious and careful.

Below are Texas’ Top 10 fireworks laws (but remember, laws may vary county to county).

Happy Independence Day to America, this July 4, 2008!

THE TOP TEN TEXAS FIREWORKS LAWS, HOW TO AVOID GETTING POPPED

  1. Ever notice how we don’t shoot fireworks off for Easter? Fireworks can only be sold from June 24th through July 4th and December 20th through January 1st.
  2. It is illegal to sell or shoot fireworks within 100 feet of a place where flammable liquids, flammable compressed gasses or fireworks are sold or stored. Makes sense to me!
  3. Despite what you may have seen in the movies, it is illegal to shoot fireworks from or towards a motor vehicle, including boats.
  4. It is illegal to shoot fireworks from a public roadway, public property, park, lake or U.S. Corps of Engineer Property. Would hate to set a lake on fire.
  5. The minimum age to buy or sell fireworks was recently changed from 12 to 16. Should probably be 26.
  6. It is illegal to shoot fireworks within 600 feet of a church, hospital, day-care center or school. I most certainly wouldn’t want to go into surgery with a constant barrage of fireworks outside the building.
  7. It is illegal to shoot fireworks within city limits and, in many cities, it’s also illegal just to possess them. Selling, igniting or possessing fireworks within city limits can carry hefty fines approaching $2,000. Yet, country clubs just keep getting away with this.
  8. In unincorporated areas where fireworks are legal, you may only shoot off fireworks if you own property there, or if you receive written permission from a property owner. A county “burn ban” outside incorporated areas often translates into a prohibition against shooting fireworks. So no blowing up the neighbor’s mailbox without their permission!
  9. If you start a fire by shooting fireworks and the fire was found to be started intentionally, you may be subject to the charge of arson. If the fire is found to be accidental, you may be subject to a fine. In either case, you may be held civilly liable for damages.
  10. Beginning January 2, 2008, bottle rockets (a.k.a. pop rockets) were banned. You know you’re addicted to fireworks if you built up a reserve supply of bottle rockets prior to the ban.

In all seriousness, play it safe and keep in mind that fireworks are somewhat unpredictable.

That said, have a wonderful 4th of July!

*Looking for more up to date information on Texas firework laws? Check out our latest post.
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In response to our “You’ve Got MAIL, AND a Contract?!” blog posting in May, one of our favorite Tilting readers asked for any tips on avoiding an e-mail signature that creates a written agreement.

Disclaiming Signatures. The Tilting team is not aware of any authoritative recommendation for language disclaiming the creation of an enforceable contract by the exchange of e-mails. In fact, the general intent of relatively recent electronic communications statutes is to facilitate business transactions by permitting enforceable electronic contracts, not to hinder them. Having said that, businesses may wish to avoid creating an enforceable contract unless one is expressly intended. Probably the most simple response is just to say that in a disclaimer or signature at the bottom of each e-mail.

For example, the following might suffice:

No Binding Agreement. This e-mail, taken by itself or with others, is neither an offer nor an acceptance of any terms or conditions that might become an agreement. Only written terms and conditions on paper and executed in ink by hand and by an authorized person, may become a binding agreement, notwithstanding any electronic communications or transactions statutes that may suggest otherwise.

However, if the parties do wish to transact by e-mail communications, it would be prudent to eliminate the following language from any e-mail intending to cement an enforceable agreement.

OUR OWN DISCLAIMER! No Surprise, Right? As far as we know, no Texas court has written on this issue, nor is there a specific Texas statute. These are practical business thoughts only and definitely ARE NOT LEGAL ADVICE.

Brad is madly in love with Jennifer. After dating her for a year, Brad proposes to Jennifer with a 5 carat Leo Diamond ring. Now, after only a few months, the engagement is off. Who gets the ring?

If Brad and Jennifer break-up (and there is no written agreement) the keeper of the engagement ring is decided by “the fault-based conditional-gift rule.” Much better than a rock/paper/scissors contest, this rule states that a gift delivered by a guy expecting to become a groom (i.e., an engagement ring) is given subject to the couple getting married.

Therefore, if Brad breaks the engagement because he decides he’s really in love with Angelina–not Jennifer–then Jennifer may keep the ring. On the other hand, if Jennifer gets a case of cold feet and breaks off the engagement, she has to give the ring back.

If both Brad and Jennifer agree to break up, then all bets are off, and they must return each other’s gifts. If Brad and Jennifer do actually “tie the knot,” all gifts “exchanged in the contemplation of marriage are the absolute property of the recipient.”

For more information about the ownership of engagement rings and the law in Texas affecting other gifts before marriage, see Curtis v. Anderson,106 S.W.3d 251 (Tex. App. Austin 2003). As for all those other gifts that your family and friends bought when Brad and Jennifer got engaged, please consult Ms. Manners.

You’re shell shocked. Super Sales Company’s best sales person Sally Star is sailing on.

She’s arrived to work on this last day of the month, picked up her commission check and shared The Shocker.

She quits, effective today. More bad news? Her new gig is your Biggest Competitor. Even worse? Sally Star has 5 years of history with your company. And your clients. In fact, she has the best and closest relationship to your clients.

A quick call to Helen in HR reveals more joy. Sally was hired two months before your company started making employees sign the Employee Manual/Confidentiality Agreement.

Great. Then you talk to your IT department. It’s confirmed. Yesterday, Sally downloaded the company client information to her PDA.

Your client list has just grown legs.

Misappropriation (theft) of trade secrets, by a former employee, can be devastating to a business. In Texas, an employer can protect its trade secrets from former or current employees who “use trade secrets, confidential or other proprietary information for their personal benefit or to the detriment of their employee” even if she did not sign a non-compete agreement. In Sally’s case, she owes the company a fiduciary duty to not disclose its trade secrets. If Sally breaches that duty, then Super Sales Company can sue for damages or an injunction.

In Texas, proving misappropriation (theft) of trade secrets requires Super Sales Company first to prove that the trade information being taken qualifies as a “trade secret” and that the company actively protected its trade secrets. Texas courts have defined a trade secret as “any formula, pattern, device or compilation of information which is used in one’s business, and which gives an opportunity to obtain an advantage over competitors who do not know or use it.”

Super Sales Company must then show (a) a breach of a confidential relationship or improper disclosure of the trade secret; and (b) use of the trade secret without the company’s authorization. Though Sally is not allowed to use a trade secret for her benefit or Super Sales Company’s detriment, Sally may use her general knowledge, skills, and experience acquired during employment to compete with Super Sales Company.

So, what if Sally memorized the customer list? No help to her. Texas courts do not apply the “memory rule.” Texas courts generally review the difficulty and methods used to obtain the “trade secrets,” and the ease of duplication through other sources. Thus, if the information is not readily accessible from the industry, and Sally memorizes the entire list, Super Sales Company can still hold her liable if she gained the information during her employment.

TOP 5 PRACTICAL PRACTICE POINTERS

  1. Include a confidentiality provision in your employee handbook or non-competition agreement and get it signed by the employee;
  2. In those documents, describe specifically what the company claims to be a “trade secret” and that such “trade secrets” are confidential and the property of the company;
  3. Limit access to company “trade secrets” to only those with a “need to know;”
  4. Conduct thorough exit interviews and require all departing employees to returnhard copies and delete soft copies of company “trade secrets” and require a signed statement that there are both no more copies and that the “trade secret” is confidential;
  5. Consider providing those employees who have a “need to know” with a company-issued PDA as the only place where “trade secrets” may be copied and which must be returned when the employment ends.

For more information, see M.N. Dannenbaum, Inc., v. Brummerhop, 840 S.W.2d 624 (Tex. App.–Houston [14th Dist.] 1992). Although some states have adopted the “Uniform Trade Secrets Act,” Texas is one of a handful of states (including New York) that has not adopted the UTSA.

Your graduating senior wants to throw a party at your house and invite his friends, Jim Beam, Jack Daniels, the team Captain Morgan and their buddy “Wiser.” Is this a good idea?

Your son Graham is graduating from high school and you want to throw a party for him and his friends to celebrate. According to Graham, graduation parties are only fun if everyone is able to kick back and relax with a beer or wine cooler in hand. After all, he and his buddies have worked hard and they “deserve” a drink or two. You know that Graham and his friends will be drinking anyway and after thinking about it a while, you decide that you’d rather them drink at your home where you can keep things under control rather than have them throw a party in a field or in a warehouse with no supervision.

You opt to be the “cool” parent and agree to let Graham throw a graduation party at your home complete with loud music, colorful decorations, great food and a refrigerator full of beer and wine coolers.

R-e-l-i-e-f. The party is going well. Everyone’s having fun. No one’s getting into trouble. The kids are behaving. You’re the cool parent.

And then you go to bed.

Shortly thereafter, some of Graham’s friends (who are obviously intoxicated) decide to have an ultimate fighting tournament in the backyard, just for fun. The boys are just “being boys,” wrestling and exchanging a few friendly punches. It all suddenly takes a turn for the worse when one of the boys, a la Hulk Hogan, crashes a lawn chair squarely over the head of another guy.

You went to bed thinking you were the “cool” parent. Ambulance sirens awaken you to the shock that someone is hurt and is headed for the hospital.

Are you liable?

Yes.

In 2005, the Texas Legislature amended the Alcoholic Beverage Code to create civil liability (in addition to criminal liability). Specifically, under the current law in Texas, a person can be held civilly liable for damages caused by the intoxication of a minor younger than 18 if he knowingly provided alcohol or allowed the minor to be served alcohol on property owned or leased by him and the minor, in turn, hurt someone, hurt themselves, or damaged property.

Thus, under the facts you have at least some civil liability, and perhaps criminal liability.

See Reeder v. Daniel, 61 S.W.3d 359 (Tex. 2001), which discusses the law before the statute was changed.

SOLD!

You and a home buyer are “discussing” price via e-mail. It’s been a barrage of online discussion and exchanges. Now, about that final price … Could it be you’ve just “sold” your house without knowing it?

Consider this e-mail exchange in Massachusetts:

  • Home buyer and home seller are exchanging e-mails.
  • Sales terms for a multi-million dollar home are “discussed” during the e-mails.
  • The e-mails detail aspects such as the home’s location, purchase price, down payment (10 percent) and waiver of “usual contingencies,” including financing.
  • At the bottom of the e-mails are the typewritten names of the respective senders.
  • The last e-mail says the parties will sign a purchase and sale agreement.
  • Then, a day later, the seller receives another offer at a higher price.

Can the seller accept the higher offer, yes or no? If not, why not?

“No document was ever signed, right? … Right?!”

Wrong.

A 2001 Massachusetts trial court permitted the buyer to enforce “the deal.” E-mail correspondence was sufficient to satisfy all “legal requirements.” In today’s “paperless” world, a signed agreement with all parties, side by side, is scarce.

  • The electronic contract is growing in strength and number. Here’s what you need to know.
  • The United States Congress and the State of Texas have enacted laws acknowledging electronic contracts.
  • E-mail communications may stand stronger as a contract, compared to an “oral contract” since e-mail has a greater probability of certainty, as governed by traditional contract principles. Any contract—electronic, oral or signed on paper—must include
  1. A valid offer
  2. An acceptance
  3. Consideration

Meeting these three contract criteria is easier to demonstrate with e-mail communications vs. the “he said/she said” aspects of an oral contract.

  • In Texas, there is The Uniform Electronic Transactions Act (UETA), which focuses on electronic communications and contracts.
  • Adopted in 2001, UETA states: “… a record or signature may not be denied legal effect or enforceability solely because it is in electronic form. Yet, there are some kinds of documents that may not be held binding without ‘pen and ink,’ such as wills, trusts, marriage, divorce, adoption and similar family agreements and court documents.
  • In Texas, there is no prohibition to e-mail sales of real estate.

Tilt the Scales Your Way

Great care must be exercised when using e-mail. If you are negotiating a deal, add disclaimers saying that e-mail communication is not binding upon the sender and that the deal is subject to the preparation of a written and signed contract. Finally, make sure that typewritten names within your e-mail state that they are for contact purposes only and are not the “signature” of the sender.

Additional Resources:

The Uniform Electronic Transactions Act (Chapter 43 of the Texas Business and Commerce Code).

Added UETA insights.

See Shattuck v. Klotzbach, Civ. Act. No. 01-1109A (Superior Ct, Mass., December 11, 2001).

For most of the late 1990s and early 2000s, it was considered to be nearly impossible to have an enforceable non-compete in Texas. After clarification by the Texas Supreme Court in 2006, non-competition agreements in Texas have found new life.

Non-competition agreements typically prevent an employee from competing with an employer after their employment ends. Frequently, employers use them to protect their customer lists and contact information, pricing structures, methodologies and business strategies, or other “proprietary” information like methods to cultivate new and existing clients or marketing strategies.

Prior to the 2006 decision, most of the Texas Courts of Appeal believed that an employer had to provide trade secrets or confidential information at the same time that an employee signed a covenant not to compete. Even then, many courts declined to enforce the non-compete if the disclosed information was not “secret” enough.

Now, thanks to the Texas Supreme Court’s decision in Sheshunoff, covenants not to compete become enforceable at any time after signing when the employer actually discloses confidential information to its employee. This decision not only allows enforcement of existing covenants not to compete, it can breathe new life into non-competes previously written off by employers and their counsel as being unenforceable.

Still, in Texas, a covenant not to compete must have reasonable limitations on duration, geographical area and scope of activity. Ultimately, the enforceability of a Non-Competition Agreement depends on the balance between the employee’s ability to earn a living and the employer’s protection of its economic self interest.

Practical Points. Employees who have confidential and proprietary information, training methods or proprietary business processes to protect should avoid using a “form” agreement that is broader and longer than necessary. A Court will invariably “reform” such an arrangement. Additionally, the existence of a valid covenant not to compete might be a useful bargaining point when attempting to negotiate a mutual release of claims with a departing, disgruntled employee.

For more information, please see Alex Sheshunoff Mgmt. Services, L.P. v. Kenneth Johnson and Strunk & Associates, L.P., 209 S.W.3d 644 (Tex. 2006).

Yes, we have a disclaimer.

Harry hits an errant elliptical drive through the 3rd window on the 2nd floor of Proud Mary’s mansion just off the 14th tee. Harry flees down the fairway to avoid an irate Mary who gallops after Harry’s golf cart wildly swinging her broom. Who pays for the window?

In Texas, many golf course communities and their homeowners associations have provisions in their CCR (covenants, conditions and restrictions) providing that all homeowners expressly waive their right to recover for damages from errantly struck golf balls.

Practically speaking, the occasional broken window from accidental (not intentional) drives, does not put enough money at stake for Proud Mary to litigate. However, if the problem becomes so pervasive for there to be regular broken windows in the same general location, Proud Mary may have sufficient incentive to pursue a claim employing the argument of negligent design against the owner (and maybe the designer) of the golf course and asking a court to require that a particular hole layout be redesigned and reconstructed.

Obviously, chasing a golf ball on to Proud Mary’s property is not advisable and raises additional liability issues.

For more about broken windows and negligent course design, see Edward J. Malouf, et al v. Dallas Athletic Country Club, 837 S.W.2d 674 (Tex. Ct. App. 1992).Yes, we have a disclaimer.