Houston Business Attorney provides answers to Employment Law FAQs and Business Law FAQs

Click on the links below to view an individual FAQ:

EMPLOYMENT & IMMIGRATION FAQs

What is "employment at will"?
What constitutes sexual harassment?
What is discrimination legally?
Do the anti-discrimination acts provide protection against discrimination based on sexual orientation?
What is the difference between an independent contractor and an employee?
I have an employee with a disability, what do I have to do?
What is a “No-Match” letter from the Social Security Administration?

BUSINESS LAW FAQs

What is a corporation?
Who should form a corporation?
What is a close corporation? What are the benefits of forming a close corporation?
What are the possible consequences of personal liability for business debts and obligations?
How can limited liability help?

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EMPLOYMENT & IMMIGRATION FAQs

What is "employment at will?"

Texas is an employment at will state. In general, that means that an employer has the right to terminate an employee for a good, bad or no reason at all with very limited exceptions. The exceptions to the employment at will doctrine include the state and federal anti-discrimination statues, which provide protection in some instances to persons in certain categories, such as race, gender, or disability discrimination, or a refusal to commit an illegal act that would subject you to criminal penalties. An employer also might owe an employee additional rights if there is a written employment contract between the parties.

What constitutes sexual harassment?

Generally for sexual harassment the person being harassed must be a member of a protected class (based on sex); be subjected to unwelcome harassment in the form of sexual advances or requests for sexual favors; the harassment complained of must be based on sex, and there must be a tangible employment action or affect a condition of employment as a result of the employee’s refusal to submit to a supervisor’s sexual demand or employees submission to unwelcome advances was implied or expressed for a job benefit.

Some of the key factors important in determining whether sexual harassment has occurred include whether the sexual harassment was unwanted; whether it was based on gender; did it lead to an abusive work environment; what kind of sexually suggestive joke or vulgar language; and the frequency or severity of any conduct. The list does not include all factors but includes the prevailing factors. Whether punishment is impose would include if preventative measures were taken or there were remedial actions taken by the employer.

What is discrimination legally?

Discriminatory acts are the acts of the employer that violate the federal anti-discrimination acts. Employment discrimination laws are designed to prevent employers from discriminating based on race, sex, religion, national origin, physical disability, and age.

The Equal Employment Opportunity Commission (EEOC) is the federal agency responsible for enforcing the anti-discrimination laws.

Employers should keep in mind that the anti-discrimination laws are not all encompassing. There are loopholes in the laws that can be used for the benefit of the employer. One example is the bona fide occupational qualification (BFOQ). A bona fide occupational qualification is defined as any requirement which when viewed on the surface seems biased, but actually is reasonably necessary for the performance of the job.

Do the anti-discrimination acts provide protection against discrimination based on sexual orientation?

The discrimination acts are geared towards curtailing discrimination based on race, sex, religion, national origin, physical disability, and age. The discrimination acts provide no protection for sexual orientation under the law. Title VII has been consistently held not to apply to discrimination against homosexuals. Nevertheless, many states and municipalities have adopted sexual orientation anti-discrimination laws.

What is the difference between an independent contractor and an employee?

This is governed by the Fair Labor Standards Act. There are three different classifications of exempt employees including professional, executive, and administrative.

Independent contractors (ICs) are people who contract to perform services for others, but don't have the legal status of employees. Because many employment laws and tax rules that cover employees don't apply to ICs, businesses can save time, money, and headaches by hiring ICs instead of employees.

The IRS has laid out guidelines for determining whether a worker is an independent contractor or an exempt employee. This will determine whether the employer will have to pay the social security, Medicare, and unemployment taxes. Generally, control governs whether or not an employee will be considered an independent contractor or employee. The three different criteria to use is the amount of behavioral control, financial control, and the type of relationship between the worker and the employer. For behavior control, if the employer gets to direct the work of the worker, decide the hours, method of work, and provides training then these are indication that the worker is an employee. However, if the worker gets to decide his own hours with little or no direction then it is an indication that the worker is an independent contractor. Additionally, if the employer controls how the work is paid, places restrictions on who the worker may work for, or influences on whether the work will make a profit, then this will indicate an employer/employee relationship. Finally, the relationship such as whether there is a contract, benefits, or work related to the employer’s primary functions would all be factors of and employer/employee relationship.

I have an employee with a disability, what do I have to do?

Even when an employer knows that its employee is disabled, the employer is not automatically required to find out whether the employee requires an accommodation. Instead, the burden is on the employee to make an initial request for an accommodation. The employee does not need to use the term accommodation, but needs only to inform the employer of the disability and that he or she needs some assistance in performing job duties. Once he or she has made the request, the employer is required to engage in an interactive process with the employee, to determine whether an accommodation is actually needed, and if so, what accommodation might be appropriate. Both parties have a responsibility to cooperate in finding a reasonable accommodation. For example, if the employee refuses to provide any medical evidence of his or her disability or specifically notify the employer of the essential job functions that he or she is having difficulty performing, the employer cannot be held liable for failing to provide an appropriate accommodation. Likewise, the employer cannot make a single offer of an inadequate accommodation and, if the employee refuses it, decline to search for other alternatives.

An employer may also be required to make reasonable accommodations for a job applicant, if the accommodations are necessary for the applicant to participate in the application process. An applicant who believes that he or she may need an accommodation must, like an employee, inform the employer of the need for accommodation, and then work with the employer to find an effective accommodation, if one exists. An example might be moving a typing test to a room that the applicant can reach or allowing the applicant to bring adaptive equipment to the interview, such a special keyboards. An applicant with hearing or visual impairments may be accommodated by allowing an interpreter to accompany the applicant to the interview. An employer who responds to an applicant’s request for accommodation by telling the applicant that he or she cannot participate in the interview process because he or she obviously cannot perform the job may be violating the law.

What is a “No-Match” letter from the Social Security Administration?

Employers are required by the law to file Wage and Tax Statements wit h the Social Security Administration (SSA) and the Internal Revenue Service (IRS) to report how much they paid their employees and how much they deducted in taxes from employees wages throughout the year. The SSA sends a “no-math” letter when the names or Social Security numbers listed on an employer’s Form W-2 do not match the SSA’s record.

The purpose of the “no match” letter is to notify workers and employers of the discrepancy and to alert workers that they are not receiving proper credit for their earnings, which can affect future retirement or disability benefits administered by the SSA.

BUSINESS LAW FAQs

What is a corporation?

What sets the corporation apart from all other types of businesses is that a corporation is an independent legal entity, separate from the people who own, control, and manage it. In other words, corporation and tax laws view the corporation as a legal "person," meaning that the corporation can enter into contracts, incur debts, and pay taxes apart from its owners. And there are other important characteristics that result from the corporation's separate existence: A corporation does not dissolve when its owners (shareholders) change or die, and the owners of a corporation are not personally responsible for the corporation's debts; this is called limited liability.

Who should form a corporation?

Because of the expense and formalities involved in setting up a corporation and issuing stock (shares in the corporation), you should form a corporation only if you have good reason to do so. If you merely want to limit your personal liability for business debts, forming a limited liability company (LLC) is probably smarter because LLCs are both less expensive to form and less complex to run.

What is a close corporation? What are the benefits of forming a close corporation?

A close corporation is any domestic for-profit corporation or professional corporation that states in its Articles of Incorporation or Certificate of Formation that "this corporation is a close corporation." The statement can be included in a corporation’s initial Articles of Incorporation or Certificate of Formation, or it can be added later by amendment.

Benefits of a close corporation are that they may be managed according to a shareholders' agreement instead of by a board of directors or bylaws. Frequently, shareholders in close corporations agree to limit the conditions under which shares may be transferred or sold, apportion profits and losses in a specific manner, or set terms and conditions for share ownership or management positions. For more information, please see Part Twelve of the Texas Business Corporation Act or BOC §§ 21.701 et seq.

What are the possible consequences of personal liability for business debts and obligations?

Personal liability can devastate the accumulated wealth of a lifetime of work. This form of liability opens the individual to claims for a wide range of business obligations. Most people realize that personal liability may extend to business losses, but other obligations may also reach individuals, including: damage awards in lawsuits; tax deficiencies and penalties; and back wages and benefit payments.

Example: Wendy operates a trucking company as a sole proprietor. One of her drivers causes an accident that kills several people. If the company's insurance and assets are inadequate to cover the damages awarded in the wrongful death suit, the plaintiffs may enforce the judgment against Wendy's personal assets.

How can limited liability help?

Limited liability offered by incorporation shelters business owners from personal liability. Certain types of insurance can also help cover business owners, directors, and officers. However, if an owner or director performs certain personal acts, behaves illegally, or fails to uphold statutory requirements for corporate status, he or she may face personal liability despite the corporate shelter.

DISCLAIMER: This site is for informative purpose only. This site is not intended to provide legal advice or create an attorney-client relationship.