Attorneys with the U.S. Department of Justice Civil Rights Division (DOJ) announced in a March 4, 2010 news release posted at http://www.justice.gov that two subsidiaries of American International Group, Inc. have agreed to pay a minimum of $6.1 million to resolve allegations that they engaged in a pattern or practice of discrimination against African American borrowers.  Brought under the federal Fair Housing and Equal Credit Opportunity Acts, the complaint alleged that African American borrowers nationwide were charged higher fees on wholesale loans made by AIG Federal Savings Bank (FSB) and Wilmington Finance Inc. (WFI), an affiliated mortgage lending company.  According to the DOJ news release, AIG FSB and WFI contracted with mortgage brokers to obtain mortgage applications that were underwritten and funded by the defendants.  In this regard, the DOJ complaint alleged that AIG FSB and WFI failed to supervise or monitor brokers in setting broker fees and this practice had a disparate impact on African American borrowers, who were charged higher broker fees than white, non-Hispanic borrowers on thousands of such loans from July 2003 until May 2006, a period of time before the federal government obtained an ownership interest in American International Group, Inc.  As stated in the news release, AIG FSB and WFI are not currently in the business of wholesale home mortgage lending.

A copy of the complaint, as well as additional information about fair-lending enforcement by the DOJ, can be obtained at http://www.justice.gov/fairhousing .

The U.S. Labor Department has settled a lawsuit in which two Texas companies were accused of not paying $1 million in overtime to 154 workers. Those workers inspected temporary housing trailers occupied by people who lost their homes during 2005’s Hurricane Katrina.

Federal labor officials announced Wednesday that Irving, Texas-based Fluor Enterprises Inc. agreed to pay the overtime as part of a consent judgment approved in a Houston federal court. The Labor Department also obtained a default judgment against Houston-based Universal Project Management Inc., a subcontractor used by Fluor. According to court documents, Fluor admitted no wrongdoing in the case, saying it wasn’t the workers’ employer.

Universal Project Management failed to answer the claims against it in court. An attorney for Universal was not listed in court records and no public listing for the company could be found.  Associated Press February 10, 2010.

In these lean times, employers want to make sure their employees are working hard, aren’t opening them up to lawsuits and, most of all, aren’t leaking sensitive information.

The challenge is how companies can monitor their employees’ e-mail, text messages and phone calls without running afoul of the law. More than a quarter of employers have fired workers for misusing e-mail and about a third have fired workers for misusing the Internet, according to a 2007 American Management Association report. “The most important thing is to have a written policy disclosing what your surveillance practices are,” said Chanley Howell, a partner in Foley & Lardner LLP’s intellectual property department in Jacksonville.

When it comes to e-mail, employers have the right to monitor any communication done on their computers. If data is handled on the company’s server, then it is legally under the purview of the employer. This applies to Houston or most cities.  Nonwork e-mail systems and social networking site communication isn’t, however. Companies have hired attorneys to sue their employees for materials and/or documents retrieved from the company’s emails and servers.

Small Business Administration (SBA) Administrator Karen Mills was in San Antonio Monday to discuss ways both the agency and the Obama administration are working on to further encourage lending to small businesses.  (Houston Business Journal, February 8, 2010 by Tamarind Phinisee). 

Mills spoke at the annual International Franchise Association convention.  These efforts, Mills says, include asking Congress for additional funding for its loan programs. This could impact Houston as well.

In February of 2009, the SBA received $730 million in federal stimulus funding as part of the American Recovery and Reinvestment Act. However, this wasn’t enough to meet the loan demand and in December, the SBA received an additional $125 million from Congress.

“We immediately were able to get that out as well. (But) it will run out at the end of this month,” Mills says, adding that the president has asked Congress for another extension in funding.  SBA spokesman Jonathan Swain says the president called for extending the recovery act provisions for the SBA’s 7a and 504 Certified Development Company loan programs through Sept. 30, 2010. The House passed legislation that would do so and it included $323 million to fund the extension. The U.S. Senate has not yet acted on the proposal.

“We are continuing to discuss it with the Senate and are hopeful we will see the extension move forward soon,” Swain says.

If granted, Mills says, the additional funds will be used to increase the loan limit for its 7(a) and 504 loan programs from $2 million to $5 million. Mills says about 10 percent or 12 percent of the loans made with recovery funds have gone to franchisees. Many of these franchisees, she says, have expressed the need for larger loan limits in order to purchase buildings or to make acquisitions. “So, we’ve proposed to Congress that we increase these loans,” she says.

Other things the SBA is looking to do is extend the 90 percent guarantee on its 7(a) loan program. The Recovery Act, among other things, temporarily raised the guarantee on the 7(a) loan program up to 90 percent through the end of the calendar year 2009, or until funds set aside for the program were exhausted.

Prior to the enactment of the law, the guarantee on the 7(a) loan program was between 75 percent and 85 percent. The act also temporarily eliminated fees for borrowers on the 7(a) loans as well as fees for both borrowers and lenders on the 504 loans through the end of the year or until funding for the enhanced programs are exhausted. The 504 CDC loans are principally used for land, new building construction, acquisition and rehab of existing buildings, long-term machinery and equipment purchases, and debt refinancing. (Houston Business Journal, February 8, 2010). 

Interestingly, Mills says, the agency is also seeking to use its 504 loan program to refinance owner-occupied commercial real estate mortgages. Mills says that in this present economic environment, in an effort to get commercial mortgages off their books, some banks may be unwilling to renew commercial real estate mortgages even if the owners have never missed a payment. Using the 504 loan program in this capacity temporarily, she says, could benefit these business owners.

Mills says the agency has been meeting with small and large banks as well as small businesses, law firm attorneys and community leaders around the country to develop the measures that it is seeking from Congress. And, she says she believes these measures are ones that will be easy to implement.

“We can do those things quickly within the programmatic structure that we already have (in place) at very cost-effective rates,” she says. 

(Houston Business Journal, February 8, 2010 by Tamarind Phinisee).

Small businesses have been hit by a wave of cybercrimes. Here’s how to protect your accounts. (New York Times, February 8, 2010, by Riva Richmond).

Cybercriminals have found a rich, new hunting ground: small businesses’ bank accounts.

Just ask Sign Designs Inc., an electric-sign maker in Modesto, California or Houston based Achievement 4 All compaines. For Sign Designs, the first sign of trouble was a morning phone call from Bank of Stockton, Sign Design’s community bank. It had just fielded a call from Chase Bank, whose anti-fraud team was questioning the legitimacy of a $9,670 electronic payment to a Chase customer in Michigan. Sign Designs confirmed it hadn’t set up the payment, and the banks halted the transaction.

Checking its account online, Sign Designs quickly discovered the problem was much bigger: Almost $100,000 had been sent to 17 mystery people, all added as payees the previous day. Although Bank of Stockton immediately notified all the banks that had received funds, some $48,000 had already been picked up by “money mules,” people recruited to shuttle money for online-crime groups, typically in Eastern Europe.

Bank of Stockton says it isn’t responsible for the losses because its systems were never breached. Hackers had planted a malicious program on the computer of Sign Designs’ controller and used it to steal his online-banking credentials. The California bank also says Sign Designs failed to take advantage of security measures that might have averted losses, such as requiring two staff members to sign off on every payment.

Sign Designs President David Johnston argues that Bank of Stockton should cover the losses because it didn’t flag the highly unusual account activity nor did it bar two computers—the controller’s and hacker’s—from accessing the account with the same credentials at the same time. “I don’t think they should offer a service that is not safe,” Mr. Johnston says. “Do you expect I’m going to solve this? I’m going to take on these Russian thieves? Clearly I’m not going to [be able to] do it.”

Sign Designs is among a growing number of small businesses whose bank accounts have been drained in increasingly sophisticated hacker attacks over the past two years. Losses have climbed into the hundreds of millions of dollars in the past year or so as more organized-crime groups, emboldened by the success of fellow criminals, move online, says Shawn Henry, assistant director of the Cyber Division at the Federal Bureau of Investigation, which issued a public warning about the problem in November.

Small businesses are proving a rich target for hackers because they—and the smaller regional banks they often use—tend to have fewer technical and financial resources to stop attacks. And unlike consumers, they lack legal protections from identity fraud, so they typically are forced to absorb the losses.

“Small businesses are really in a bind,” says Avivah Litan, an analyst at Gartner Inc. “They need to protect themselves.”

Experts offer the following suggestions for small businesses seeking to ward off an attack:

Defend Computers

Hackers often take aim at small firms’ computers because they are easier to infiltrate than banks’ systems. One common mode of attack is to send a “spear phishing” email containing an infected file or a link to a malicious Web site to employees with access to the firm’s financial accounts. Once the employee opens the attachment or goes to the Web site, malware is installed on the computer that allows criminals to access banking logins and passwords. While up-to-date antivirus software offers substantial protection against malware, it isn’t 100% effective.

Accessing your bank account through a computer that isn’t used for anything else—no email or Web surfing—and isn’t connected to the local network offers strong protection, says William Nelson, president of the Financial Services Information Sharing and Analysis Center, an industry group that collects and shares threat data.

Another option is to use an obscure computer operating system such as Ubuntu or Web browser such as Opera because attackers rarely create malware for them, security experts say. Riva Richmond

If you use Microsoft Corp.’s Internet Explorer browser, make sure you have the latest version, IE 8, which includes security features to help prevent attacks. Consider using Explorer in “protected mode,” which restricts files that try to install on a computer without the user’s consent, and set your “Internet zone security” to “high,” which disables some of Explorer’s less-secure features, according to Microsoft.

Protect Accounts

Ask your bank to set up “dual controls” on your account so that each transaction requires the approval of two people—a good guard against fraud, security experts say. Establish a daily limit on how much money can be transferred out of your account, and require that all transfers be prescheduled by phone or confirmed via phone call or text message. If possible, impose restrictions on adding new payees, security experts say.

Check bank balances and scheduled payments at the end of every workday, rather than the beginning, and immediately contact your bank if anything is amiss. Banks use the Automated Clearing House system to transfer funds to payees’ banks. These transfers usually aren’t paid until the next morning, so timely action could halt the completion of a fraudulent transaction, Mr. Nelson says.

Shop for a Bank

Review your agreement with your bank and know what rights you may be waiving by not using certain security measures. While agreements between banks and commercial customers typically absolve banks of responsibility for fraud losses, the bank down the street may offer better protections, so shop around. Also, consider adding insurance coverage for fraud losses.

Many banks, concerned about damage to customer relationships, have stepped up their defenses against cyberattacks, rolled out new protections for customers and begun sharing more threat information with each other and law enforcement, Mr. Nelson says.

An emerging motivator may be a growing number of lawsuits by small companies claiming their banks didn’t have “commercially reasonable” security.

A judge in a closely watched case involving a self-employed couple’s personal and commercial accounts said in refusing to grant a summary judgment that a jury might find fault with the adequacy of the bank’s defenses, which the plaintiffs argued weren’t state of the art at the time of the theft. The case—Shames-Yeakel vs. Citizens Financial Bank—was settled in late December under confidential terms. The plaintiff’s lawyer, John Soumilas of Francis & Mailman PC in Philadelphia, says he pursued the case as one of consumer-identify theft, where protections are ample. The Wall Street Journal, February 8, 2010.

Still, David D. Johnson, a digital-media lawyer at Jeffer, Mangels, Butler & Marmaro LLP in Los Angeles who wasn’t involved in the case, says the judge’s action suggests that “a bank can’t simply rest on its laurels, on its security measures that worked last year,” and avoid liability. The judge declined to comment, and Citizens Financial didn’t return a call for comment. There no comments from Houston, Texas attorneys.

Reach Out

Connect with law-enforcement agencies before an incident occurs, suggests Mr. Henry. He says small businesses should consider joining the FBI’s InfraGard, a group of businesses, academic institutions and state and local law-enforcement agencies that seek to ward off cyberattacks and other threats by sharing information and intelligence.

He also urges companies to report all computer crimes immediately to the FBI. The agency has relationships with law-enforcement organizations around the world that are starting to bear fruit, he says, pointing to the recent arrest of 120 people tied to Romanian groups that allegedly stole money from U.S. companies and citizens.  The Wall Street Journal, February 8, 2010.

“In the cases where we have put hands on somebody, it was the result of a victim company raising their hand and saying this happened,” Mr. Henry says. “If they hit you today, they’re hitting the guy down the street tomorrow.” Seek your Houston attorney immediatley when you suspect any wrong doing.

The National Employment Lawyers Association (NELA) announced on January 14, 2010 that Congress, at the end of its last session, enacted the “Jamie Leigh Jones Amendment” (also known as the Franken Amendment in section 8116 of the Defense Appropriations Act for 2010).  Signed by President Obama on December 19, 2009, the Franken Amendment is the first federal legislation that prevents employers from forcing pre-dispute, binding arbitration on their employees.  The Franken Amendment prohibits the award of Department of Defense contracts of over one million dollars to any company that forces its employees or independent contractors to submit to pre-dispute binding arbitration of Title VII and sexual assault related tort claims (with certain exemptions).

According to NELA, the Franken Amendment will protect hundreds of thousands of employees around the country from being forced to arbitrate their Title VII claims; it is estimated that 80% of defense contractors exceed the Amendment’s one million dollar threshold.  NELA reports that a list of the 2009 top 100 defense contractors can be found at http://washingtontechnology.com/toplists/top-100-lists/2009.aspx .  Also, more information can be found at http://www.governmentcontractorswon.com/default.asp .   Further in this regard, NELA states that the Amendment provides a major new legal tool for employees to use to strike down forced arbitration clauses imposed by their employers who are federal defense contractors or subcontractors, and sets an important prcedent for efforts to eliminate forced arbitration in other employment and consumer contexts.

The list of covered sexual assault-related tort claims is reportedly quite extensive, encompassing “any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision or retention.” 

Importantly, employees protected by the Franken Amendment can invoke it to defeat motions to compel forced arbitration.  Further information about NELA’s comments on the Amendment may be located at www.nela.org .  For its own part, NELA advances employee rights and serves lawyers who advocate for equality and justice in the American workplace.

In a January 6, 2010 Press Release at http://www.eeoc.gov/eeoc/newsroom/release/1-6-10.cfm , the United States Equal Employment Opportunity Commission (EEOC) announced that 93,277 workplace discrimination charges were filed with the federal agency nationwide during Fiscal Year 2009, the second highest level ever.  According to the EEOC Press Release, the Fiscal Year 2009 data show that private sector job bias charges (which include those filed against state and local governments) alleging discrimination based on disability, religion and/or national origin hit record highs.  The number of charges alleging age related discrimination reached the second highest level ever.  Continuing a decade-long trend, the most frequently filed charges with the EEOC in Fiscal Year 2009 were charges alleging discrimination based on race (36%), retaliation (36%), and sex-based discrimination (30%).  The Fiscal Year 2009 statistics can be found at http://www.eeoc.gov/eeoc/statistics/enforcement/index.cfm .  As stated in the Press Release, the federal agency also filed 281 new “merits” lawsuits and resolved 321 merits lawsuits in Fiscal Year 2009.  In this regard, merits suits include direct suits and interventions alleging violations of the substantive provisions of the statutes enforced by the EEOC and suits to enforce administrative settlements. 

Further information about the EEOC may be found at www.eeoc.gov .

The U. S. Department of Justice (”DOJ”) issued a September 30, 2009 Press Release announcing that the DOJ and an Alabama bank have reached a settlement which resolves allegations that the bank engaged in a pattern of discrimination on the basis of race.  According to the DOJ’s Press Release posted on the agency’s website at http://www.usdoj.gov/opa/pr/2009/September/09-crt-1062.html , the DOJ’s lawsuit alleged that the bank charged African-American borrowers higher rates than similarly situated white borrowers on home mortgage related loans.  As stated in the DOJ Press Release, the complaint also alleged that the bank unlawfully failed to provide its lending services and products on an equal basis to majority African American areas in west central Alabama, a practice known as redlining.  DOJ attorneys brought the discrimination lawsuit in Alabama under the federal Fair Housing Act and the Equal Credit Opportunity Act.

The U. S. Department of Labor announced in a News Release that effective July 24, 2009 the federal minimum wage increased to $7.25, and, with this change, employees who are covered by the federal Fair Labor Standards Act (FLSA) will be entitled to pay no less than $7.25 per hour.  According to the News Release, the increase is the last of three provided by the enactment of the Fair Minimum Wage Act of 2007.  The Department stated that the increase will directly benefit workers in multiple states, including Texas, where the state minimum wage is currently at or below the federal minimum wage, or there is no state minimum wage.  In addition, the Department stated that a family with a full-time wage earner would see its monthly income increase by $120, and that is more than a week’s worth of groceries for an average family of four or more than one week’s utility bills.  Further information on this subject may be found in the agency’s website at http://www.wagehour.dol.gov .

The Houston Chronicle reported in an August 3rd article that House Bill 1831will give Texas mayors and county judges who order, for example, a hurricane evacuation the authority to remove residents who refuse to evacuate.  See, Radcliffe, Jennifer, “New Law Puts Teeth In Evacuation Orders,” Houston Chronicle, 8/3/09, p. B1.  According to the article, officials from Galveston to La Marque to Kemah are guardedly optimistic that the new state legislation will persuade more people to evacuate from flood-prone communities during a hurricane.  In this regard, if rescue teams have to pluck a person from a storm area after they refuse to evacuate, the resident could also be liable for the cost of a rescue, under the legislation that takes effect September 1.  A Galveston County Sheriff stated that recouping costs of rescuing people who stay in a hurricane has merit when they stay and then have to be rescued.  According to a La Marque Fire Chief quoted in the article, “It’ll be basically up to the officer’s discretion to enforce it (statute) or not.”  The legislation’s co-sponsor, State Representative Craig Eiland, added that the legislation is “another tool to help encourage people to heed evacuation warnings.” 

Texas law also offers protections to employees who leave the workplace in certain emergency situations.  Under Chapter 22 of the Texas Labor Code, an employer may not discharge or in any other manner discriminate against an employee who leaves the employee’s place of employment to participate in a general public evacuation under an emergency evacuation order.  Pursuant to Texas Labor Code Section 22.001(2), emergency evacuation order means an official statement issued by the governing body of this state or a political subdivision of this state to recommend the evacuation of all or part of the population of an area stricken or threatened with disaster.  In this regard, the Texas Labor Code defines disaster to include, for example, the occurrence or imminent threat of widespread damage from, for example, wind, flood, storm or wave action. 

Chapter 22 of the Texas Labor Code provides employees with certain relief but also contains certain restrictions.  Consequently, victims of employment related hurricane evacuation discrimination in Texas can contact an attorney to determine if an unlawful termination lawsuit may ultimately be appropriate under the particular facts and circumstances of the potential wrongful employment termination or adverse action claim.