Contributed By Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
As in most US urban areas, a significant number of people in Oklahoma City and Tulsa have turned to “gig economy” work as primary or supplemental income. Such “gig economy” jobs include sharing mobile apps such as Uber and Airbnb as well as more traditional freelance work. Co-working and office sharing facilities are also popping up in Oklahoma’s metropolitan areas.
An employer looking to utilize “gig economy” labor should carefully consider the legal implications. In addition to federal concerns, Oklahoma state agencies can be aggressive in seeking to treat independent contractors as statutory “employees” for purposes such as unemployment-insurance taxes. Though Oklahoma does not have its own overtime rules and has comparatively fewer employment protections compared to coastal states, Oklahoma does have a robust plaintiff’s bar that will seek to enforce existing worker protections through civil litigation.
Social media platforms are popular in Oklahoma across all demographics. Employees often use social media to express political or other opinions that may appear extreme to foreign investors or express negative views about their employers. Neither federal nor state law prohibits private employers from disciplining or terminating employees for such speech, but employers should consider each situation carefully in light of other employment protections before making any disciplinary decisions.
Oklahoma law does not prohibit employers from reviewing an applicant’s social media presence during the hiring process, but Oklahoma law does prohibit employers from requiring applicants and employees to turn over their social media log-in credentials or allow their employer to observe the content of their social media accounts which is not available to the general public. Employers are also prohibited from taking retaliatory action against an employee for refusing to give their employer access to their social media accounts.
Oklahoma has not adopted any specific legislation in response to the “Me Too” movement, such as the prohibition of confidential settlement agreements. Oklahoma employers should be diligent in meeting their responsibilities under state and federal laws prohibiting gender discrimination, harassment and retaliation.
Oklahoma has been a “Right-to-Work” state since 2001. In other words, Oklahoma employees cannot be required to pay union dues as a condition of employment. Labor unions are not a significant force in Oklahoma (outside of certain trades and the public sector).
Organized labor is not a significant concern in Oklahoma. While the National Labor Relations Board does maintain a resident office in Tulsa, Oklahoma and lies within NLRB Region 14 – St. Louis, as recently as 2017 the NLRB has proposed closing this office.
The nature of an employment relationship can affect a variety of issues. In the context of federal law, among other things, whether a worker is recognized as an “employee” or an “independent contractor” will determine the applicability of certain employee protections, such as overtime compensation and the minimum wage under the Fair Labor Standards Act (FLSA), the requirement to extend certain benefits and the requirement to withhold certain payroll taxes. The nature of the employment relationship affects the applicability of unemployment-insurance taxes under the Oklahoma Employment Security Act, the requirement to maintain workers’ compensation insurance under the Oklahoma Administrative Workers’ Compensation Act and the application of certain workforce protections under the Oklahoma Protection of Labor Act. The nature of the relationship will also determine whether an employer may be vicariously liable for the acts of a worker.
Oklahoma has recently addressed the nature of employment relationships in the context of franchises; in 2016 Oklahoma passed legislation clarifying that “employees of a franchisee shall not be considered employees of the franchisor [and] neither shall the employees of a franchisor be considered employees of a franchisee”.
Unpaid internships are subject to strict limitations under federal law and are generally discouraged. Oklahoma has not adopted additional laws or regulations governing unpaid internships.
The general rule in Oklahoma is that employment is “at will”, meaning an employee may be terminated for any lawful reason (or for no reason at all) and an employee may leave his or her employment for any reason. An employer may ask an employee to enter into an employment contract, whether at will or for a specified term. Such an employment contract usually includes the material aspects of the employment relationship (eg the position, compensation and the benefits) and other provisions such as non-solicitation and trade-secret protections and arbitration covenants.
An employer should explicitly state in its policies and handbooks that such documents are not a contract of employment (unless an employer desires to make such provisions enforceable contracts), but Oklahoma law requires certain policies to be reduced to writing and signed by an employee. Such provisions include wage deductions, limitations or forfeitures of certain benefits and bonuses and recoupment of overpaid wages.
Oklahoma has adopted the federal standards regarding minimum wages and overtime and uses a test similar to the federal test to determine whether a worker is an “employee” subject to certain labor protections.
Immigration is exclusively regulated under federal law. Recent surveys estimate Oklahoma’s immigrant population to be 220,000, about 8% of the workforce. An estimated 95,000 of these immigrants are undocumented. Local surveys predict that Oklahoma’s immigrant populations, especially those from Mexico and Central America, will continue to grow. Industries such as construction, oil and gas and hospitality should be especially careful to comply with the requirements of federal law.
As mentioned above, organized labor is not a significant concern in Oklahoma.
Oklahoma has not adopted many prohibitions regarding the interview process. For example, while Oklahoma state agencies may not inquire about past criminal convictions, there is no such “ban the box” law that applies to private employers, except that employers are prohibited from inquiring about sealed criminal matters such as juvenile convictions and expunged records. Oklahoma employers may ask employees about wage and salary history and may conduct credit checks in compliance with federal law. Inquiries into age, pregnancy and disability are discouraged, except to the extent necessary to discuss reasonable accommodations, and should not be a factor in the ultimate hiring decision.
Oklahoma law requires an employer to provide written notice prior to requesting a consumer report concerning an applicant. The notice must inform the subject that a consumer report will be used and must contain a box that the subject may check to receive a copy of the report.
Oklahoma courts will not enforce traditional non-compete clauses (ie agreements not to engage in competitive enterprises) unless entered into as a principal as part of the sale of a business. Even in such cases, traditional non-competes must be limited to the county and contiguous counties (ie the metropolitan area) in which the purchased business operates.
Oklahoma courts will enforce non-solicitation agreements covering an employer’s employees, independent contractors and “established customers”. Such agreements may be entered into with both employees and principals. To comply with Oklahoma common law, such agreements should be limited to two years in duration.
Oklahoma courts are quick to strike down overly broad non-competes and non-solicits. Oklahoma courts will only modify an overly broad covenant to the extent that such modification does not materially change the agreement, such as limiting the geographic scope or shortening the duration.
Confidentiality provisions to protect trade secrets and data are enforceable in Oklahoma. They are especially important in data-driven industries like oil and gas and trade secret-driven industries such as the tech industry. Oklahoma has adopted the Uniform Trade Secrets Act while the common law recognizes other claims that can be invoked to protect trade secrets. That said, Oklahoma courts, both state and federal, are cautious when asked to grant preliminary injunctive relief. Computer forensic science or other substantial evidence is usually a prerequisite to injunctive relief.
Oklahoma has its own workplace discrimination law, the Oklahoma Anti-Discrimination Act (OADA), but the OADA does not extend any protections beyond the reach of federal law and the available remedies are more limited than under federal law. Oklahoma common law also recognizes tort actions for unlawful termination in violation of Oklahoma public policy (the so-called Burk tort), but this tort has been essentially limited by statute to whistle-blower actions.
The Oklahoma jury pool is socially conservative, but also populist and employee-friendly. For example, in 2017 a jury empanelled in the United States District Court for the Western District of Oklahoma found in favour of a transgender university professor in a gender discrimination action and awarded more than US$1 million in damages. Employers, especially those in traditionally male industries such as construction and oil and gas, should be vigilant in adopting and enforcing anti-discrimination training and policies to head off actionable discrimination, harassment and retaliation.
Workplace safety is generally governed by federal law. The US Department of Labor maintains an OSHA area office in Oklahoma City. Oklahoma has its own workers’ compensation statute, the Oklahoma Administrative Workers’ Compensation Act. Other than in certain limited circumstances, private employers are required to maintain workers’ compensation insurance, which covers employees but not independent contractors.
The Oklahoma Standards for Workplace Drug and Alcohol Testing Act is an employer-advantageous law that allows for employers to enact effective policies promoting and protecting a drug-free workplace. That said, in 2018 the Oklahoma voters approved State Question 788, a medical marijuana law that provides for an Oklahoma adult resident to become a license-holder to possess and use marijuana for medical purposes. However, that law does not allow for the possession or use of medical marijuana during work hours or at an employer’s property, nor may a license-holder be impaired in the workplace or during work hours. Employers are allowed to prohibit such use under their drug–free workplace policies.
In 2019, the Oklahoma Legislature passed supplemental laws regarding medical marijuana, which is commonly referred to as the Unity Bill. The Unity Bill contains many provisions affecting the medical marijuana industry. Importantly for employers, the Unity Bill allows employers to refuse to hire an applicant who uses medical marijuana and to discipline or discharge a current employee who uses medical marijuana if such an applicant or current employee works or has applied to work in a safety-sensitive job. Safety-sensitive jobs are those that the employer “reasonably believes could affect the safety and health of the employee ... or others”. The Unity Bill contains a non-exhaustive list of job duties falling within the definition of “safety sensitive job”, including the following: the handling, packaging, processing, storage, disposal or transport of hazardous materials; the operation of a motor vehicle or other vehicle, equipment, machinery or power tools; repairing, maintaining or monitoring the performance or operation of any equipment, machinery or manufacturing process, the malfunction or disruption of which could result in injury or property damage; performing firefighting duties; the operation, maintenance or oversight of critical services and infrastructure including but not limited to electric, gas and water utilities; power generation or distribution; the extraction, compression, processing, manufacturing, handling, packaging, storage, disposal, treatment or transport of potentially volatile, flammable, combustible materials, elements, chemicals or any other highly regulated component; dispensing pharmaceuticals; carrying a firearm; or direct patient care or direct child care. Further, under the Unity Bill the use, possession and being under the influence while at work may be prohibited.
Finally, the Unity Bill clarifies that any cause of action brought by an aggrieved applicant or employee must be brought through the Oklahoma Standards for Workplace Drug and Alcohol Testing Act, which requires the willful violation of the statute.
Oklahoma generally follows federal law with respect to compensation and benefits. Employers in Oklahoma must follow the FLSA’s minimum wage and overtime requirements for non-exempt employees. Private employers in Oklahoma must pay all wages due to their employees at least twice each calendar month on regular pay days designated in advance.
Oklahoma has not adopted a state family and medical leave law. However, the leave provisions of the federal Family and Medical Leave Act have been codified to apply to government workers in Oklahoma. Under Oklahoma law, employees with disabilities related to pregnancy, childbirth, miscarriage, abortion or related medical conditions must be treated the same as employees with other types of disabilities for all job-related purposes. Oklahoma law also prohibits discrimination based on sex.
Oklahoma law does not require that private employers provide their employees with paid or unpaid holiday, vacation or sick leave.
Similar to most jurisdictions, Oklahoma recognizes the employment at will doctrine. As an exception to the at will doctrine, Oklahoma recognizes the Burk tort – borne from the Oklahoma Supreme Court’s decision in Burk v. K-Mart Corp. A “Burk” claim, which is narrowly construed and now appears to be limited to whistle-blower contexts, provides an employee with legal recourse if the employee can prove that his or her termination was in contravention of clearly mandated public policy. Further, as set out in more detail below, certain state and federal laws prohibit termination for certain discriminatory reasons. Additionally, Oklahoma permits the use of employment contracts that alter at will employment agreements, eg term employment agreements.
If an employer has a policy providing for the payment of vacation pay, sick pay, severance pay or other similar compensation at termination, or a pattern or practice of paying out such compensation upon termination, the employer must pay the terminated employee such accrued compensation. An employer may adopt a policy requiring than an employee be currently employed on the date of payment to receive an accrued or awarded bonus, but such a policy limiting the terms of payment must be reduced to writing and signed by the employee. An employer may not make deductions from an employee’s final paycheck except as required by law or court order, as agreed by the employer and employee in a written and executed agreement or to offset a prior overpayment of wages. However, there is no Oklahoma statute that requires the payment of severance.
With respect to lay-offs, Oklahoma does not have a “mini-WARN” statute. Therefore, if applicable, an employer’s notice obligations to those employees who are subject to a layoff will be governed by the federal WARN Act. While Oklahoma does not have any laws governing disclosure in the context of severance agreements, employers must comply with the federal Older Workers Benefit Protection Act, which mandates certain disclosures to workers age 40 and older.
Oklahoma law recognizes the right to enter into an employment contract. In analysing permitted claims and applicable recovery, the courts will review the employment contract. However, the existence of an employment contract will not prohibit a plaintiff from bringing other statutory state law claims.
Disputes regarding express employment contracts will be construed in accordance with normal contract principles. In addition, although rare, Oklahoma has recognized an implied contractual right to employment based representations made in an employee manual or handbook. Accordingly, placing disclaimers as to the existence of a contract in manuals or employee handbooks is recommended for all employers.
The OADA prohibits discrimination, retaliation and harassment in employment on the basis of race, color, national origin, religion, sex, physical or mental disability, age and genetic information. The OADA governs all employers with one or more employees. Although Oklahoma does not recognize discrimination on the basis of sexual orientation, employers should be mindful that statements within their employee handbook may expand the categories in which they claim not to discriminate beyond those legally protected, thus permitting an extra-legal wrongful termination or discrimination claim.
Discrimination or retaliation based on an employee’s or potential employee’s application for acceptance of workers’ compensation benefits under the Oklahoma Administrative Workers’ Compensation Act or an employee’s or potential employee’s application for or acceptance of unemployment benefits under the Oklahoma Employment Security Act also is prohibited.
Oklahoma employees may seek recovery of unpaid wages and liquidated damages against an employer with one or more employees for or on behalf of that employee and other similarly situated employees. The elements for a wage claim under Oklahoma law are delineated in Title 40 of the Oklahoma Statutes. In addition, Oklahoma courts may award costs and reasonable attorneys’ fees.
While there is an Oklahoma statute regarding whistle-blower protections for public employees, there is no similar statute regarding private employees. In certain situations, usually regarding whistle-blowing about concerns of public health or safety, a private employee may bring a claim for whistle-blower retaliation under the holding in Burk v. K-Mart Corp.
Similar to most jurisdictions, Oklahoma employers have the option of resolving disputes through alternative means – including mediation (whether private or through the EEOC) and/or arbitration. The Oklahoma Attorney General also has an Office of Civil Rights Enforcement which has a work-sharing agreement with the EEOC that offers a free mediation service.
Oklahoma’s class-action statute largely mirrors the Federal Rule of Civil Procedure 23, but class actions are specifically limited to the State of Oklahoma. Oklahoma does not have a state law that addresses collective actions similar to the provisions under the FLSA, nor does Oklahoma have a statute addressing class-action or collective-action waivers.
Damages under the OADA are limited to back pay and an additional amount as liquidated damages. Earnings and amounts that could have been earned with reasonable diligence during the pendency of an OADA action may be deducted from the damages. Punitive damages and emotional distress damages are not recoverable. Reinstatement may also be ordered. Additionally, under the OADA the prevailing party, plaintiff or defendant may recover attorneys’ fees.
Oklahoma follows common choice-of-law models. Oklahoma will generally enforce a choice-of-law provision in a contract to the extent that the contract does not violate Oklahoma public policy. This issue arises most often in non-compete cases.