A Publication of the Association of Business Texas Volume 25 | Issue 9 | September 2010 | www.TXBIZ.org Business Report

TAB Takes Aim At Improving Higher Education Workforce Q& Association To Tackle Post-Secondary Ed Challenges A One of the most complex challenges to the future My company is a defense contractor and I was recently prosperity of Texas is our state’s ability to educate and told that we cannot continue to train our students to successfully enter the workforce. to use mandatory arbitration Texas companies need highly educated workers who can agreements with our keep pace with the innovation and evolution of industrial employees. Is this true? technology. Texas needs a first-class higher education (see page 2) system in order to remain globally competitive in the 21st Century. The Texas Association of Business (TAB) is unrivaled in its advocacy for a quality higher education system in Texas; one that produces students who meet the needs online team of the business community. TAB believes that Texas must do more, and must.

In order to advance an aggressive legislative agenda to improve education Have you joined the over outcomes in Texas, TAB is planning a one-day conference to focus on the 3,000 people who are part of solutions necessary to create a higher education system which will ensure that our official Texas Association Texas has a globally competitive workforce. of Business online team? SAVE THE DATE! The conference will take place in Austin, on November 30th. Join us today at twitter.com/ 2010 Conference Raising the education bar will require that state txbiz and facebook.com/ “Reforming Higher leaders, employers, and educators work together txbiz for the latest on the Education: A Prerequisite toward some common goals. Texas, which has issues important to the Texas for Prosperity” been so successful in almost every arena of business community! November 30, 2010 economic growth, lags in successfully producing 8:00 a.m. - 4:00 p.m. a well-educated workforce prepared for the rigors of the modern job market. TAB aims to find For more information, go out just how we can bring together stakeholders M i s s i o n to the ‘Events’ section at under one umbrella to continue moving towards TAB www.txbiz.org the goal line by implementing some or all of the To make the Texas following important solutions: business climate the ★★ Revise College Funding Formulas to Reward Completions. At a minimum, 10 percent of the state funding to higher education should be based both on best in the world. completion rates and the percentage increase from year to year. Paying for continued on page 5 Workforce Texas Q&A Business Report My company is a defense contractor and I was recently told that we cannot continue to use Volume 25 | Issue 9 mandatory arbitration agreements with our September 2010 employees. Is this true? TAB Statewide officers Yes, depending on the size of your Department of Gray Mayes, State Chairman Defense contract relationship. On December 19, Larry Simmons, Chair Elect 2009, President Obama signed into law the Fiscal Brett Graham, Treasurer Year 2010 Department of Defense Appropriations Rudy Oeftering, Secretary Act (the “Act”). Embedded in this $636 billion Bill Hammond, President spending measure is a provision that prohibits federal Scott McDonald, contractors receiving Defense Department funds for TAB Team Contacts Littler contracts in excess of $1,000,000 from requiring their Art Roberts, Senior Vice President employees to arbitrate certain listed claims, including claims under Title VII of Chamber Relations the Civil Rights Act of 1964. Contractors are also required to certify that their [email protected] subcontractors follow these restrictions. Sandra McGee, Senior Vice President Employment Services & Finance The restrictions apply to contracts awarded after February 17, 2010, and prohibit [email protected] covered contractors and subcontractors from requiring employees to arbitrate Dan Cahalen, Senior Vice President Membership Development a number of specific claims. The covered claims include any claim arising [email protected] under Title VII, or any tort claim “related to or arising out of sexual assault or Cathy DeWitt, Vice President harassment, including assault and battery, intentional infliction of emotional Workers’ Compensation, Tort Reform and distress, false imprisonment, or negligent hiring, supervision, or retention.” Employment Relations [email protected] Contractors may still require employees to arbitrate certain other claims that fall Stephen Minick, Vice President outside of the Act’s prohibition. For employees with existing agreements, the Environmental Quality and Energy Act prohibits covered defense contractors and subcontractors from enforcing the [email protected] provisions of existing arbitration agreements as to any of the above listed claims. Kandice Sanaie, Governmental Affairs Manager Insurance & Health Care Finally, some exceptions to these new restrictions do exist. The arbitration- [email protected] prohibition provisions do not apply to agreements that cannot be enforced in TAB Regional Offices this country. Also, the Secretary of Defense may waive these restrictions on a case-by-case basis if the Secretary or the Deputy Secretary personally determines Central Texas Area Ron McGill that the waiver is necessary to avoid harm to the national security interests of the [email protected] ~ (254) 913-0752 , and that the term of the contract or subcontract is no longer than Southeast Texas Area Miles Resnick necessary to avoid such harm. [email protected] ~ (409) 363-1481 Rus Penson The Author acknowledges the contribution of Ilyse W. Schuman, in Littler’s [email protected] ~ (816) 286-9122 Washington, D.C. office and Henry D. Lederman in Littler’s Walnut Creek office to Northwest Texas Area this article. Marshall Jeffus [email protected] ~ (940) 642-5428 North Texas Area Mark Sadowski [email protected] ~ (214) 906-3361 Employment Relations questions? Texas Business Report (ISSN0892-6816) is published on the 15th of every month by Texas Association of Don’t forget to call TAB’s Employment Relations Hotline Business, located at: 1209 Nueces Street, Austin, TX for your next HR Question. 78701. Subscriptions are available at a rate of $2.00, which is deducted from TAB members’ annual dues. 1.800.856.6721, ext. 164 or E-mail [email protected]. Articles may be reprinted with permission. Legislative advertising paid by TAB. Periodicals Postage Paid at Austin, Texas. POSTMASTER – Send address changes to: Texas Business Report, 1209 Nueces Street, Austin, TX 78701

2 Who’s On The Ballot? Pro-Business Picks

BACPAC, the political arm of the Texas Association of Business, has announced its endorsements for the 2010 general election. Congratulations to the following candidates who have received BACPAC’s endorsement:

Governor: U.S. House (continued) Texas House (continued) Texas House (continued) 25 Donna Campbell 25 82 Lt. Governor: 26 Michael Burgess 26 Charlie Howard 83 Charles Perry David Dewhurst 28 Henry Cuellar 28 John Zerwas 84 John Frullo Attorney General: 31 John Carter 29 Randy Weber 85 Jim Landtroop 32 Pete Sessions 30 Geanie Morrison 86 John Smithee 32 Todd Hunter 87 Walter “Four” Price Comptroller: Texas Senate 33 Solomon Ortiz, Jr. 88 Warren Chisum Susan Combs District Candidate 34 Connie Scott 89 Jodie Laubenberg Land Commissioner: 1 Kevin Eltife 35 Jose Aliseda 91 Kelly Hancock Jerry Patterson 2 Bob Deuell 38 Eddie Lucio, III 92 Todd Smith Agriculture Commissioner: 3 Robert Nichols 43 JM Lozano 93 Barbara Nash Todd Staples 5 Steve Ogden 44 Edmund Kuempel 94 Diane Patrick 7 45 Railroad Commissioner: 97 Mark Shelton 8 Florence Shapiro 47 Paul Workman David Porter 98 Vicki Truitt 12 Jane Nelson 50 Mark Strama 99 Supreme Court, Place 3 17 Joan Huffman 51 Marilyn Jackson 100 Eric Johnson Debra Lerhmann 18 Glenn Hegar 52 Larry Gonzales 101 Supreme Court, Place 5 22 Brian Birdwell 53 102 Stefani Carter Paul Green 25 Jeff Wentworth 54 Jimmie Don Aycock 105 Linda Harper-Brown 29 Jose Rodriguez 55 Ralph Sheffield Supreme Court, Place 9 106 Rodney Anderson 56 Charles “Doc” Eva Guzman Texas House 107 Kenneth Sheets Anderson 108 Dan Branch District Candidate 57 Marva Beck U.S. House 112 Angie Chen Button 2 58 Rob Orr 113 Joe Driver District Candidate 3 Erwin Cain 59 Sid Miller 114 Will Hartnett 1 Louie Gohmert 4 60 115 Jim Jackson 2 Ted Poe 5 Bryan Hughes 61 Phil King 117 John Garza 3 Sam Johnson 6 62 Larry Phillips 121 4 Ralph Hall 7 David Simpson 63 122 5 Jeb Hensarling 8 64 Myra Crownover 126 Patricia Harless 6 Joe Barton 9 65 127 Dan Huberty 7 John Culberson 10 66 Van Taylor 128 Wayne Smith 8 Kevin Brady 11 Chuck Hopson 67 Jerry Madden 129 John Davis 10 Michael McCaul 12 James White 68 Rick Hardcastle 130 Allen Fletcher 11 Michael Conaway 13 69 Lanham Lyne 132 Bill Callegari 12 Kay Granger 14 Fred Brown 70 133 Jim Murphy 13 Mac Thornberry 15 Rob Eissler 71 Susan King 134 Sarah Davis 14 Ron Paul 16 Brandon Creighton 72 Drew Darby 17 Bill Flores 17 Tim Kleinschmidt 73 Doug Miller 135 Gary Elkins 19 Randy Neugebauer 18 John Otto 76 Naomi Gonzalez 136 Beverly Wooley 21 19 Mike Hamilton 77 Marisa Marquez 138 Dwayne Bohac 22 Pete Olson 20 Charles Schwertner 78 Donald “Dee” 141 Senfronia Thompson 23 Francisco “Quico” 21 Alan Ritter Margo 144 Ken Legler Canseco 22 Joe Deshotel 80 Tracy King 149 Jack O’Connor 24 Kenny Marchant 24 Larry Taylor 81 Tryon Lewis 150 Debbie Riddle

3 Member Profile Red Fly Studio the staff code programs; 35% of the staff design the look and feel of the game, and 40% of the staff work on the Texas Company Is Global Player art and graphics portion. In Video Game Industry The company is always looking at opportunities to grow and maintain its level of quality as a leader in It is all around us: kids and adults enjoying innovative their field. Borth sees the biggest challenge, like most video games. And you can look no further than Texas to others do in the business world do, as having a qualified see where the next big thing will come from. work force ready and available. He is excited to see the Among the elite in the video game industry is Austin- training programs now available at various institutions based, Red Fly Studio. Red Fly Studio is the inspiration like Southern Methodist University’s-The Guildhall, the of two artists, Dan Borth and Kris Art Institute, and community colleges across Texas for individuals looking to Taylor, both whom have spent their Only by ensuring that careers mastering their craft. The two “ enter the video game industry. “TAB is entrepeneurs logged over ten years of our students receive a an important and critical force for not experience working with industry titans first-class education can only fostering one of the best business climates in the world, but also for such as Nintendo, Sony and Microsoft. the success of our future understanding the link between higher You may not know this, but Texas workforce be guaranteed. education and our industry,” said Borth. rd is among the 3 largest production TAB certainly shares that environment for the video game industry. “In order for the video game sector to In addition, the video game industry mission,...” thrive, we need a steady supply of bright, is now larger than all of the other motivated workers,” Borth continued. entertainment industries combined. When - Dan Borth “Only by ensuring that our students you take into account the above statistic President/CEO receive a first-class education can the includes movies and music, the facts seems Red Fly Studio success of our future workforce be even more staggering. guaranteed. TAB certainly shares that mission, and we are proud that they Today, 68% of American households play support our vision for the future of entertainment and computer or video games, and those games accounted for industry.” sales of over $11 billion in 2008. With that in mind, we are proud that Texas is home to an estimated 100 video “TAB is fortunate to have Red Fly Studio as a member game studios. because its company is at the forefront of the state’s explosion its industry,” said TAB President Bill In 2005, Borth and Taylor took a gamble and pooled Hammond. “The expansion of global gaming means that their resources in order to dive into creating their own this sector will continue to thrive thereby creating more business full force. Red Fly is now recognized as one jobs. We are proud that so many innovative companies, of the top Nintendo Wii video game developers in the like Red Fly Studio, choose to call Texas home.” world. Borth and Taylor’s first foray in their new studio was a video game named Mushroom Men, which they developed with a very small number of staff. As a testament to the success of the studio, the studio just recently completed work on “Star Wars: The Force Unleashed 2”, the officially licensed video game of the globally-popular Star Wars movie franchise. Today, the studio employs over 75 of the best and brightest in the industry. In the industry there are basically three types of employees; approximately 25% of

4 Keeping All Americans Working TAB Summit continued from page one Did you know that approximately In addition, Disability.gov includes 54 million Americans are living an ‘Information by State’ drop-down performance should have with a disability? menu, located on the left hand side of a positive impact on the any page on the site, so that visitors In today’s economy, it is more graduation rate. can locate resources specific to their important than ever for employers state. For example, in the ‘Texas ★★ Create a College-Going to draw upon the skills of this Employment’ section, employers can Culture. Texas must work innovative, yet often underutilized, access links to resources like Texas to substantially increase the talent pool as a potential source of Workforce Centers and the North proportion of high school employees. Likewise, it is essential for Texas Small Business Development students who, upon graduation, employers to consider the growing Center Network. are prepared for college or number of consumers with disabilities ready to enter the workforce. as a potential market. Implementing Another section of the site that may In addition, Texas must work inclusive workplace practices and be of interest to employers is the offering disability-friendly services ‘Disability Etiquette and Accessibility harder to get adults who quit or benefits everyone and can help your Guidelines and Standards’ sub- choose not to enroll in post- business succeed. folders in the ‘Community Life’ secondary education courses, section. Disability Etiquette includes back into the classroom, and Disability.gov (www.disability.gov) is resources on person-first language completing their degrees or a valuable tool that can help you find and communicating with and certificate programs. answers to questions about disability- about people with disabilities in related programs, services, laws and ★★ Reforming Remedial the workplace; and Accessibility Education. Remedial classes benefits. Guidelines and Standards for should be self-paced. Many Businesses and Service Providers Through the site, Americans with students get frustrated in offers information on best practices disabilities, their families, Veterans, remedial classes as they start at for working with customers who have employers and others are connected a much lower level than their disabilities. to thousands of resources; anything actual abilities. from government agencies, Disability.gov, formerly known as ★ educational institutions, to non-profit DisabilityInfo.gov, is managed by the ★ Priority-Based Selection organizations. New content is added U.S. Department of Labor’s Office Process for Financial daily across 10 main subject areas – of Disability Employment Policy, Assistance. Currently, the benefits, civil rights, community life, in collaboration with 21 federal TEXAS Grant Program awards education, emergency preparedness, partner agencies. In July 2009 the grants on a first come, first serve employment, health, housing, site underwent a complete redesign, basis because it is not able to technology and transportation. adding social media platforms – assist every student who applies. The process should allow for Employers are connected to hundreds Twitter, Facebook and LinkedIn – to students who have proven to be of national, state and local resources encourage interaction and feedback. college ready to have priority in on topics such as tax incentives, tips Recently added personalization the selection process. for recruiting and interviewing a tools take this effort one step person with a disability, workplace further, enabling visitors to vote ★★ Benchmarking Student accommodations and how the and comment on resources, view Progress. Benchmarks for Americans with Disabilities Act additional resources that are students should be based on (ADA) affects their business. The recommended based on their actual graduation rates and site also offers comprehensive actions on the site and participate should be used to track the information on self-employment in group forums where they can ask percentage increase of graduates and entrepreneurship, particularly questions and post comments. The from year to year. concerning starting a business, new enhancements continue a nearly writing a business plan, finding year-long effort to use innovative For more information funding sources and growing a small social media and information-sharing regarding the Summit, please business -– all located within the technologies to connect and to engage visit the events section at ‘Employment’ section of Disability.gov. visitors. http://txbiz.org. 5 1209 Nueces Street Texas Business Report Austin, Texas 78701 SEPTEMBER 2010 (512) 477-6721 phone (512) 477-0836 fax www.TXBIZ.org

Talk AboutBusiness No New Taxes - No Way, No How Bill Hammond, TAB President

The recession that we are currently When times are lean, we cannot af- The solutions TAB supports are facing has touched nearly every ford to put an increased burden on austere, lean approaches to the budget. corner of the globe. The anxiety and Texas families through increased taxes. Our State Legislators, Speaker, Lt. uncertainty has caused families to We only need to look to California to Gov. and Governor must remain tighten their belts, pay down debt and see firsthand the damage that raising committed to not raising taxes during do what they can to work through this taxes and expanding the size of govern- this fragile stage of our economic and difficult period. For the State of Texas, ment can have on citizens. The beast fiscal recovery. From the beginning less revenue coming in via sales taxes of bureaucracy in California has led to of this year, Texas has already added and other fees equate to a difficult $800,000+ salaries for city managers over 180,000 jobs. A large measure outlook for the future. When the Texas of small cities. That type of waste won’t of that success is due to our state’s Legislature convenes in January for cut it in Texas. proactive business climate that places the legislative session, it will face an Let us be clear: $18 billion is a lot an emphasis on low taxes. By keeping estimated $18 billion dollar shortfall of money, but challenges like these our tax burden low, we can attract for the upcoming biennium. require Texas-sized solutions. The first successful companies to get Texans In 2003, the State faced, and step is cutting costs. Texas is fortunate back to work, get families back on successfully addressed, a similar to have a $9 billion emergency fund their feet, and have our State remain challenge--balancing a $10 billion that can be utilized with supermajority the beacon of the nation’s economic dollar shortfall without cutting essential consensus of both the House and the recovery. services. To date, Gov. Rick Perry, Lt. Senate. TAB does not advocate for Gov. David Dewhurst and Speaker draining the fund, but tapping into In the August 2010 edition of Joe Straus have called for five percent this fund for a one-time injection to Campaigns & Elections, Texas across-the-board cuts for state agencies help bridge this shortfall caused by the Association of Business President budgets this year. The three leaders economic downturn is an appropriate Bill Hammond was listed as one have asked for another ten percent use for a portion of the resources. Also of the Top 10 most influential reduction during the next budget there is an estimated $2-3 billion in figures in Texas politics and biennium. The Texas Association of the Available School Fund that the government. The list, compiled Business applauds this decision to cut Legislature can use to meet its budget by PolitiFact’s Gardner Selby, spending instead of raising taxes. obligations. The Legislature can also draws from “private suggestions push its financial obligations into the from members of the state’s We have seen how the decisions next biennium by shifting payments power-political intelligencia.” made during the 2003 Session have by one day. This “smoke and mirrors” TAB is proud of this accolade, helped spur our State’s standing in the approach is by no means the best and it would truly not be possible American economy for instance, just option, but given the uphill climb without the support and efforts of recently, Texas was designated as the that our state faces to account for this all the Association’s members. Best Place to Do Business by CNBC. shortfall, it could be vital and necessary.