A Publication of the Association of Business Texas Volume 25 | Issue 2 | February 2010 | www.TXBIZ.org Business Report

A Look At The 2010 TAB Annual Conference Workforce Q&A Leaders tackle education at successful event What is the “Franken The Texas Association of Business 2010 Annual Amendment” and how Conference was a resounding success. Nearly four does this new law impact employers? hundred people attended the event, which highlighted how the business community and lawmakers can prepare (see page 2) and equip Texas graduates to excel in the job market. The Association was proud to welcome Lt. Governor David Dewhurst, Comptroller Susan Combs and the esteemed legislators and policy experts who brought attention to the myriad challenges we face in producing a world-class New Media education system. The conference kicked off with a keynote address from Lt. Governor Dewhurst, who highlighted the Tier One initiatives passed during the 2009 Legislative Join the 1,000-plus Session. The state will match funds raised by schools on the path to becoming a people who follow TAB world-class research universities. Texas currently only has two public universities on top social media sites. with a “Tier One” designation, while California and New York both have at least six. To remain competitive with our neighbors across America and the globe, the Find us on Twitter at Legislature passed and the Governor signed legislation that will guide many of our twitter.com/txbiz great public universities to reach the next and become a fan of level in academic accomplishment. us on Facebook by searching for the “Texas Senator closed out the first Association of Business” day of the conference with entertaining remarks that tied his current success in business, broadcasting and the Legislature to finding what he enjoyed doing as a young man. Much like in his experience, he pointed out that having the outlets for students who are M i s s i o n interested in mechanics or repair can TAB lead them to high-paying jobs. Patrick To make the Texas cited an employer in his district that was business climate the Governor chats with TAB Chair Gray looking for a diesel mechanic paying Mayes (L) and Board Member Brint Ryan at the $85,000. Patrick’s anecdote reflects best in the world. 2010 Annual Conference perfectly the problem TAB’s conference

continued on page 3 Workforce Texas Q&A Business What is the “Franken Amendment” and how does Report this new law impact employers? Volume 25 | Issue 2 The Franken Amendment is a provision included in February 2010 the Department of Defense Appropriations Act for TAB Statewide officers 2010. Specifically, that federal statutory provision, Gray Mayes, State Chairman which was sponsored by Senator Al Franken of Min- Larry Simmons, Chair Elect nesota, requires any defense contractor that receives a Brett Graham, Treasurer contract awarded under the Defense Appropriations Rudy Oeftering, Secretary Bill Hammond, President Act on or after February 17, 2010, to refrain from entering into any agreement with any of its employees TAB Team Contacts Bob Nichols or independent contractors that requires, as a condi- Art Roberts, Senior Vice President Bracewell & Giuliani LLP tion of employment, that the employee or independent Chamber Relations contractor agree to resolve through arbitration any [email protected] claim under (i) Title VII of the Civil Rights Act of 1964 or (ii) any tort related Sandra McGee, Senior Vice President to or arising out of sexual assault or harassment, including assault and battery, Employment Services & Finance [email protected] intentional infliction of emotional distress, false imprisonment or negligent hir- ing, supervision or retention. Further, the provision prohibits an employer with Dan Cahalen, Senior Vice President Membership Development a covered contract from taking any action to enforce any provision of an existing [email protected] agreement with an employee or independent contractor that mandates the em- Cathy DeWitt, Vice President ployee or independent contractor to resolve any of the identified types of claims Workers’ Compensation, Tort Reform and through arbitration. Employment Relations [email protected] Although many employers might assume the Franken Amendment is not a Stephen Minick, Vice President concern for them because they do not have a contract of over $1 million with Environmental Quality and Energy the Department of Defense, this new law also provides that, beginning 180 days [email protected] after December 19, 2009, defense contractors will be required to certify that their Kandice Sanaie, Governmental Affairs Manager subcontractors with subcontracts of over $1 million on a defense project will also Insurance & Health Care comply with these restrictions on arbitration agreements with employees and [email protected] independent contractors. Enrique Marquez, Communications Director [email protected] Notably, while originally this legislation was characterized as just prohibiting em- ployers from requiring employees making sexual assault allegations from arbitrat- TAB Regional Offices ing claims, the law appears to have much broader scope than that and extends to Central Texas Area Ron McGill any (i) discrimination claim under Title VII and (ii) tort claims related not only [email protected] ~ (254) 913-0752 to alleged sexual assault, but also to sexual harassment. Southeast Texas Area Miles Resnick All employers should be concerned by the Franken Amendment because it [email protected] ~ (409) 363-1481 demonstrates the widespread support in Congress for restrictions on workplace Northwest Texas Area arbitration. There are bills currently pending in Congress that would broadly Marshall Jeffus prohibit mandatory arbitration in the employment setting. [email protected] ~ (940) 642-5428 Area For the time being, those employers with significant defense-related contracts or Mark Sadowski subcontracts should evaluate whether they are covered by the Franken Amend- [email protected] ~ (214) 906-3361 ment restrictions and, if so, modify any arbitration programs that may have to Texas Business Report (ISSN0892-6816) is published comply with these restrictions. on the 15th of every month by Texas Association of Business, located at: 1209 Nueces Street, Austin, TX Employment Relations questions? 78701. Subscriptions are available at a rate of $2.00, which is deducted from TAB members’ annual dues. Don’t forget to call TAB’s Employment Relations Hotline Articles may be reprinted with permission. Legislative for your next HR Question advertising paid by TAB. Periodicals Postage Paid at Austin, Texas. 1.800.856.6721, ext. 164 or E-mail [email protected] POSTMASTER – Send address changes to: Texas Business Report, 1209 Nueces Street, Austin, TX 78701 2 Annual Conference Spotlights Education Special Thanks to continued from page one 2010 TAB Annual Conference Sponsors hoped to tackle: If we do not have a TAB’s signature education issue, prepared workforce here in Texas, the accountability, was the focus of a jobs will move elsewhere. panel featuring Rep. Rob Eissler Opening Session and Senator Florence Shapiro – Commissioner of the Texas Higher Sponsor who chair the respective House Education Coordinating Board and Senate education committees, Walmart Raymund Paredes led one of the policy guru Sandy Kress and Chris most insightful panels featuring Cloudt of the Texas Education Representatives Dan Branch (R Agency. Shapiro and Eissler were Awards Ceremony – ) and Joaquin Castro (D the architects behind House Luncheon Sponsor – San Antonio) and Chair of the Bill 3, which will overhaul the Governor’s Business Council, Woody accountability system, was one TAB Ryan Hunt. The four tackled the subject of strongly supported and continues to higher education, with Hunt laying support. Cloudt reinforced that the out in a brief presentation the dire Conference Hosts bill took much of the wiggle-room consequences Texas faces if we do not Altria Client Services Inc away from TEA so that the vision continue to improve how we educate American Insurance Association outlined in the bill will be what is our children. As Texas shifts to soon Boeing Company implemented in the classrooms. becoming a majority-minority state, CenterPoint Energy, Inc educating and ensuring that the The final panel of the conference Chevron Hispanic student body graduates featured Gary Scharrer of the ExxonMobil Corporation with a high school degree that Chronicle, Terry Stutz of Hewlett Packard prepares them to enter the job the Dallas Morning-News and Ross Prudential Insurance Company market is the most important public Ramsey of the Texas Tribune. They TAB Dallas Chapter policy issue Texas faces. went into detail about the lack of Time Warner credibility that politicians have when USAA Rep. Castro provided insightful speaking honestly about education. Verizon Communications commentary on his experience The panel also gave their perspective representing an area that contains on the 2010 elections and who’s got Friends of TAB underprivileged students whose the power in Texas. parents do not know enough about Akin Gump Civic Action Committee American Electric Power the higher education process to In addition to the conference, BGI Contractors be able to help with financial aid, TAB’s political action committee Blue Cross and Blue Shield of Texas choosing a school or filling out announced its endorsement of Frost Bank the necessary paperwork – leaving Governor Rick Perry’s gubernatorial Germer Gertz, LLP the students to try to negotiate the re-election in 2010 just prior to his Greenberg Traurig, LLP difficult process on their own. speech honoring the Best Companies IBC Bank To Work For In Texas. Perry spoke Paredes detailed the ideas being con- Lockheed Martin Aeronautics Company at length about the power of Texas sidered at the Coordinating Board to Nucor Steel - Texas business and how the employer base tie education grants and scholarships Pfizer Inc is what keeps Texas thriving. to merit and need, rather than just a Superior Health Plan need-based system that is currently in “The event was a wonderful Texans for Lawsuit Reform place. During the last legislative ses- testament to the members of TAB,” Texas Cable Association sion, a bill was filed by Rep. Donna said President Bill Hammond. “This Texas Chamber of Commerce Executives Howard (D – Austin) to enact Pare- was one of the best conferences we Texas Hospital Association des’ idea. Though it languished and have had to date and I am thankful Texas Instruments was not passed by the House, Paredes to our panelists and sponsors Texas Mutual Insurance Company remains hopeful that the 2011 Ses- for making this event such an Work Loss Data Institute sion will yield different results. overwhelming success.” Zenith Insurance Company

3 PERSPECTIVEs movement as an auxiliary of the Republican It would be tempting to consider the tea party radically transformed. candidates, the 2010 election season has been new waves of volunteers to race-changing instrumental in shaking the status quo. Between Even here in Texas the tea parties have been polls reflected the intensity of their effort. for Massachusetts’ Scott Brown long before any were door-knocking and sign waving passionately Jersey, Virginia and elsewhere in November. They These were the people mobilizing turnout in New the energy of so many tea party activists. that legislation to see the light of day, thanks to supporting such a thing. Today, no one expects which involved raising the political cost of victory. Except these people had other plans, Obama’s health care reforms seemed a foregone With a super-majority in the Senate, President newfound political and policy interests. many continue to seek ways to invest their waved at rallies got too heavy. Some have, but assumed they would go away once the signs Dismissed by the left as “tea-baggers,” it was European-style collectivist health care proposal. bank bailouts, ill-conceived stimulus plans and a sense that America’s spirit was being shackled by were driven by many things, but mostly by a took to rallies in the spring and summer. They Tens of thousands, then hundreds of thousands, whose voices had gone silent. engagement. But it was a rant awakened many lyst would turn into a national dialogue on citizen from the Chicago trading floor by a CNBC ana Few would have suspected an unscripted rant months. American political landscape in just the last twelve is the impact “tea parties” have had on the errand. What’s more interesting, and instructive, especially of political movements, is a fool’s for Fiscal Responsibility: Michael Quinn Sullivan, President, Texans movement. Matt Glazer share their perspective on the Tea Party Quinn Sullivan and influential progressive blogger key political issues. Conservative watchdog Michael commentary from influential, disparate voices on TAB is proud to present Perspectives, featuring Effect ofthe Predicting the future, Tea Party M - Texas Republicans, however, missed the lesson. longer a reality in American politics. off voters from traditional Democrats are no electoral consequences of the Green Party peeling the struggle is exclusively among Democrats. The among Democrats on issues like health care – but middle. It is a struggle we see play out even today and minds of both the far left and conservative into a two-front campaign to win the hearts only solution for Democrats was to move slowly careful steps to include more diverse voices. The Republican rise, the Democratic Party took After the 2000 election and subsequent 2002 passions. “Third Way” centrism ignored their policies and very liberal Americans who felt ’s an anti-incumbent, anti-corporate feeling among social justice centered Green Party capitalized on take the torch from President Clinton. Yet, the In 1999, Al Gore seemed perfectly positioned to over a long period of time. brought into the big tent of the Democratic Party immediately, whereas the Green Party was been co-opted by corporate Republicans almost The biggest difference is that the Tea Party has Green Party was to Democrats in 1999-2000. Tea Party is to Republicans today what the Matt Glazer, Partner, GNI Strategies that the political game has been changed. about the remainder of the 2010 election season is back, not ahead. What can be safely predicted different. Its impact will be most visible looking isn’t measured in months; the tea party will be no Frankly, the success of a grassroots movement the tea parties. It is impossible to predict the long term impact of the “professional” political class. phytes have done wouldn’t have been allowed by of the parade. In reality, much of what these neo current and former have tried to leap to the front nated. Certainly no shortage of politicians future, for some, perhaps, to believe it was led or coordi activities really have been. It would be comforting What’s been shocking is just how spontaneous the people driven by principles, not parties. Party. But that misses the point; many of these are ovement continued on page 5 page on continued : The - - 4 2010 BACPAC Endorsements Perspectives continued from page four BACPAC recently announced its first District 65 Burt Solomons round of candidate endorsements for District 66 Mabrie Jackson If the Republican Party had read the 2010 election cycle. Endorsements District 67 Jerry Madden the tea leaves and adjusted ahead of are based on candidate interviews, District 68 Rick Hardcastle time, Debra Medina would not be questionnaires and the TAB legislative District 69 Lanham Lyne polling at 16%. If Rick Perry and voting record. Here are our picks for District 70 the Republican Party of Texas hadn’t some of the most important races: District 71 Susan King fought against Ron Paul throughout the 2008 elections, Medina may not Governor District 72 Drew Darby even be running for office. Rick Perry District 73 Doug Miller Lt. Governor District 78 Donald “Dee” Margo Instead, Medina is rising in the polls, David Dewhurst District 80 Tracy King Kay Bailey Hutchison is falling, and Railroad Commission District 81 Tryon Lewis Rick Perry cannot break the magical Victor Carrillo District 82 50% marker. Medina, meanwhile, Supreme Court, Place 9 District 83 Zach Brady has suggested that if she loses she Eva Guzman District 84 John Frullo would support an independent or Texas House District 85 Jim Landtroop Libertarian-style candidate in the District 2 Dan Flynn District 86 John Smithee general election instead of Perry or District 4 Betty Brown District 87 Victor Leal Hutchison. District 5 Bryan Hughes District 88 Warren Chisum While Perry is doing everything in District 6 Leo Berman District 89 Jodie Laubenberg his power to co-opt the Tea Party District 7 Tommy Merritt District 91 Kelly Hancock movement, you have to remember: District 10 Jim Pitts District 92 Todd Smith he only got 39% of the vote in District 11 Chuck Hopson District 93 Barbara Nash 2006. The Libertarian Party in Texas District 13 Lois Kolkhorst District 94 Diane Patrick can receive anywhere from 3-7% District 14 Fred Brown District 97 Mark Shelton in Texas elections, easily. If Medina District 15 Rob Eissler District 98 Vicki Truitt champions a Libertarian-style District 16 Brandon Creighton District 99 Charlie Geren Independent candidate throughout District 18 John Otto District 100 Eric Johnson 2010, that number could easily District 19 Mike Hamilton District 101 Greg Noschese double. District 102 Stefani Carter District 20 Milton Rister That leaves Rick Perry to fight a two- District 105 Linda Harper-Brown District 21 Alan Ritter front political battle as he’s running District 108 Dan Branch District 24 Larry Taylor for election – much as the Democrat District 25 Dennis Bonnen District 112 Angie Chen Button he once previously endorsed in District 26 Charlie Howard District 115 Jim Jackson 1988, Al Gore, tried and failed to do District 29 Randy Weber District 121 in 2000. Any attempts by Perry to District 30 Geanie Morrison District 122 Lyle Larson galvanize and co-opt the Tea Party District 32 Todd Hunter District 126 Patricia Harless movement only moves him further District 43 Tara Rios-Ybarra District 128 Wayne Smith to the right, leaving him vulnerable District 44 Edmund Kuempel District 129 John Davis to recruit the moderates and District 45 Patrick Rose District 130 Allen Fletcher independents in Texas he needs to District 52 Larry Gonzales District 135 Gary Elkins pull away from Bill White in order District 53 Harvey Hilderbran District 136 Beverly Wooley to win in November. District 54 Jimmie Don Aycock District 149 Bryan Le District 150 Debbie Riddle Ultimately, the District 55 Ralph Sheffield does not indicate a fundamental shift District 58 Rob Orr in political identity. Instead, Debra To view the full list of BACPAC’s District 59 Sid Miller Medina and the Texas Tea Party are District 60 Jim Keffer endorsements, please visit us online signs of a growing problem for the District 61 Phil King at http://www.txbiz.org for all the Republican Party – one they are District 62 Larry Phillips information you need. trying to co-opt before they suffer

District 63 Tan Parker Political advertising paid for by Business and Comerce Political Action Nader-like consequences in the 2010 District 64 Myra Crownover Committee (BACPAC). Governor’s race. 5 1209 Nueces Street Texas Business Report Austin, Texas 78701 FEBRUARY 2010 (512) 477-6721 phone (512) 477-0836 fax www.TXBIZ.org

Talk AboutBusiness Can’t Tax And Spend Your Way To Prosperity Bill Hammond, TAB President

As the preeminent voice for the We have been cited by countless A thriving business is not an extra state’s business community, the Texas publications as having the best comma in an executive’s salary. It is Association of Business often hears business climate and being regarded the resource that provides families from employers about the challenges as the best place in America to do with jobs, and often pays for health they face in growing their business business. Texas had more job growth insurance and retirement programs. and adding employees during this in 2008 than all other 49 states in Attracting and retaining companies particularly difficult time in our state’s America combined. that employ Texans is job one for the history. business community. That being said, a nod from Forbes Our state and nation are in the midst doesn’t put food on the table for Toward that end, the Texas of an historic, global recession, but Texas families. The fact remains that Association of Business is proud there are true glimmers of hope for men and women are struggling. to support two state constitutional our state. According to the Texas People are delaying paying certain amendments to limit spending growth Workforce Commission’s most bills from month to month to make to correspond with the growth rates recent data, Texas added over 50,000 ends meet. Families are tapping into of the state’s population and inflation, jobs in the last three months. Our college and retirement funds to pay and require a two-thirds vote of the 8.3% unemployment rate, while too their mortgage. They are unsure that Legislature to approve all tax increases. high, remains far below the national their representatives are taking care of By controlling these two economic average. their needs. And the constant refrain factors, we can avoid the disastrous Despite the tough times, employers from Washington seems to be “Give results we have seen in California, remain unwavering in their belief that us your money, and we’ll do a better whose 20 billion dollar budget Texas is best positioned to get out of job of taking care of your needs than shortfall has been caused by spiraling this Wall Street-created mess sooner you can.” growth in taxes and spending. than our neighbors across America. Here in Texas, we know that the best We currently have a multi-billion In just a few short years, Texas has thing government can do is to get the dollar budget surplus. And to face become an economic beacon for the hell out of its citizens’ pockets. the challenges to come, we must be nation in large measure because of To get down to brass tacks, we stand prepared to fend off foolishly trying fiscally conservative leadership in the taller than our peers because we keep to tax and spend our way into a better Legislature. taxes and spending low. The feedback economy the way that we have seen in The business community has thrived our Association has received from Washington D.C. and California. in Texas, as we continue to maintain employers is that Texas is attractive Taking these important steps will the highest number of Fortune 500 because they have to pay less to the ensure that Texas remains open for companies in our state than any other. state to make their businesses thrive. business.