A Publication of the Association of Business TEXAS Volume 29 | Issue 2 | February 2014 | www.TXBIZ.org BUSINESS REPORT

TAB’s Business & Commerce PAC (BAC PAC) WORKFORCEQ&A Board Makes Primary Endorsements My company has been assessed a large fine by USICE for For the first time, three major endorsements were I-9 Employment Verification violations. Recent OSHA, and made after BAC PAC Board Members heard from the Wage and Hour investigations Republican candidates for three major statewide offices as also have resulted in fines that have impacted our ability part of the TAB Annual Conference. to pay the ICE assessment. The BAC PAC board voted to endorse David Dewhurst in the Lieutenant Will the judge take this into Governor’s race, Dan Branch in the Attorney General’s race and Harvey consideration? Hilderbran in the Comptroller’s race. (see page 2) “This was not an easy decision to make,” said Bill Hammond, President and CEO of the Texas Association of Business. “We have worked closely with many of the candidates in these races. It isn’t all that often that we have so many friends of YOU’RE INVITED business seeking the same office like we do in these three races. I want to thank all of the candidates who came to speak at our annual conference, and I want them to Get ready to celebrate the best of know how hard it was to make these decisions.” the best and “Run For The Roses” April 1 at the Best Companies In January, the board made all of the other endorsements, including endorsing to Work for in Texas dinner. We U.S. Senator John Cornyn for re-election, and Attorney General for are out of the gates with a high Governor. energy celebration of this year’s winners. Whether you are a Best Here is the full list of endorsements: Company winner, a proud Texan, Governor Attorney General Greg Abbott or a business in the home stretch Lieutenant Governor Lieutenant Governor David Dewhurst to greatness, we invite you to Comptroller State Representative Harvey Hilderbran celebrate with us. Visit www.txbiz.org/events Attorney General State Representative Dan Branch for details. Land Commissioner George P. Bush U.S. Senate Senator John Cornyn

TAB MISSION To make the Texas business climate the best in the world. Lieutenant Gov. David Dewhurst State Rep. Harvey Hilderbran State Rep. Dan Branch

continued on page 3 WORKFORCE TEXAS Q&A BUSINESS REPORT My company has been assessed a large fine by United States Immigration and Customs Volume 29 | Issue 2 Enforcement (USICE) for I-9 Employment Verification February 2014 violations. Recent Occupational and Safety and Health Administration (OSHA), and Wage and Hour TAB STATEWIDE OFFICERS investigations also have resulted in fines that have State Chairman, Dale Young, Summit Consolidated Group impacted our ability to pay the Immigration and Chair Elect, Terri Ricketts, Customs Enforcement (ICE) assessment. Will the Progressive Waste Solutions (IESI) Treasurer, Sara Tays, judge take this into consideration? ExxonMobil Corporation Secretary, Gary Gibson, The Office of the Chief Administrative Hearing Officer Star Furniture Company (OCAHO) recently held that financial burdens imposed President, Bill Hammond, Harry J. Joe Texas Association of Business Jackson Lewis LLP upon the employer by other governmental entities is a factor that can be considered and used to lower the TAB TEAM CONTACTS Sandra McGee, Senior Vice President assessed civil monetary penalty for the employer’s failure to properly and timely Employment Services & Finance complete the I-9 Employment Verification Forms for its employees, even though [email protected] such burdens were temporary. United States of America v. Pharoah’s Gentleman’s Dan Cahalen, Senior Vice President Membership Development Club, Inc. OCAHO Case No. 12A00061, July 18, 2013 (USDOL EOIR). [email protected] Aaron Cox, Vice President Pharoah’s, an adult entertainment business, was charged with failing to verify Chamber Relations the employment authorization of 30 employees within 3 days of their hiring [email protected] and completing the I-9 form for each of them, and failing to ensure the proper Cathy DeWitt, Vice President Workers’ Compensation, Tort Reform and completion of the I-9 for ten other employees. Pharoah’s conceded these allegations. Employment Relations [email protected] Moreover, the Government alleged that 22 of the I-9s that were subsequently Stephen Minick, Vice President produced in response to a Notice of Inspection had been backdated and that this Environmental Quality and Energy backdating warranted a finding of bad faith. The Government sought an order for [email protected] Nelson Salinas, Governmental Affairs Manager civil fines totaling $38,335, an assessment of $935 for each of the 40 violations. Education [email protected] Pharoah’s contended that the amount sought by the government was excessive Robert Wood, Communications Director and that only the minimum amount be assessed in view of the extreme financial [email protected] pressures and setbacks that they had recently incurred. They include: a recent Jennifer Clarke, Events Director sales tax audit that resulted in additional liability of $120,000; another state [email protected] assessment in the amount of $63,00 for unpaid unemployment insurance arising TAB REGIONAL OFFICES from misclassification of the employee status of their dancers from independent Central Texas Area - Beau Berlin contractors to employee; and being the defendant in a $5,000,000.00 personal [email protected] ~ (512) 769-2915 Coastal Texas Area - Daryl Davis injury lawsuit that was not covered by any insurance. [email protected] ~ (816) 582-3311 North Texas Area - Mark Sadowski On the issue of whether the production of the backdated I-9s constituted bad [email protected] ~ (214) 906-3361 faith, Administrative Law Judge Ellen K. Thomas declined to find bad faith in Northwest Texas Area - Marshall Jeffus the absence of additional evidence of the instructions given to the employer at the [email protected] ~ (940) 642-5428 time it received the Notice of Inspection and absent any evidence of other culpable Southeast Texas Area - Miles Resnick conduct. [email protected] ~ (409) 363-1481 Southeast Texas Area - Russ Penson The Administrative Law Judge (ALJ) did agree with Pharoah’s contention that [email protected] ~ (816) 286-9122 West Texas Area - K C Emery the amount sought by the Government was excessive in light of the New York [email protected] ~ (806) 620-3611 back sales tax, unemployment insurance tax assessments, and the costs that it was incurring in defending the personal injury suit. The ALJ stated that these Texas Business Report (ISSN0892-6816) is published on the 15th of every month by Texas Association of liabilities were factors that could be considered in conjunction with determining the Business, located at: 1209 Nueces Street, Austin, TX employer’s ability to pay a penalty in such proceedings. 78701. Subscriptions are available at a rate of $2.00, which is deducted from TAB members’ annual dues. Employment Relations questions? Articles may be reprinted with permission. Legislative advertising paid by TAB. Don’t forget to call TAB’s Employment Relations Hotline for your next HR Question Periodicals Postage Paid at Austin, Texas. POSTMASTER – Send address changes to: 1.800.856.6721, ext. 164 or E-mail [email protected] Texas Business Report, 1209 Nueces Street, Austin, TX 78701

2 BACPAC Endorsements continued from page 1

U.S. House (by district): 5. Sen. Charles Schwertner – Georgetown 21. Dade Phelan – Beaumont 7. Paul Bettencourt – 22. Rep. Joe Deshotel – Beaumont 1. Cong. Louie Gohmert – Tyler 8. Rep. Van Taylor – Plano 24. Rep. Greg Bonnen – Houston 2. Cong. Ted Poe – Humble 9. Sen. Kelly Hancock – 25. Rep. Dennis Bonnen – Houston 3. Cong. Sam Johnson – Flower Mound North Richland Hills 26. Rep. Rick Miller – Sugar Land 4. Cong. Ralph Hall – Rockwall 10. Dr. Mark Shelton – Fort Worth 28. Rep. John Zerwas – Fulshear 5. Cong. Jeb Hensarling – 14. Sen. Kirk Watson – Austin 29. Rep. Ed Thompson – Pearland 6. Cong. Joe Barton – Ennis 15. Sen. John Whitmire – Houston 30. Rep. Geanie Morrison – Victoria 7. Cong. John Culberson – Houston 16. Sen. John Carona – Dallas 31. Rep. Ryan Guillen – Rio Grande City 8. Cong. Kevin Brady – The Woodlands 17. Sen. Joan Huffman – Houston 32. Rep. Todd Hunter – Corpus Christi 10. Cong. Michael McCaul – Austin 23. Sen. Royce West - Dallas 33. Rep Scott Turner – Frisco 11. Cong. Michael Conaway – Midland 25. Sen. Donna Campbell – 35. Rep. Oscar Longoria – Mission 12. Cong. Kay Granger – Fort Worth 30. Sen. Craig Estes – Wichita Falls 36. Rep. Sergio Munoz Jr. – Mission 13. Cong. Mac Thornberry – Amarillo 31. Sen. Kel Seliger – Amarillo 41. Rep. Bobby Guerra – Mission 14. Cong. Randy Weber – Pearland 42. Rep. Richard Raymond – Laredo 17. Cong. Bill Flores – Waco Texas State House (by district) : 43. Rep. J. M. Lozano – Kingsville 19. Cong. Randy Neugebauer – Lubbock 1. Rep. George Lavender – Texarkana 44. Rep. John Kuempel – Seguin 20. Cong. Joaquin Castro – San Antonio 2. Rep. Dan Flynn – Van 45. Rep. Jason Isaac – Dripping Springs 21. Cong. Lamar Smith – San Antonio 3. Rep. Cecil Bell – Magnolia 47. Rep. Paul Workman – Spicewood 22. Cong. Pete Olson – Sugar Land 4. Rep. Lance Gooden – Terrell 48. Rep Donna Howard – Austin 24. Cong. Kenny Marchant – Irving 5. Rep. Bryan Hughes – Mineola 50. Rep. Mike VanDeWalle – Austin 25. Cong. Roger Williams – Weatherford 6. Rep. Matt Schaefer – Tyler 52. Rep. Larry Gonzales – Round Rock 26. Cong. Michael Burgess – 7. Rep. David Simpson – Longview Flower Mound 53. Rob Henneke – Kerrville 8. Rep. Byron Cook – Corsicana 27. Cong. R. Blake Farenthold – 54. Rep. Jimmie Don Aycock – Killeen Corpus Christi 9. Rep. Chris Paddie – Marshall 55. Rep. Ralph Sheffield – Temple 28. Cong. Henry Cuellar – Laredo 11. Rep. Travis Clardy – Nacogdoches 56. Rep. Charles “Doc” Anderson – Waco 29. Cong. Gene Green – Houston 12. Rep. Kyle Kacal – Bryan 57. Rep. Trent Ashby – Lufkin 31 Cong. John Carter – Round Rock 13. Rep. Lois Kolkhorst – Brenham 59. Rep. J. D. Sheffield – Gatesville 32. Cong. Pete Sessions – Dallas 14. Rep John Raney – College Station 60. Rep. Jim Keffer – Eastland 36. Doug Centilli – Baytown 15. Bruce Tough – The Woodlands 61. Rep. Phil King – Weatherford 16. Duane Ham – Montgomery 62. Rep. Larry Phillips – Sherman Texas State Senate (by district): 17. Rep. Tim Kleinschmidt – Lexington 63. Rep. Tan Parker – Flower Mound 2. Sen. – Greenville 18. Rep. John Otto – Dayton 64. Rep. Myra Crownover – Lake Dallas 3. Sen. Robert Nichols – Jacksonville 19. Rep. James White – Hillister 65. Rep. Ron Simmons – Carrollton 4. Rep. Brandon Creighton – Conroe 20. Rep Marsha Farney – Georgetown 66. Glenn Callison – Plano continued on page 5

Attorney General Greg Abbott George P. Bush Senator John Cornyn

3 MEMBER PROFILE Process Control Outlet – they have the opportunity to influence how these organizations will make a difference in the community. Customer Service and Quality The Community Outreach Team at PCO organizes Care a variety of on-site events to make it fun and easy for their associates to give back to the community. The Process Control Outlet was founded in 1995. The team meets regularly to brainstorm new ways to get company started out of the trunk of a car, 2 employees, associates involved and to elect which eligible nonprofit and an initial investment of $50,000. Today, PCO has 31 organizations the activities will benefit. Employees employees in four states and has a repair depot in Tampa. participate in and raise money for The Their primary market has been the process Annual Light The Night walk benefiting control industry, and they specialize in the As the voice of Texas blood cancer research, The Hemophilia computer control segment of that market. “ Center’s Annual Walk for a Cure, PCO’s business, TAB can say They provide material and software First ever employee cookbook where support, repair and field service along things to people that I could 100% of the proceeds go to charity, with systems integration and training at never say, and reach people and Toys for Tots, are just a few of the their Baytown, Texas facility. They have I could never reach. My one activities held regularly. designed, engineered, and manufactured small voice doesn’t even several devices specific to the process TAB President Bill Hammond shares his register, while TAB’s unified industry. appreciation for PCO and their Business voice can’t be ignored,” Development Manager, Sally Larrabee, PCO not only provides great service to “We are so grateful for the enthusiastic the process industry, they also provide - Sally Larrabee, support from Sally and PCO. They are great services to their employees and their Business Development Mgr. such a strong advocate for business, and community. They have a grant through Process Control Outlet are admirably active in the community.” Texas Workforce Commission that The appreciation is reciprocated. “As enables their employees to continue their the voice of Texas business, TAB can say education in the field of electronics at Lee College. PCO things to people that I could never say, and reach people is very flexible with class scheduling, and several of their I could never reach. My one small voice doesn’t even employees have graduated with degrees in related fields. register, while TAB’s unified voice can’t be ignored,” says Their community involvement is consistent with their Sally Larrabee. company’s principles and with their mission of customer PCO was nominated in 2011 as one of “Houston’s Top service and quality care. PCO aspires to be a great 50 Places to Work” and in 2012 as one of “101 Best and corporate citizen by playing a leading role in influencing Brightest Companies to Work For™.” PCO was a top 25 the community agenda, supporting the volunteer efforts winner in “Houston’s 101 Best and Brightest Companies of their associates, and investing in the communities in to Work For™” in 2012 and 2013. which they live and serve. They want to inspire these same qualities in their associates, which is why they offer many opportunities for them to get involved. Leaders are encouraged to participate on local boards and in programs such as Small Business Development Center at Lee College, Houston Networking News Events, NAPW (National Association of Professional Women), and i-Chamber Meetings which are sponsored by the Area Chamber of Commerce. Currently, PCO’s leaders serve on the panel to improve the web page of Lee College, CERT of Baytown, Emergency Responders PCO provides material and software support, repair Crisis Team, and Junior Achievement. In their roles, and field service, along with systems integration and training at their Baytown, Texas facility.

4 BACPAC Endorsements RUN FOR THE ROSES TEXAS STYLE continued from page 3 CELEBRATING THE BEST 67. Rep. Jeff Leach – Plano 99. Rep. Charlie Geren – Fort Worth 68. Rep. Drew Springer – Muenster 102. Rep. Stefani Carter – Dallas Join the celebration April 1, 2014 69. Rep. James Frank – Wichita Falls 105. Rep. Linda Harper Brown – Irving at the Hyatt Regency Austin, as the 70. Rep. Scott Sanford – McKinney 106. Rep. Patrick Fallon – Frisco Texas Association of Business and 71. Rep. Susan King – Abilene 107. Rep. Kenneth Sheets – Dallas program partners Texas Monthly, 72. Rep. Drew Darby – San Angelo 108. Chart Westcott – Dallas Texas SHRM and Best Companies Group will again come together to 73. Rep. Doug Miller – New Braunfels 112. Rep. Angie Button – Garland honor the Best Companies to Work 77. Rep. Marisa Marquez – El Paso 113. Rep. Cindy Burkett – Mesquite for In Texas. 79. Rep. Joe Pickett – El Paso 114. Rep. – Dallas 80. Rep. Tracy King – Batesville 115. Rep. Bennett Ratliff – Coppell This year we will “Run for the 81. Austin Keith – Odessa 117. John Garza – San Antonio Roses” derby style (with a Texas 82. Rep Tom Craddick – Midland 121. Speaker – San Antonio twist) in a high-energy celebration 83. Rep. Charles Perry – Lubbock 122. Rep. Lyle Larson – San Antonio designed to recognize the 84. Rep. John Frullo – Lubbock 126. Rep. Patricia Harless – Spring exceptional efforts of companies 85. Rep Phil Stephenson – Wharton 127. Rep Dan Huberty – Houston from across the great state of Texas. 86. Rep. John Smithee – Amarillo 128. Rep. Wayne Smith – Baytown Grab your derby hat, your best suit 87. Rep. Walter “Four” Price – Amarillo 130. Rep. Allen Fletcher – Tomball or a mint julep and get ready. 88. Rep Ken King – Canadian 132. Ann Hodge – Katy This year’s program will again 89. Rep. Jodie Anne Laubenberg – Parker 133. Rep. Jim Murphy – Houston feature KVET-FM morning show 91. Rep. Stephanie Klick – Fort Worth 134. Rep Sarah Davis – host, Bama Brown, as the emcee 92. Rep. Jonathan Stickland – Bedford West University Place so there will be no shortage of fun 93. Rep. Matt Krause – Fort Worth 135. Rep. Gary Elkins – Houston and laughter. “We are pleased to 94. Rep. Diane Patrick – Arlington 136. Rep. Tony Dale – Cedar Park/Austin have the opportunity to honor the 96. Rep. Bill Zedler – Arlington 138. Rep. Dwayne Bohac – Houston companies that make Texas such 97. Rep. Craig Goldman – Fort Worth 144. Rep. Mary Ann Perez – Houston a great place” said TAB President 98. Rep. Giovanni Capriglione – 145. Rep. Carol Alvarado – Houston and CEO Bill Hammond. “Add Southlake 150. Rep Debbie Riddle – Houston in Bama, who was a huge hit last year, it is sure to be a fun night for 2014 the honorees representing the 100 best companies as well as our other TAB Annual Conference guests that evening.” Highlights Upcoming The Best Companies program is Election designed to distinguish companies that demonstrate workplace excellence. Utilizing data gathered through an in-depth survey process, Best Companies Group objectively Bill questions Attorney General candidates reviews, evaluates and ranks each participating company resulting in the creation of the list of the “Best Companies to Work For In Texas”. For those attending and wishing to stay the night there is a block of rooms that have been set aside Bill questions candidates for Lieutenant Governor for attendees at the Hyatt. Call (512)477-1234 before March 14 to reserve your room at the special rate of $195. For full event details or to Candidates for Comptroller discuss issues register visit www.txbiz.org/events. 5 1209 Nueces Street TEXAS BUSINESS REPORT Austin, Texas 78701 FEBRUARY 2014 (512) 477-6721 phone (512) 477-0836 fax www.TXBIZ.org

Talk AboutBusiness Scary Numbers Should Bring Change Bill Hammond, TAB President

The recently released Houston cycle of poverty, but with these num- We have seen first-hand what happens Endowment study, which followed all bers, there is not much chance of that when someone challenges the education Texas eighth graders to see if they went happening. establishment. They are quick to on to complete some kind of post- defend the job they are doing, and Let us put these numbers in perspective secondary education, should serve as a that is understandable. We all want to with the total student population. wake-up call to the leaders of this state think we’re doing a good job, but these Roughly 65 percent of our students and the educational establishment. numbers show otherwise. We are losing in Texas are born into poverty, and as The Houston Endowment should be we know, poverty knows no race or a generation of children, and defending congratulated for doing this study. It ethnicity. Maybe it’s time we look at the status quo won’t cut it. This study accurately measures the results that are focusing on better educating children puts into perspective the performance most important to students, families in poverty rather than focusing only on of our education system. It looks at and our economy. The study answers race and ethnicity. completion numbers, and the numbers the very important question: Are are terrible. People can argue all day students completing their education? You cannot talk about completing long about what kind of measurements Unfortunately the answer for the vast some form of higher education without we should take to hold our schools majority is: No. talking about completing high school. accountable, I think this study does a Around 73 percent of ninth graders good job, because there is very little The numbers are disturbing to say the actually graduate in four years. Working wiggle room. You are either successful at least. The study followed these eighth on our high school completion rate getting students a high school diploma graders for 11 years, giving them six should go hand-in-hand with working and post-secondary training, or you are years following high school to complete on our post-secondary completion rate. some kind of higher education. Only 19 not. The education establishment is not. percent of eighth graders in 2001 went There are some in the education We are proud of our strong on to complete any kind of post-sec- establishment who will say that the Texas economy, but without vast ondary education. The numbers are far only answer is money. They will tell improvements in education, we will no worse for children born in poverty, and you that their funding was cut in 2011, longer be economically competitive in the disparity between those children and and they haven’t recovered. Remember, the future. We must do a much better students who come from higher income the kids in this study were already job. Almost every child is capable families grew over the timeframe of the out of high school by that time. Also of learning, graduating high school study. Thirty two percent of children remember that during the period this and graduating some kind of higher not born in poverty attained a post- study looked at the amount we spent on education program. You should ask your secondary degree or certificate, but only public education did nothing but go up superintendent and your school board 8.5 percent of children born in poverty dramatically. If these are the results from what they are doing to address this issue. achieved that same level of education. that kind of spending, then it is clear, It is simply too important to ignore. Education is the key to breaking the money is not the only answer.