Texas At-Will Employment Laws

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Texas is an at-will employment state, which means either party in the employment relationship can change the terms and conditions of employment. The parties can also end the relationship for any reason or no particular reason, with or without advance notice. The exception to these rules is if there is a statute or express agreement,, like an employment contract that obligates the parties to act in another manner.

Protection From Termination for Illegal Reasons

Neither party in an employment relationship is allowed to terminate an employment contract for an illegal reason. Illegal reasons are those that violate state or federal law. Termination of an employee because of their race, color, religion, gender or national origin is a violation of Title VII of the Civil Rights Act of 1964.

Federal law also prohibits an employer from firing an employee for joining a union, reporting a workplace safety violation, missing work because of jury duty and filing a workers' compensation claim. An employer is not allowed to fire, demote, harass or retaliate against an employee for submitting a complaint of discrimination or sexual harassment, participating in a discrimination proceeding or sexual harassment, or for otherwise opposing discrimination or sexual harassment. The retaliation law applies to private employers with 15 or more employees and all state and local government entities, no matter how many employees they have.

Public Policy Exception to the At-Will Employment Doctrine

It is not permissible for an employer to terminate employees for a reason that violates public policy. For example, firing an employee for failing to perform an illegal act is against public policy. The 2011 Texas Supreme Court case Safeshred, Inc. v. Martinez confirmed that an employee who is terminated solely for performing an illegal act has a right to sue the employer for wrongful termination. In this case, the Texas Supreme Court further ruled that such a claim is more like a tort claim, a claim for an injury suffered to a person, than a contract claim, a claim for violation of a contract.

In a claim that involves a violation of public policy, the former employee can recover punitive damages, damages that exceed compensation for injuries suffered and that are meant to punish the wrongdoer.

Violation of Contractual Agreements

A termination is against Texas employment law if it violates the terms of an employment contract between the parties, including collective bargaining agreements. When an employee is let go for any illegal reason, it is called a “wrongful discharge.”

Remedies for wrongful discharge include reinstatement, bringing the former employee back to their old position under the same terms as before, awarding the former employee back and future pay, and a promotion. A court can also issue an injunction, an order to the employer, to prevent the employer from engaging in future illegal conduct. The employer may be ordered to compensate the former employee, as well as to pay punitive damages, attorney’s fees, expert witness fees and court costs, the cost that the court incurs in holding proceedings.

Written Wage Agreements

A written wage agreement typically will not interfere with an at-will employment relationship. Texas courts appear to be unanimous that unless a written contract shows a clear intent to create a definite term or duration of employment, there is a presumption that the employment is intended to be of indefinite duration. This means the employment contract is terminable at will by either party. The Texas Workforce Commission advises employers to include a standard employment at-will disclaimer in a compensation agreement for added security.

Probationary Periods and HIPAA

It is not against Texas or federal law for an employer to treat an employee as a probationary employee. The federal Health Insurance Portability and Accountability Act (HIPAA), however, requires an incoming employee to have immediate access to a company’s benefit plan. During a probationary period, an employer can subject an employee to special scrutiny. The employee must perform successfully to continue with the company and become a regular employee.

Avoidable Mistakes for Employers

Employers should seek to avoid acting outside of their established policies and failing to create sufficient policies to fire an employee. The Texas Workforce Commission provides a guide for employers to identify common mistakes. These include terminating an employee in the heat of the moment, ignoring company policy and changing the explanation for the termination.

Creating Clear Policies

A Texas employer will benefit from developing personnel policies that are in line with state and federal laws. The employer can make these policies known through onboarding procedures, updates that change the policies, trainings, and employer and employee handbooks or manuals. When an employee who has been terminated has a claim or lawsuit, the employer can then point to its policies.

The employer can explain how and when it notified employees of standards to which it would hold them and itself. The Texas Workforce Commission provides that “secret policies are useless.” An employer cannot use an unknown policy against a former employee in an unemployment claim or another kind of employment-related claim or lawsuit.

What an Employer May Change

Under Texas state law, an employer may reassign employees and change work locations. It may alter job titles, job descriptions, work schedules, pay and other aspects of jobs at will. As to work schedules, employers are bound by state and federal laws with regard to some aspects.

With very few exceptions, an employer may require an adult employee or a youth aged 16 or 17 to work unlimited hours every day. As to pay, an employer must adhere to what it promised the employee for pay methods and pay rates.

Proof of Wage Agreement

An employee can show proof of a wage agreement with verbal and written evidence. An employer should take care when making oral and written communications that the communications are consistent and carefully expressed.

Wage agreements that are ambiguous, or can be understood in two or more different ways by reasonable people, are usually resolved against the employer. This is because the employer is presumed to be in charge of how the parties reached the agreement. The court will hold the employer responsible for clearly expressing its intent.

Unemployment Insurance Claims

A former employee qualifies for unemployment insurance (UI) when they show that they are out of work through no fault of their own. In a work separation determination, the burden of proof is on the party who initiates the work separation. A claimant who quits must prove good cause for quitting.

If the claimant was fired or laid off, the employer is required to prove that the work separation resulted from misconduct connected with work on the claimant’s part. If an employer changes terms and conditions of employment, and the employee does not accept the new terms and conditions, the employee can be disqualified from UI benefits.