Texas Law
Texas Employment Law: Management
- Employment Law: Management
Employment Law: Management
Business owners today must be more aware than ever of the legal issues concerning employer-employee relations. Decisions on whom to hire and fire are subject to numerous state and federal laws and may subject an employer to liability. Even the seemingly simple determination of who is an employee under the law can be tricky, and mistakes can have serious and costly consequences. This chapter offers an introduction to some aspects of employment law.
The Employment Relationship
Many of the rights and responsibilities of employers and workers turn on the legal relationship that exists between the worker and the employer. The distinction between employee and independent contractor status and the concept of "employment at will" are important to defining an employment relationship.
Employee versus Independent Contractor
When a worker is paid to do a task or provide a service for another person, the worker is either an independent contractor or an employee. The distinction is not always clear, but it is important for both the business and the worker. The classification determines whether a business must withhold taxes and what records it must keep, whether it should have unemployment insurance, and whether it is subject to federal and state wage and hour regulations. For example, an employer who hires someone as an independent contractor does not have to pay certain taxes on the worker's income.
Whether a worker is an independent contractor or an employee is based on the work performed, not the worker's title. The more control an employer has over a worker, the more likely it is the worker is an employee. On the other hand, the more a worker acts like an independent business enterprise, the more likely the worker is an independent contractor. In some cases, the status is clear: a worker who arrives at a set time every day, is trained by the employer, uses the boss's tools or equipment, and is paid by the hour, week, or month, most likely is an employee. Someone who works for more than one company at a time, sets his or her own hours, and realizes a profit or risks a loss probably is an independent contractor.
An employer could be subject to fines if the Internal Revenue Service, the Texas Comptroller of Public Accounts, or the Texas Employment Commission finds a worker has been an employee when the employer treated him or her as an independent contractor. An employer who is unsure about a worker's status should ask a federal or state agency for an opinion based on the agency's guidelines. Guidelines vary from agency to agency, and one agency may classify someone as an employee even though another considers the same worker an independent contractor.
Employment At Will
The state of Texas recognizes the traditional rule of employment at will. This means that all workers in Texas are presumed to be at will unless the employer takes some action to create a different relationship. There are several ways an employer can alter the relationship. An employer might enter into an oral or written contract guaranteeing to employ someone for a specific period of time or promising to terminate the employee only for specified reasons. An employee handbook or collective bargaining agreement may limit the employer's right to terminate employees. Sometimes an employer inadvertently limits its right to fire an employee if, by its actions, the employer gives the employee reason to believe his or her job will continue. For example, if an employer promises a job to someone from out of state and that person moves to Texas specifically to take the job, the employer probably has changed the employment relationship. The employment is not at will because the employee has gone to the trouble and expense of moving after reasonably relying on the promise of new employment.
The implications of the at-will relationship are far-reaching. Unless there is an agreement to the contrary, an employer may discharge an employee at any time for any legal reason. As long as an employee is not fired for an illegal reason--such as racial or gender discrimination--an employer does not need a good reason to fire someone. Even a silly reason is enough. It also means that an employee may resign at any time, for any reason, with or without giving notice. The employee is free to leave for any reason at all, even if by doing so he or she greatly inconveniences the employer.
Government Administered Benefits
Three programs administered by the state and federal government are of interest to employers: unemployment compensation insurance, workers' compensation, and Social Security. Each of these programs provides benefits to a worker based on the terms and conditions of his or her employment, and the cost of the benefits is paid, at least in part, by the employer.
Unemployment Insurance
Unemployment insurance provides benefits to employees who are laid off, fired, or otherwise forced to leave their jobs. Most employees are covered by unemployment insurance, a program administered by the state and funded by employer contributions. The Corporate Tax Law Chapter discusses the unemployment tax more fully.
Unemployment benefits are not automatic; the worker must apply for them from the Texas Employment Commission (TEC). After gathering information about an applicant, the TEC makes an initial determination of whether the person is eligible to receive benefits. If the TEC's decision is that the employee is eligible, it informs the former employer. Because the former employer pays the benefits, the employer has the right to some of the information given by the former employee to the TEC and has an opportunity to present information.
An applicant will not receive benefits if the applicant:
- Is an independent contractor or a commission-only salesperson
- Is a student hired by the educational institution in which he or she was enrolled
- Is fired for misconduct
- Quits for any reason other than an illegal or intolerable work environment
- Participates in a labor strike
- Refuses an offer to work again for the former employer
- Fails to seek, apply for, or accept suitable work
Because employers and employees often have different ideas of what constitutes a reasonable work environment, the issue in most disputed unemployment claims is whether the employer created an intolerable workplace environment. Only certain kinds of employer actions give someone a legitimate reason to quit a job and still collect unemployment benefits. Some of these valid reasons include:
- Sexual harassment by an employer or inaction by an employer who was informed of instances of sexual harassment
- A substantial cut in pay or benefits
- Drastic changes in working conditions or hours without an employee's consent
- Requiring an employee to break the law or work under obviously unsafe conditions
Demotions, modest decreases in wages or benefits, disagreements over management policy, and reasonable changes in workplace hours or employee regulations are conditions of employment that do not create an intolerable working environment for purposes of eligibility to collect unemployment benefits.
Workers' Compensation
Workers' compensation provides benefits to employees injured in the workplace. Many Texas employees are covered by workers' compensation, which is administered by the Texas Workers' Compensation Commission (TWCC). However, Texas is one of a few states in which employers are not required to be covered by workers' compensation insurance, nor must they be self-insured, for employees' job-related injuries. Any insurance broker should be able to help a business obtain workers' compensation insurance. An employer also may seek help by contacting the Texas Workers' Compensation Insurance Facility, which helps employers obtain insurance coverage.
The benefits available to workers include death benefits, permanent or temporary total disability, permanent or temporary partial disability, and medical and related expenses. The benefit amount is determined by state guidelines and is based on the worker's salary at the time of injury.
It is illegal for an employer to discriminate or retaliate against someone for filing a claim for workers' compensation benefits. An employer may not refuse to hire an individual because he or she has a disabling condition from a prior injury. However, employers who hire workers with pre-existing conditions are protected from some liability. If an employee suffers an injury that is made greater because of a condition that existed at the time of hiring, the employer's liability is limited. Workers' compensation is discussed further in the Workers' Compensation Defense Law Chapter.
Social Security
Social Security provides workers and their dependents with retirement and other benefits. Social Security benefits are financed through taxes on wages paid by both employers and workers. Under the Federal Insurance Contribution Act (FICA), an employer is responsible for withholding the appropriate taxes from an employee's pay, in addition to submitting its own share of FICA taxes. Withholding requirements are discussed in more detail in the Corporate Tax Law Chapter.
Civil Rights In The Workplace
Four major federal laws--the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, and the Americans with Disabilities Act of 1990--protect the rights of workers to be free from workplace discrimination in the United States. While Texas laws also prohibit workplace discrimination, they impose no more stringent standards for employer conduct than the federal laws. This section, therefore, describes only the federal civil rights laws of which employers should be aware.
In General
Most employment discrimination is outlawed by the two major civil rights acts passed by Congress in 1964 and 1991. Under these laws, workers are protected against discrimination based on color, national origin, race, religion, or sex. Other laws protect workers from discrimination based on age or disability.
People frequently refer to "Title VII" rights when they are talking about a particular section of the Civil Rights Act of 1964. Title VII prohibits discrimination in a wide variety of employment areas, including advertisements for jobs, apprenticeship programs, benefits, firing, hiring, layoffs, promotions, recalls, recruitment, testing, training, and transfers. Title VII also prohibits retaliation against a person who files a charge of discrimination, participates in an investigation of discrimination, or opposes an unlawful employment practice.
Under certain extremely limited circumstances, employers are allowed to base their employment decisions or practices on a person's race, sex, etc., if the employer can demonstrate a truly legitimate need. For example, it is legal to hire only women to be attendants in women's locker rooms. Religious institutions may refuse to hire individuals based on their religious beliefs, but only for positions that are directly related to the performance of religious duties; they generally are not allowed to discriminate when hiring individuals for secular tasks such as secretarial or janitorial work. Certain employers, such as police departments, may base some employment decisions on an applicant's physical abilities. Other types of hiring criteria are allowed if they measure skills that are truly essential for an applicant to have in order to perform a particular job, and if they are not applied in a selective or discriminatory way. For example, an employer may require applicants for administrative jobs to pass typing or computer skills examinations.
Courts apply a test created by the United States Supreme Court to determine whether there has been discrimination in the workplace. The employee or applicant must show:
- He or she is a member of a protected class of people
- The employee or applicant was qualified for the job from which he or she was fired or for which he or she was not hired
- The termination or rejection happened even though the employee or applicant was qualified
- The position was filled by a person who is not a member of the protected class
A person who feels that he or she has been unfairly discriminated against or harassed in the workplace files a complaint with the Texas Commission on Human Rights or the Federal IEqual Employment Opportunity Commission (EEOC). The Texas Commission on Human Rights enforces the federal civil rights acts that apply to the workplace in cases deferred by the EEOC. A complaint must be filed within 180 days of the discriminatory act. If the Commission believes the civil rights laws have been violated, it will file a complaint in a state court on behalf of the worker. The worker may file a civil action in court even if the Commission does not believe the employer has engaged in illegal acts. In any case, the employer must be notified of the charge of discrimination, and the employer is given the opportunity to present information as part of any investigation or court procedure.
Age Discrimination
The Age Discrimination in Employment Act (ADEA) expands Title VII prohibitions against age discrimination. Most employers may not enforce mandatory retirement policies, except under a few very specific circumstances in which age is a valid qualification for doing a particular job, such as firefighting, police work, or flying airplanes. Anyone age 40 or over who works for an employer with 20 or more employees is protected by the ADEA and may not be retired against his or her will, regardless of age, as long as he or she can do the job. Other federal and state laws that prevent discrimination based on age contain some exceptions allowing employers to force an employee age 70 or older to retire.
Discrimination Against Persons with Disabilities
The Americans with Disabilities Act of 1990 (ADA) is a federal law that prohibits discrimination based on a person's physical or mental ability. The ADA makes it illegal to fire or to refuse to hire someone because that person lacks physical or mental abilities that are not essential to the job; the ADA does not change an employer's right to employ only people who have the skills to perform the "essential duties" of a job. For example, an employer may not refuse to hire as a daycare provider a person with epilepsy simply because the employer thinks the employee should be able to drive to a hospital in an emergency if driving is not an essential duty of the job. If it is not an essential duty, it is not a valid reason to discriminate against the epileptic applicant who is prevented from having a driver's license by his or her epilepsy.
The ADA requires employers to make "reasonable accommodations" for applicants or employees with disabilities. The employer must do whatever is reasonable to accommodate a person's disability, including modifying work schedules, providing special training, changing the work environment, buying or modifying special equipment, or reassigning to another position an employee who no longer is able to do the "essential duties" of a job. A reasonable accommodation is one that does not place an undue burden on the employer. Using pre-employment tests that identify and exclude applicants with disabilities is permissible only if the tests are unequivocally job-related.
The ADA only protects from discrimination people with permanent conditions that limit a major life activity. Thus, the ADA does not cover an employee who has a sprained ankle that is expected to heal fully, even though that employee is disabled for a period of time. A person with a permanent disabling condition that is controlled by drugs, physical therapy, or by some other treatment is covered by the ADA, such as an epileptic whose seizures are controlled by medication. The ADA also prohibits discriminating against individuals with AIDS or HIV, or people who have completed or are still participating in drug rehabilitation programs. An applicant or employee currently using illegal drugs is not, however, protected by the ADA.
The ADA is administered by the EEOC. Since 1983, discrimination against persons with disabilities has been prohibited by the Texas Commission on Human Rights Act. The Texas Commission on Human Rights enforces both Texas law and federal complaints deferred by the EEOC.
Sexual Harassment
Sexual harassment in the workplace is punishable as an illegal form of sex discrimination under Title VII of the Civil Rights Act of 1964. Sexual harassment can take many forms:
- Sexual or sexist comments about a coworker's appearance
- A mandatory dress code that provokes others to make sexually explicit comments
- Unwanted sexual contact or touching
- Sexual suggestions or pressure to have sexual contact
- Sexual jokes or explicit sexual comments that embarrass a coworker
- Sexual or pornographic pictures displayed or passed around
Sexual harassment is illegal if participation in any of the above activities is required to get or keep a job, to be promoted, or to qualify for benefits, or if it makes it harder for a worker to do his or her job by creating a hostile environment. The law requires that the behavior be unwelcome, undesirable, and offensive to be considered sexual harassment. The law uses the "reasonable person" standard to determine what is offensive: if a reasonable person would find an action offensive, then it is offensive under the law.
Determining what kind of behavior constitutes sexual harassment may depend on the circumstances. However, some general descriptions of sexual harassment can be made. A single, or occasional, sexual joke or sexual comment is not sexual harassment unless the comment unequivocally offers workplace advancement in return for sexual favors. Unwanted touching of someone else's body is sexual harassment. Someone who repeatedly tells lewd or obscene jokes that make other employees uncomfortable may be guilty of sexual harassment, especially if the person has been told that the behavior makes others uncomfortable. A case for sexual harassment in this example may be weakened if the person claiming harassment participates in the joke-telling.
In addition to civil laws designed to prohibit workplace sexual harassment, criminal laws provide remedies against the most serious forms of unwanted sexual contact. Anyone fired or forced to leave a job because of sexual harassment may be entitled to receive unemployment insurance benefits while searching for a new job.
Pregnancy Discrimination
Title VII protects pregnant workers and job applicants from discrimination. Employers may not refuse to hire a woman because she is pregnant, fire a woman because she is pregnant, take away benefits or accrued seniority because a woman takes maternity leave, take away benefits from a single woman who has a baby, or fire or refuse to hire a woman who has an abortion.
Generally, an employer must treat pregnant women the same as other workers who cannot perform their jobs for short periods of time. Thus, if an employer allows employees to take a leave for a broken leg or short-term illness, the employer must allow pregnant women to take a leave under the same terms and conditions. Employers also are required to transfer a pregnant employee to a less hazardous or strenuous job during the pregnancy, if the employer makes such provisions for other workers with temporary disabilities. Pregnancy leave also is protected under the Family and Medical Leave Act (discussed below).
Other Workplace Rights And Responsibilities
The workplace is governed by a number of additional laws.
Wages and Hours
The federal minimum wage for adult workers age 18 and over is $4.25 per hour. Employers must pay at least the minimum wage, even to employees who earn tips, and employers may not force employees to share their tips with other workers or managers, although employees may do so voluntarily. Workers under 18 years of age must be paid a minimum wage of $3.75 per hour. Generally, employers also must pay hourly employees one-and-a-half times their regular rate for every hour over 40 hours worked in a week.
There are some exceptions to the minimum wage law. For example, certain salaried workers are exempt from minimum wage standards and overtime regulations. To be exempt, an employee must be in an executive, administrative, or professional position and receive at least $250 each week in salary or fee. The employee must supervise at least two other workers, manage an office or a business operation, be a skilled artistic performer or a teacher, or work in a profession requiring advanced knowledge, such as engineering.
Employment laws also regulate child labor. For example, in Texas employers may not employ children under the age of 14 unless the child is specifically exempted by the Texas Employment Commission. Some exempted fields of labor include performing in a radio, television, or theatrical production; delivering newspapers; agricultural work; work as part of a rehabilitation program; or other casual nonhazardous employment under parental supervision. Even when it is permitted, children who are 14 or 15 years of age may work only eight hours each day and no more than 48 hours each week. In addition, children may be employed only certain hours during the school year. Employing a minor in violation of these laws is a Class B misdemeanor.
Workplace Safety and Health
Workplace safety issues in Texas are governed by federal standards under the Occupational Safety and Health Act (OSHA) and administered by the state IDivision of Workers' Health and Safety of the Texas Workers' Compensation Commission. In addition, the Division coordinates and enforces state laws relating to health and safety in the workplace. Under the law, an employer is responsible for ensuring that working conditions are safe and healthful. More specifically, an employer must provide working conditions free from recognized hazards that cause, or are likely to cause, death or serious injury. All places of employment are subject to inspection for compliance with safety and health standards, and monetary penalties may be assessed for noncompliance.
Employers must alert employees to their OSHA rights by displaying an "Occupational Safety and Health Protection on the Job" poster. In addition, employers may not charge employees for protective equipment required under OSHA standards. Under Texas law, employers must provide information about hazardous chemicals in the workplace to employees who might come in contact with the hazardous chemicals. Whenever the employer has knowledge of an occupational disease, the employer is obligated by law to provide the Commission with a report. Employers also must file reports each time an employee misses more than one day of work due to an on-the-job injury.
Employers also have certain rights under OSHA. For example, an employer may request a variance from an OSHA standard in some situations, may participate in the process of developing or revising standards, or may go before the Occupational Safety and Health Review Board to request that a citation or penalty be reviewed and changed. In addition, under the Act trade secrets or privileged communications are protected. The reports of injury or disease made to the Commission may not be used as admissions or evidence against the employer who files them.
Family and Medical Leave
The federal government requires certain employers to provide parenting, family, and medical leave to qualified employees. The federal Family and Medical Leave Act of 1993 (FMLA) allows qualified employees to take up to 12 weeks of unpaid leave to attend to family matters, including health emergencies. Under the Act, a qualified employee may take an unpaid leave following the birth or adoption of a child, after acquiring a foster child, to care for an immediate family member with a serious health condition, or to care for his or her own serious health condition.
Men and women are entitled equally to this leave, but not every worker is qualified. A person must be a full-time government employee, or an employee of a company with 50 or more employees who has worked for the company at least 12 months and at least 1250 hours during the 12 months immediately prior to taking leave.
Under most circumstances, an employee may elect or the employer may require the use of any accrued paid leave for periods of unpaid leave under the FMLA. When the leave is foreseeable, an employee must provide the employer with at least 30 days' notice of the need for the leave. If the leave is not foreseeable, the notice must be given as soon as it is practical. An employer may require medical certification of a serious health condition from the employee and may require periodic reports of the employee's status and intent to return to work during the leave. In addition, an employer may require a fitness-for-duty certification upon return to work in appropriate situations.
The employee is not entitled to accrue benefits such as vacation time or sick leave during a leave under the FMLA. Any benefits accrued by the employee at the time of the leave, however, stay with the employee. During the leave, the employer must maintain the health benefits the employee was receiving at the time the leave began, at the same level and in the same manner as if the employee had continued to work.
When an employee returns from a leave under the FMLA, the employee is entitled to be restored to the same job the employee left when the leave began. If the same job is not available, the employer must place the employee in an equivalent job with equivalent pay, benefits, duties, and responsibilities. Under the Act, employers are prohibited from discriminating against or interfering with employees who take FMLA leaves.
Substance Abuse in the Workplace
Under certain circumstances, employers in Texas may compel employees to pass drug and alcohol tests as a condition of employment. Various federal laws govern drug use or drug testing in certain employment situations. For example, the Federal Drug Free Workplace Act of 1988 requires that recipients of federal grants as well as most federal contracts have comprehensive substance-abuse policies. Rulings by the National Labor Relations Board, regulations promulgated by the Department of Transportation, Department of Defense rules, and judicial interpretations of the federal Constitution and civil rights laws also have considered the issues of substance abuse or rehabilitation in the workplace. In addition, Texas law governs some aspects of drug testing in the workplace. Employers who have 15 or more employees and who have workers' compensation insurance must have some kind of policy to eliminate drug abuse in the workplace. It is a criminal misdemeanor for a person to interfere intentionally with drug test results. Some Texas cities--such as Houston--also have ordinances that regulate an employer's testing for use of substances. Houston's law allows testing for substances in various safety-impact positions, as well as in pre-employment, post-accident, and for-cause situations. The law is quite punitive: even employees who test positive for drug use in the workplace just once may be fired.
An employer may test an employee for drugs and alcohol only if the test is part of a reasonable policy that seeks to prohibit the use of alcohol or illegal drugs in the workplace. These tests must not be given in a discriminatory way, and if passing a drug or alcohol test is a job requirement, then all employees performing that job must take the test. For example, a reasonable policy may include testing all employees in safety-sensitive positions. An employer may test for drug and alcohol use when an employee unmistakably violates workplace rules on drugs or alcohol while operating an employer's machinery, equipment, or vehicle.
Employees also are guaranteed privacy in matters of substance abuse and rehabilitation. In addition to general principles of confidentiality and privilege that are applicable to employee assistance programs, some Texas agencies have rules that govern privacy issues for employees who participate in rehabilitation. Although current users of drugs or alcohol do not have protection from the consequences of their actions in the workplace, private employers of 25 or more employees are required to accommodate employees who wish to participate voluntarily in alcohol or drug rehabilitation. These employees are treated as persons with disabilities. The identity of an employee participating in such a program may not be disclosed by the employer or by a health care practitioner without the employee's consent. There are some limits to these guarantees, however. The accommodation of an employee who is participating in rehabilitation may not impose an undue hardship on the employer. And, as mentioned, an employer is not required to hire or retain someone who is unable to perform a task or who endangers others because of current alcohol or drug use.
Privacy
Employees' right to privacy at work is a hotly debated issue today as increasing numbers of employers are using searches, surveillance, and eavesdropping in an attempt to better monitor their employees' activities. The law in this area is evolving and is largely unsettled, but it is fair to say that an employee surrenders some of his or her right to privacy at the workplace door. Employers have more of a legal right to monitor employees than governments have to monitor citizens. However, the number of employees who are challenging employer practices is growing.
When a court must determine whether an employee's right to privacy was violated, it looks to whether the employee's expectation of privacy in a particular situation was reasonable. For example, the expectation of privacy is more reasonable for items in a locked desk drawer than for items left out on a desk. Similarly, it is more reasonable to expect privacy during a personal phone call made on a pay phone than during a work-related call on the employer's phone.
The reasonable expectation standard is not a very strong guarantee of employee privacy. An employer can expand his or her right to search or monitor simply by giving notice to employees. Once an employee receives notice that the employer reserves the right to monitor calls, search offices, read electronic mail, or film the workplace, there is very little reasonable expectation of privacy.
In addition to surveillance and search activities, areas in which the right to privacy is an issue include lie detector tests, smoking in the workplace, free speech, dress and personal appearance, and disclosure of employee records.
Whistleblowing
It is illegal for an employer to fire a worker in retaliation for reporting a violation of a law or for refusing to participate in activity the employee believes to be illegal. If an employee acts in good faith and reports suspected illegal activities to the employer, a governmental agency, or a law enforcement officer, the employee may not be fired or be treated adversely. Employers are prohibited from retaliating against employees who report workplace safety violations. An employee whose job is terminated or suspended for whistleblowing is entitled to judicial relief in the form of reinstatement, compensation for lost wages, and reinstatement of benefits and seniority rights, as well as attorneys' fees and court costs.
Veterans' Reemployment Rights
Some veterans returning from active duty are entitled to be reemployed in their pre-service jobs. A veteran must meet the following five requirements to be covered by the Veterans' Reemployment Rights Act:
- Held an "other than temporary" (not necessarily "permanent") civilian job
- Left the civilian job for the purpose of going on active duty
- Was on active duty for no longer than four years, unless the period beyond four years (up to an additional year) was "at the request and for the convenience of the federal government"
- Was discharged or released from active duty "under honorable conditions"
- Applied for reemployment with the pre-service employer within 90 days after separation from active duty
Reinstatement must be within a reasonable period of time to a position of similar pay, seniority, and status. In addition, the seniority level must be set at the point it would have been had the veteran kept the position continuously during military service.
Non-Compete Agreements and Trade Secrets
A non-compete agreement is a type of restrictive covenant that limits an employee's right to work in a particular industry after he or she leaves a company. The former employee may be prevented from doing one or all of the following:
- Working for a competitor of the former employer
- Starting a business that competes with the former employer
- Contacting former or current customers or employees of the former employer
A non-compete agreement generally is enforceable only if executed when the worker is initially hired or at a time when the employee receives a raise, broader sales territory, or new or expanded responsibilities. It must be reasonable in its limitations as to geographic area, scope of activity, and length of time. For example, an agreement that covers the employer's trade area, specifically lists the activities the former employee is prevented from doing, and expires within six months to one year of termination is likely to be enforceable. Non-compete agreements are assignable upon the sale of a business.
Another type of restrictive covenant prevents an employee from using trade secrets and other confidential or privileged information learned on the job after termination. Factors in the enforceability of confidentiality agreements include the ability of the former employer to prove that the information truly is confidential, the precautions that were taken to guard the information, and the reasonableness of the time and geographic limitations imposed.
Termination
Firing a worker may be emotional for both the employer and employee. Employers should recognize that an involuntarily terminated employee may seek legal action. Treating an employee fairly during the termination process may benefit the employer in helping to prevent such legal action.
Reasons for Discharge
Recognizing whether an employee was hired at will is critical to proceeding properly with termination. As stated earlier, if a worker has been employed at will, he or she may be discharged at any time for any reason other than an illegal one. If the employment relationship is not at will, such as when an employer has promised to employ the worker for a specific period of time, termination must be "for cause." The power to discharge an at-will employee is limited by public policy and the employer's responsibility to act in good faith and to deal fairly. Causes that justify job termination include habitual lateness or absence, theft of the company's or a co-worker's property, and falsifying records.
Termination Procedures
When a written employment contract exists, it may include requirements that relate to termination. A common requirement is that an employee be notified at least 30 days in advance of the termination. If an employee belongs to a union, the negotiated contract governs the process for involuntary termination.
Rights and protections given to employees through an employee manual may be enforceable against employers in post-termination lawsuits as "implied contracts." For example, some courts have found that company retirement, sick leave, and fringe-benefits plans described in employee manuals were enforceable promises of compensation. Oral promises made at the hiring interview also may be recognized as implied contracts.
As stated earlier, fired employees usually are eligible for unemployment benefits. Because the unemployment tax for some businesses is based on their experience with unemployment claims, it may be important to know how and when to contest claims. Unemployment claims may have ramifications for any discharge-related lawsuits a former employee may file. For example, if a company chooses not to oppose a former employee's claim for unemployment benefits, the company could be found to have waived a legitimate reason for the firing or to be tacitly admitting wrongdoing. A former employee who wins an unemployment case may find it easier to file a lawsuit for wrongful discharge.
Prohibitions on Firing
As noted, dismissals are illegal when based on age, color, disability, national origin, race, religion, or sex. In addition, an employer is prohibited from firing an employee for other reasons, such as:
- Good-faith reporting of alleged violations of the law
- Participating in union activity, such as a strike
- Joining with others to protest unsafe working conditions
- Refusing to commit an unlawful act on the employer's behalf, such as committing perjury or fixing prices
- Reporting to jury or military duty
- Pursuing a wage, workers' compensation, discrimination, or other legitimate claim against the employer
- Reporting railroad accidents
- Engaging in legal activities off-premises and after working hours
It also is prohibited to fire an employee whose wages have been garnished or whose pension rights under the Employment Retirement Income Security Act (discussed in the Employee Benefits Law Chapter) may be affected.
Defamation Related to Termination
Fired employees sometimes sue former employers for libel (defamation in written form) or slander (defamation in oral form). A defamatory statement is one that harms a person's reputation by lowering his or her standing in the community or deterring others from associating with him or her. Defamation occurs when the statement is false and communicated to a third party, and no special privilege exists.
Discussing a decision to terminate and criticizing a fired employee in front of non-essential third parties are actions that can increase an employer's vulnerability to defamation charges. Successful lawsuits have been based on statements in discharge letters and negative references to prospective employers. Generally, an employer is not required by law to give an explanation for discharge; however, if a reason is given, it is important that an employer state only truthful reasons for any termination. Truth is an absolute defense in any defamation lawsuit.
Resources
Additional information is available in a book by Robert Coulson, entitled Empowered at Forty: How to Negotiate the Best Terms and Time of Your Retirement (HarperBusiness, New York, NY 1990).
For information about tax issues affecting employers, contact the Internal Revenue Service, 1111 Constitution Avenue N.W., Washington, DC 20224, (800) 829-3676 and/or the Texas Comptroller of Public Accounts, 111 17th Street East, Austin, TX 78711, (512) 463-4000.
The Texas Commission on Human Rights, P.O. Box 13493, Austin, TX 78711, (512) 437-3450, TDD (800) 735-2989, publishes free pamphlets, including Equal Employment Opportunity Law: Texas Commission on Human Rights and The Law and Employment Discrimination Against Persons with Disabilities: Texas Commission on Human Rights.
Workplace safety compliance issues should be addressed to the Region VI-Dallas Office of Occupational Safety and Health Administration, Federal Building #602, 525 Griffin Street South, Dallas, TX 52026, (214) 767-4731.
For information or to order Employment Law Issues in Texas; Independent Contractors/Contract Labor; Legal Issues Behind Drug Testing in the Workplace; The Easiest, But Most Avoidable, Ways to Lose a TEC Case; and Wage and Hour Law Basics, free publications, contact the Texas Employment Commission, 101 15th Street East, Austin, TX 78778, (512) 463-2800 or (800) 832-9394. These and other publications also are available on line through Telnet (hi-tec.tec.state.tx.us).
For information about the Veterans' Reemployment Rights law or assistance in attaining reemployment, contact the United States Department of Labor, Director for Veterans' Employment and Training, (202) 219-9110, or the Texas Veterans Commission, P.O. Box 12277, Austin, TX 78711, (512) 463-5538.
For information, including information on wages, hours and overtime, contact the United States Department of Labor, Wage and Hour Division, Employment Standards Administration, Federal Building #800, 525 Griffin Street South, Dallas, TX 75202, (214) 767-6895. To order free pamphlets, including Compliance Guide to the Family and Medical Leave Act (June 1993) and Handy Reference Guide to the Fair Labor Standards Act (Oct. 1994), contact Headquarters, (202) 219-8743, TDD (800) 326-2577.
The United States Department of Labor, Women's Bureau Region VI, Federal Building #735, 525 Griffin Street South, Dallas, TX 75202, (214) 767-6985, also has free information, including Family & Medical Leave: Know Your Rights, Pregnancy Discrimination: Know Your Rights, and Sexual Harassment: Know Your Rights.
The United States Department of Veterans Affairs, Office of Public Affairs, 810 Vermont Avenue N.W., Washington, DC 20420, provides a free booklet on Federal Benefits for Veterans and Dependents (1994 ed.).
For information or to file a charge, contact the United States Equal Employment Opportunity Commission, Dallas District Office, 207 Houston Street South Third Floor, Dallas, TX 75202, (214) 655-3300; Houston District Office, 1919 Smith Street Seventh Floor, Houston, TX 77002, (713) 209-3373. The Region VI Disability and Business Technical Assistance Center, (713) 520-0232, TDD (713) 520-5136 or 1801 L Street N.W., Washington, DC 20507, (202) 663-4900, TDD (800) 872-3302, should be contacted for information about the ADA or to order The Americans with Disabilities Act: Questions and Answers or The Americans with Disabilities Act: Your Responsibilities as an Employer, free booklets.