Yes, Texas is an at-will state. At-will employment suggests that an employer and employee have equally bargained for the exchange of labor (from the employee) and payment (from the employer) and freely engage in that transaction without the existence of an employment contract. This means that an employer may fire an employee for cause (the employee did something wrong) or no cause at all. It is a strange legal fiction, since employees rarely are on an equal playing field as the employer to bargain for the terms of employment. Instead, employees are generally subject to all the terms decided by the employer with a single option to reject those terms – quit. However, it is the state of the law, as seemingly absurd as it may be.
Although Texas long ago adopted the at-will framework, this does not mean that the employer has complete power to behave however it wishes. There are several limitations to the at-will employment doctrine. I will discuss three general areas:
First, employees and employers can create an employment contract which lays out some or all of the terms of employment. When a contract is created, the relationship is no longer at-will. There is a governing document (the contract) and contract law may limit the employer’s conduct to the employee. For example, the contract may specify that the employee must be paid $50,000 annually and may be terminated only for cause after violating certain provisions of the employee handbook. In that case, the employer cannot discharge the employee because it dislikes the employee, has no work for her to do, etc. In the event the employer violates the contract, there are remedies under contract law (or the terms of the contract itself) to compensate the employee for the breach.
Second, a collective bargaining agreement may govern the employment relationship. This normally occurs through a formal union that has bargained on behalf of the employees to establish specific terms of employment. A collective bargaining agreement is a contract, and is governed by contract law to an extent, but it is specifically covered by the National Labor Relations Act, which protects the right of employees to unionize and work under a collective bargaining agreement. A collective bargaining agreement also destroys the at-will employment status because the employees and employer agree to work under the terms of the collective bargaining agreement.
Third, civil rights and welfare laws protect employees under certain situations from employer conduct. These laws include many areas, such as discrimination (e.g. Title VII, Age Discrimination Act, Equal Pay Act), workplace safety (e.g. OSHA, workers’ compensation), wage payment (Fair Labor Standards Act), worker health (FMLA – Family Medical Leave Act, ADA — Americans with Disabilities Act) and so forth. Under these laws, the employer must conform working conditions, the treatment of employees and the exchange of payment for labor to those many federal and state laws. Although these laws do not prevent the employer from terminating an employee with no cause, they will prevent an employer from terminating an employee for a malevolent cause (such as discrimination).