All states except Montana follow the employment at will doctrine for employees. Although the employment at will doctrine governs employment relationships in Texas and most of the country since the days of the Founding Fathers, there is still a great deal of confusion about what this means. Part of the continuing confusion is the growing body of law modifying the employment at will doctrine. Understanding the employment at will doctrine is vital for any employee employed in an at will relationship. Today’s post will help unravel some of the confusion, particularly for those who have been wrongfully terminated in Texas.
What is employment at will in Texas?
Employment at will means you have an employment relationship with your employer that exists as long as both parties want it to continue. It ends when one or both parties decides to end the relationship. If one of the parties decides the terms of the relationship are no longer pleasing then that party can end the relationship. It is much like dating. You date a person for as long as both people want to be in a relationship with each other.
The polar opposite of an employment at will relationship is term employment. Term employment means the employer and employee agreed to an ongoing employment relationship for a length of time. Term employment arises by either agreement or the conduct of the parties that implies a contract. In a term employment arrangement the parties fulfill the term of the employment contract and then the relationship ends. They may choose to initiate a new relationship at the end of the term. In term employment, if either party violates the contract then that party can be liable for damages to the other.
Somewhere in the middle is an employment relationship in which the employer can only fire an employee with just cause. Just cause means the parties agreed that the employer can only fire the employee for a specific list of infractions. In just cause or good cause employment settings the employee is typically free to leave at any time.
Just cause or good cause for discharge is normally built into an employment contract but the employer may be free to fire the employee at any time that it can prove it has just cause to do so. Just cause or good cause does not mean term employment exists although there is often a just cause provision in a term employment relationship that allows one party to prematurely end the relationship when it has just cause as defined in the employment contract.
How contracts limit the Texas employment at will relationship
We have already explored two ways contractual provisions limit employment at will: just cause and term employment. These types of employment relationships are no longer employment at will relationships. Employees can work in an employment at will relationship in which agreements between the employer and employee exist but retain the at will relationship. Generally the terms of the employment at will relationship are defined by the agreement of the parties and the terms can be changed at any time. If one party decides to change its mind about how the relationship will proceed then the other party can choose to accept the new terms and continue employment (or negotiate into new terms both parties agree to follow) or reject the new terms and end the employment relationship.
Some employees work under an individual contract that defines the terms of employment. These contracts may be term contracts or may install a just cause or good cause relationship. Other contracts may be more limited and provide agreements on specific terms of employment that does not affect the at will nature of the relationship. These may be contracts governing future compensation for work performed, such as benefit plans or bonus plans, or specifying the job responsibilities for the employee’s position. These contracts leave open the ability for either the employer or employee to end the employment relationship at any time but govern what happens while the parties continue their employment.
Similarly, employees may work for a union under a collective bargaining agreement (CBA) that governs the employment relationship. Most collective bargaining agreements include a just cause provision that limits the employer’s ability to discharge an employee at will and many provisions governing the conduct of the employer and employee while the employment relationship exists. Some union employees are term employees, professional athletes being the most recognizable, but most work under just cause provisions of the CBA. It is possible for union employees to work in an at will relationship but unions generally consider protecting an employee’s job the first priority and just cause protections are almost always included as part of the CBA.
So far we have talked about how parties modify or move out of an employment at will relationship by agreement. Parties are generally free to negotiate and agree to the terms of their relationship. (So long as the agreement does not violate the law.) Absent an employment contract to the contrary, employees exist in an employment at will relationship. We will turn to discuss those next.
Laws that limit employment at will in Texas
Texas and federal law do not limit an employee’s right to end an employment relationship. This is because the constitution prohibits slavery and other forms of indentured servitude. Even when an employee agreed to work for a term period the employer’s recourse for the employee’s breach of contract is monetary. Employers, however, are more strictly governed. Employers can in certain situations have a duty to employ a person. Federal and Texas laws obligate employers to certain conduct towards their employees.
Statutory job protections
A wide array of statutes and regulations limit the employer’s freedom to construct the terms of the employment relationship. These statutes and regulations may not change the freedom to hire or fire employees. They do set boundaries for how employers design job responsibilities and how employers treat employees. These laws include safety regulations, employee rights and wage laws. Industry and job-specific regulations may also govern particular businesses or job positions.
Similarly, a number of laws govern how employers make hiring and firing decisions. Some of the statutes discussed above, such as FMLA and wage laws, prohibit employers from making these employment decisions on the basis of the rights under those laws. Employment discrimination laws also prohibit employment decisions on the basis of protected classes.
Employees enjoy protections from retaliation for filing a claim or assisting in an investigation of unlawful employment conduct. Whistleblower laws also prevent employers from retaliating against employees report illegal conduct in other areas. In Texas we also prohibit employers from retaliating against employees who refuse to engage in illegal conduct for their employer.
People often wonder where wrongful discharge fits with the employment at will doctrine in Texas. Texas has a very narrow interpretation of wrongful discharge or wrongful termination. It is not enough that a termination was unfair or feels wrong. (Texas does not follow just cause or good cause unless the parties have agreed to it.) A wrongful termination lawsuit may only prevail when the employer terminated the employee in violation of a federal, state, or local law.
However, a terminated employee who files for unemployment benefits in Texas will find that the unemployment system takes a broader approach to wrongful discharge. It is similar to a just cause standard. Unemployment benefits are awarded for any of the unlawful conduct discussed above as well as other situations. Unemployment insurance is another way the state limits the employer’s freedom to discharge employees. It does nothing to require employers to retain employees. However, it creates a disincentive for employers to discharge employees without good reason. These legal limitations on the at will doctrine are a small set of reasons why employers discharge employees.