"At Will" Employment Agreements: Texas is what is called an "at will employment" state. Simply stated, what "at will employment" means is that an employer can terminate the employment of an employee, at any time, for good reason, bad reason, or no reason at all. That is, Texas employees do not have a "right" not to be terminated, regardless of length of service, level of performance, or value to the employer. Generally, under the "at will" doctrine, the Courts have stated that in an employment situation, such as a termination of an employee, the situation may not be fair, or even moral to the employee, however, the unfairness or lack of morality of the employer does not make the termination a "wrongful" or "illegal" termination. Further, the Supreme Court of Texas has consistently refused to impose a duty of good faith and fair dealing in the employment relationship. Again, what may not be "fair" or "moral", it is not necessary illegal. To summarize, unless an employment contract, whether oral or written is for an indefinite period of time, such as an agreement to work for a year or more, either the employer or the employee is free to terminate the employment relationship at any time. Similarly, the terms of an "at will" employment contract, such as the rate of pay, may also be modified by either party at any time.

Employee Handbooks: Many employees look to employee handbook as evidence of the terms of an employment contract which "changes" the "at will" relationship between the parties. However, most employee handbooks contain express statements that employment is "at will" and Texas courts have consistently held, in most cases, that an employee handbook constitutes nothing more than "general guidelines". Thus, statements in an employee handbook concerning "permanent employees" or "progressive discipline" do not limit the employer's right to terminate an "at will" employee.

Exceptions to the "at will" principle: In some situations, courts have held that the "at will" relationship is terminated by either representations of the employer or by other means. For example, in one particular case, a supervisor's statement to an employee that "he could work for the company until his retirement" modified the "at will" relationship and therefore, the employee could not be terminated until he reached retirement age. However, in the opinion of the author, relying on a supervisor's statement of continued employment or a specified term of employment (e.g., "you can work for this company as long as your performance is satisfactory") is not easy to prove, will generally be denied by the employer, and sometimes negated by statements contained in the employee handbook. Thus, an employee should never rely on oral promises of supervisors and employers should discourage the making of such promises and have express disclaimers against the modification of an "at will" employee relationship in the employee handbooks in order to ensure that the relationship remains "at will".

Other Exceptions: Texas courts recognize two main theories for limiting the "at will" employment relationship. The recognized theories are: (i) termination for refusal to perform an illegal act; and (ii) termination in violation of a Texas or federal statute. In 1985, the Texas Supreme Court recognized that an employer may not discharge an employee for the sole reason that the employee refused to perform an illegal act. However, Texas courts have been careful not to expand this basis for suing an employer. For example, the act which the employee is asked to commit must be the type that is a crime not merely dishonest or deceptive. For example, in one particular case, the employee was terminated because the employee reported that his employer, a newspaper, was deceiving its customers by falsely pumping up the paper's circulation figures. The court did not find this to be a crime and therefore, the employee did not prevail in its cause of action against the employer for wrongful termination. With respect to termination of employees under state or federal statutes, the employer may not terminate an employee for exercising his/her right to vote, for serving as a juror or attending a trial or deposition as a witness under a subpoena. Similarly, an employee cannot be terminated for exercising his rights under the Texas Workers Compensation Act, for exercising rights under federal minimum wage and overtime law, and for assignment or garnishment of wages. Also, employees may not be terminated for pursuing certain rights under ERISA, for exercising rights under OSHA, or for exercising rights protected by either state or federal discrimination laws.

Employer Torts: Finally, there is a number of other theories under which an employee may sue her or his employer. In more recent times, employees have sued their employers for "intentional infliction of emotional distress" and "defamation". These type of cases are common in situations where the employee has been treated by the employer in an abusive, "outrageous and extreme" manner which "violates all norms of public decency". However, it should be noted that the author has reviewed a substantial number of cases and has concluded that the majority of cases for intentional infliction of emotional distress have been lost by the employee since the type of conduct that Texas courts have required to state a cause of action must be extremely severe. That is, rude behavior and/or unfairness, crude language, etc. usually do not constitute intentional infliction of emotional distress. Defamation is another cause of action which employees have brought against their employers and these actions usually arise from an employer giving a bad reference (either orally or in writing) to other prospective employers about the employee. What is a "defamatory" however, varies from case to case and employees should always remember that truth is always a defense to a cause of action for defamation. Further, it is the practice of most enlightened employers to adopt a policy which prohibits the employer's supervisors or other personnel to give references about a current or former employee to anyone except to state the employee's name, length of time in the employ, and position held.

Federal Discrimination Laws:

To many employers, discrimination means racial discrimination. However, although this type of discrimination has received much publicity is it is certainly not the only type of discrimination prohibited by modern employment laws. Similarly, many employees and/or employers believe that the federal and state statutes are only applicable in the event of the termination of employment. However, the Texas and federal employment law actually cover all aspects of the employment relationship such as hiring, promotion, sexual harassment, wage differentiation because of discrimination, termination, and other acts after the termination which may be actionable. In summary, the federal (and Texas) laws which prohibit discrimination in the area of employment are the following:

1. Title VII of the Civil Rights Act of 1964: Prohibits discrimination on the basis of race, color, religion, sex, or national origin.

2. Equal Pay Act: Prohibits difference in pay based on sex.

3. Age Discrimination in Employment Act (ADA) Prohibits discrimination of employees on the basis of age (40 and over).

4. Civil War Acts and Civil Rights Act of 1866: Prohibits intentional race discrimination.

5. Civil Rights Act of 1871: Prohibits discrimination for exercising federally guaranteed rights.

6. Immigration Reform and Control Act: Prohibits victims of "unfair immigration-related employment practices".

7. American with Disabilities Act: Prohibits discrimination of employees who are "qualified individuals" with a disability.

Texas Human Rights Act: Protects employees from discrimination on the basis of race, color, disability, religion, ancestry, age, sex, and national origin.

Employees Rights: In general, in situations where an employee may feel mistreated or discriminated on the basis of a protected trait (e.g., sex, national origin, disability, race, etc.), the employee may file a complaint against the employer with the Equal Employment Opportunity Commission (EEOC). The EEOC is a federal agency which investigates all complaints of discrimination under most federal and state anti-discrimination statutes (with the exception of the Civil Rights Act of 1866, Civil Rights Act of 1871, and the Immigration and Control Act). The primary purpose of the EEOC is to investigate complaints of discrimination and to seek conciliation of the complaint. If necessary, the EEOC may also subpoena witnesses and records for the purpose of its investigation. The EEOC may also, although it rarely does, seek a restraining order against the employer if it determines that prompt judicial action is necessary and sue employers in behalf of aggrieved employees. However, most typical is for the EEOC to investigate and if it finds that discrimination has taken place, make an attempt to conciliate and have the employee and the employer reach an agreement resolving the dispute. If such resolution is not possible, the EEOC issues a "determination" which states whether a violation of the statute has or has not occurred and issues the employee a "right to sue letter." Once the employee receives a "right to sue letter" he or she has 90 days from the date of the letter to file suit in court against his/her employer for discrimination. If an employee does not bring suit within the 90-day period, the employee is then barred from bringing suit after this period of time. Further, it must be kept in mind that the filing of a complaint with the EEOC is a jurisdictional prerequisite. In other words, an aggrieved employee cannot bring suit under the federal discrimination statutes unless he/she has filed a complaint with the EEOC. Also of interest is the fact that regardless of how the EEOC concluded its investigation, the findings by the EEOC are inadmissible at the trial of a discrimination case.

Trial of a Discrimination Case:

Generally, under the discrimination laws, an employee must file suit and allege the following elements: 1. The employee is a member of a "protected group" (e.g., female, over 40, Hispanic, etc.); 2. The employer's action or inaction has a negative or discriminatory impact on the complaining party's employment. After the employee proves these elements, the burden shifts to the employer to show that the reason for the employment action considered to be adverse, was not as a result of the employee's protected status (e.g., employee was not promoted for lack of good performance and not because of his race). Once the employer shows a legitimate, non-discriminatory reason for the employment action, the burden shifts back to the employee to show that the employer's reason is only a pretext for discrimination. Proof of pretext is sometimes hard to come by since there are usually no "smoking guns" to show that discrimination was the real reason for the employment action. Further, pretext is also harder to prove because it is not sufficient to say that the employer's action "was not fair" or "did not make economic sense". In other words, courts have been reluctant to become "personnel managers" and second guess the employer's personnel actions from a business standpoint. In a number of reported decisions, the courts have held that pretext is not shown by the fact that the employer "made a bad decision" in either demoting or terminating an employee. In other words, the employer is allowed to make bad personnel decisions as long as those decisions are not merely a pretext for unlawful discrimination.

Employee Benefits: Generally, an employer is not required by law to offer benefit programs such as sick pay, group life and health insurance severance pay, pension and retirement plans, Christmas bonuses and other types of benefits which are part of the employee's compensation package or his employment contract. However, if an employer offers such benefit plans, it must do so in a non-discriminatory manner and must be applied in accordance with the employer's own rules and regulations. However, an employer is also free to discontinue any particular benefit plan at any time without notice to the employee unless such notice is required by law or by the employer's own policies and procedures.

Summary: In summary, Texas is a state in which the "at will" doctrine of employment relationship is alive and well. This doctrine is more than 100 years old and simply stated, when the term of employment is indefinite, it gives the employer the absolute right to terminate an employee for good reason, bad reason, or no reason at all, regardless of the length of service or the performance level of the employee. In cases where the "at will" doctrine is not in effect, that is, when the employer has waived or modified its rights under the "at will" doctrine, the employee may have a cause of action for a wrongful discharge. Frankly, in the author's opinion, Texas employment law is not highly favorable to the employee, especially during a climate of conservatism in the Texas judiciary. Nonetheless, the federal (and Texas) anti-discrimination laws are useful to employees who have been discriminated. However, an employee should always keep in mind that the burden of proving discrimination is not easy and the fact that the employer made a bad employment decision does not automatically translates into a cause of action for illegal discrimination.

Since employment law, whether Texas or federal is a complicated and extensive subject, an employee or employer is always urged to consult with his/its attorney regarding any particular employment matter or decision. This publication is certainly not an exhaustive and complete compendium of employment law and its only purpose is to provide both, employers and employees, with a simple, easy-to read understanding of Texas and Federal employment laws. However, this publication should not be used to make any decisions by either an employer and/or employee in relation to a labor or employment matter since only the attorney for either party can evaluate the situation and provide the proper legal advise. Also, the law is not static and it changes from time to time. New reported decisions come from the courts almost on a daily basis and each case is somewhat unique on its own merits and factual situation. For this reason, the reader is urged to consult his or its attorney or other professional employment expert with regards to any particular questions which he/she or it may have with regards to any particular employment matter.

1. Equal Employment Opportunity Commission: EEOC offices are located in most major cities. In Houston, the EEOC offices are located at 1919 Smith, 7th Floor, Houston, Texas 77002, Telephone (713) 653-3320.

2. United States Department of Labor/Wage and Hour Division: The Houston office is located at 2320 Labranch #2100, Houston, Texas 77004. Telephone: (713) 750-1682.

3. Houston Workers' Compensation Commission is located at 1445 North Loop West, Houston, Texas 77008-1654. Telephone (713) 880-0206.

4. Texas Workforce Commission: TEC Building, 101 East 15th Street, Austin, Texas 78778-0001. Telephone: (512) 463-2222. A number of offices also located in most major cities. See the Government pages in your local phone book.