Texas Termination Laws

July 2nd 2024

In Texas, the legal framework surrounding employment termination is shaped by the state’s adherence to the “at-will” employment doctrine, allowing both employers and employees the flexibility to end the employment relationship at any time, for almost any reason. However, this flexibility is not without its boundaries. Texas termination laws incorporate a variety of federal and state regulations designed to protect the rights of employees and ensure fair practices.

This article explores the key legal considerations and protections that come into play when terminating an employee in Texas. Understanding these laws is crucial for both employers and employees to navigate the complexities of employment termination within the state.

This Guide Covers

Legal Considerations for Termination in Texas
“At-Will” Employment in Texas
Lawful Termination in Texas
Legal Protections During Termination in Texas
Terminated Employee Benefits in Texas
Layoffs in Texas
Resignations in Texas
Legal Cases Related to Wrongful Termination in Texas

Legal Considerations for Termination in Texas

Terminations in Texas, whether voluntary or involuntary, are subject to various legal considerations that both employers and employees should be aware of:

  • “At-Will” Employment: Texas follows the principle of “at-will” employment, meaning that in the absence of an employment contract stating otherwise, either the employer or the employee can terminate the employment relationship at any time, for any reason or no reason, with or without notice.
  • Contractual Obligations: If there is an employment contract or collective bargaining agreement in place, termination must comply with the terms specified in the contract. This could include notice periods, grounds for termination, and procedures for dispute resolution.
  • Discrimination Laws: Employers cannot terminate employees based on protected characteristics such as race, color, national origin, sex, religion, age (40 or older), disability, or genetic information. These protections are provided under federal laws like Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (ADEA), and the Americans with Disabilities Act (ADA).
  • Retaliation Protections: It is illegal for employers to terminate employees in retaliation for exercising their rights under various laws, such as filing discrimination complaints, whistleblowing on illegal activities, or participating in investigations.
  • Final Pay and Benefits: Employers must adhere to state regulations regarding the timing of final wages and benefits owed to employees upon termination, whether voluntary or involuntary. This includes payment for accrued but unused vacation or sick leave if provided for in company policy or employment contract.

“At-Will” Employment in Texas

What is “At-Will” Employment?

“At-will” employment in Texas refers to the principle that either the employer or the employee can terminate the employment relationship at any time, for any reason or no reason at all, with or without cause or notice. This means that in the absence of a specific agreement (employment contract or collective bargaining agreement) stating otherwise, both parties have the freedom to end the employment relationship whenever they choose.

What are the Exceptions to “At-Will” Employment in Texas?

In Texas, despite being an “at-will” employment state, there are several exceptions where employers cannot terminate an employee for specific reasons:

  • Texas Commission Rights Act: This refers to protections provided to employees who file complaints, assist in investigations, or participate in hearings related to discriminatory practices or violations of civil rights in the workplace. Employers are prohibited from retaliating against employees for engaging in such protected activities.
  • Workers’ Compensation Retaliation: This exception prohibits employers from terminating employees in retaliation for filing a workers’ compensation claim, seeking benefits, or asserting rights under the state’s workers’ compensation laws. It ensures that employees can exercise their rights to medical care and financial compensation without fear of losing their jobs.
  • Jury Service: Employees summoned for jury duty in Texas are protected from termination due to their service. Employers cannot fire employees for attending jury duty, provided the employee gives reasonable notice to the employer of the jury duty summons.
  • Employment of Person Called to Active Duty: This exception applies to employees who are called to active military duty. Employers cannot terminate these employees based on their military service obligations, ensuring they are not penalized for fulfilling their duty to the country.
  • Child Support Withholding Order: Employers in Texas cannot terminate an employee solely because there is a valid child support withholding order against their wages. This protection ensures that employees fulfilling their child support obligations through wage withholding are not unfairly penalized by their employers.
  • Compliance with Subpoena Order: Employees cannot be discharged or otherwise penalized for complying with a subpoena to appear as a witness in court. This exception ensures that employees can fulfill their legal obligations without fear of retaliation from their employers.

Employment Under Contract in Texas

In Texas, while the default employment relationship is “at-will,” where either party can terminate the relationship at any time for any lawful reason, employment contracts introduce specific terms and conditions that can alter this dynamic. Employment contracts can provide greater job security and define the expectations and obligations of both parties in more detail.

Employment contracts specify the duration of employment, job duties, compensation, benefits, and grounds for termination, among other terms. If either party fails to fulfill the terms of the employment contract, it constitutes a breach of contract. Employees may claim wrongful termination if fired without just cause as defined in the contract, while employers can terminate employees for reasons explicitly stated in the agreement, such as poor performance or misconduct.

Lawful Termination in Texas

Legal Grounds for Termination in Texas

In Texas, termination of employment can occur for various legal reasons, guided by both state and federal laws. The primary legal grounds for termination in Texas include:

  • “At-Will” Employment: Texas follows the doctrine of “at-will” employment, meaning that employees can terminate employees for any reason or no reason at all, as long as it does not violate anti-discrimination laws or public policy exceptions.
  • Discrimination: Employers cannot terminate employees based on protected characteristics such as race, color, national origin, sex, religion, age (40 or older), disability, or genetic information. This protection is provided under federal laws like Title VII of the Civil Rights Act of 1964, the Age Discrimination of Employment Act (ADEA), and the Americans with Disabilities Act (ADA).
  • Retaliation: It is illegal for employers to terminate employees in retaliation for exercising their rights under various laws, such as filing discrimination complaints, whistleblowing on illegal activities, or participating in investigations.
  • Breach of Employment Contract: If an employment contract is in place that specifies grounds for termination, employers must adhere to those terms. A breach of contract can occur if an employer terminates an employee violating the contract terms.
  • Misconduct: Termination for misconduct occurs when an employee engages in behavior that violates company policies, codes of conduct, or legal standards. Examples include dishonesty, insubordination, harassment, theft, or violence in the workplace.
  • Poor performance: Employers can terminate employees for consistently poor performance or failure to meet job expectations, provided that they have documented performance issues and given the employee a reasonable opportunity to improve.
  • Reduction in Force (Layoffs): Economic reasons or organizational restructuring may lead to layoffs where positions are eliminated due to financial constraints, business closure, or technological advancements.
  • End of Contract or Project: Termination may occur at the natural conclusion of a fixed-term contract or specific project for which the employee was hired.

Read our comprehensive guide to firing employees in Texas for further information.

How Do I File a Wrongful Termination Claim in Texas?

Filing a wrongful termination in Texas involves determining whether your termination qualifies as wrongful under Texas law. Wrongful termination includes termination based on discrimination, retaliation, breach of contract, and violation of public policy. If you believe you are terminated wrongfully, gather documentation (e.g. employment contracts, performance reviews, termination letters, emails, and witness statements) that can support your claim,

If your claim involves discrimination or retaliation under the law, you must file a charge with the Equal Employment Opportunities Commission (EEOC) within 180 days; or file a complaint with the Texas Workforce Commission (TWC).

Legal Protections During Termination in Texas

  • Texas Payday Law: This law ensures that employees receive their final wages promptly after termination. Employers must pay final wages within six calendar days for involuntary terminations and by the next payday for voluntary resignations. Disputes can be filed with the Texas Workforce Commission.
  • Texas Anti-Discrimination Laws: These laws prohibit employment discrimination based on race, color, national origin, sex, religion, age, and disability. They align with federal laws such as Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), and the Age Discrimination in Employment Act (ADEA). Employers must provide equal employment opportunities and cannot terminate employees based on these protected characteristics.
  • Texas Whistleblower Act: This act protects public employees who report illegal activities or violations of law by their employers. It prohibits retaliation against employees who report such violations in good faith. Employees who face adverse actions for whistleblowing can seek legal remedies. This law is designed to protect employees who expose wrongdoing.
  • Texas Unemployment Compensation Act: This act provides unemployment benefits to eligible workers who lose their jobs through no fault of their own. It establishes criteria for eligibility, including sufficient past earnings and active job searching. Employees who are terminated may qualify for temporary financial assistance while seeking new employment.
  • Fair Labor Standards Act (FLSA): A federal law that establishes minimum wage, overtime pay, and child labor standards. It requires employers to pay at least the federal minimum wage and overtime for hours worked over 40 in a workweek. Terminated employees are entitled to any unpaid wages and overtime earned prior to termination. The FLSA ensures that employees are compensated fairly for their labor.
  • Family and Medical Leave Act (FMLA): A federal law that entitles eligible employees to up to 12 weeks of unpaid leave for certain family and medical reasons. It includes leave for personal or family illness, childbirth, or adoption. Employees are guaranteed job protection and continuation of health benefits during leave. Termination related to FMLA leave can lead to legal consequences for employers.
  • Occupational Safety and Health Administration (OSHA): A federal agency that sets and enforces workplace safety and health standards. Employees have the right to a safe workplace and can report hazardous conditions without fear of retaliation. Termination for raising safety concerns or filing OSHA complaints can be challenged as unlawful. This agency aims to prevent workplace injuries and illness.
  • Worker Adjustment and Retraining Notification (WARN) Act: A federal law that requires employers to provide 60 days notice in advance of plant closures or mass layoffs. It applies to businesses with 100 or more full-time employees. The notice allows employees time to seek alternative employment or retraining opportunities. Failure to comply with the WARN Act can result in penalties for the employer.

Terminated Employee Benefits in Texas

When an employee is terminated in Texas, whether it is due to layoffs, dismissal for cause, or other reasons, there are several considerations regarding their benefits:

  • Final Paycheck: Texas law requires employers to provide employees with their final wages within a specific timeframe after termination. For involuntary terminations, the final paycheck must be given within six calendar days of the termination date. If the termination is voluntary, the final paycheck must be provided by the next regularly scheduled payday.
  • Health Continuation Insurance: Terminated employees may be eligible for continuation of health insurance coverage under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA allows employees and their dependents to continue group health insurance coverage for a limited period, typically up to 18 months, by paying the full premium.
  • Severance Pay: Severance pay in Tecas can be enforceable if it is promised in writing or another form of agreement. According to Texas Payday Law § 821.25(b), severance pay is additional compensation for past services, typically based on a predetermined formula such as length of service. It must be established in written commitments. Severance pay differs from wages in lieu of notice, which compensates for lack of advance notice and is at the employer’s discretion.
  • Retirement Benefits: Employees with retirement plans such as 401(k)s or pensions may be entitled to receive vested contributions and any employer contributions upon termination, as governed by the terms of the plan.
  • Unemployment Benefits: Terminated employees in Texas may qualify for unemployment benefits through the Texas Workforce Commission (TWC), provided they meet eligibility criteria such as sufficient earnings and actively seeking new employment.
  • Child and Spousal Support Deductions: Employers must deduct specified amounts from severance pay or wages in lieu of notice as outlined in child or spousal support orders under the Texas Family Code § 158.214.

Layoffs in Texas

In Texas, a layoff occurs when employers reduce their workforce for reasons such as economic downturns, restructuring, budget cuts, or job redundancy. It is distinct from termination for cause, as it is not due to employee performance or misconduct but rather external factors affecting the employer’s operations.

Employers are required to comply with the Worker Adjustment and Retraining Notification (WARN) Act, which mandates that employers must provide advance notice of layoffs and plant closures affecting a significant number of employees. The WARN Act applies to businesses with 100 or more full-time employees and must provide at least 60 days of advance notice to their affected employees.

Resignations in Texas

Voluntary Resignations

Voluntary resignations in Texas occur when an employee chooses to end their employment voluntarily. Reasons for voluntary resignations can vary widely and may include career advancement opportunities, personal reasons, dissatisfaction with the job or company culture, or even relocation. In such cases, the decision to resign is entirely within the employee’s discretion. Most employees in Texas provide two weeks’ notice as a courtesy and can do it in verbal or written form.

Involuntary Resignations

Involuntary resignations occur when an employer coerces or applies pressure that forces the employee to resign. This can include constructive dismissal (where an employer makes working conditions intolerable to encourage resignation), coerced resignations due to threats or harassment, or situations where an employee can resign or be terminated. In Texas, employees who are coerced into resigning under duress or facing unfair conditions may have legal recourse depending on the circumstances, such as claims of wrongful termination or breach of employment contract.

Legal Cases Related to Wrongful Termination in Texas

1. Dallas Independent School District Settles for $60,000 in Tonya Sadler Grayson’s Discrimination and Retaliation Lawsuit

In the case, Tonya Sadler Grayson v Dallas Independent School District, Tonya Sadler Grayson served as the executive director of human resources at the Dallas Independent School District for 18 months. Her tenure was marked by several controversies, including accusations of lying on her employment application and bullying a colleague. Despite these issues, she received unwavering support from the district superintendent, Mike Miles.

After a new superintendent, Michael Hinojosa, took over, he requested Grayson’s resignation. When she refused, Hinojosa terminated her employment in July 2015.

Grayson sued the school district, alleging racial discrimination, sexual harassment, retaliation for reporting the harassment, and denial of due process upon her termination. In March 2017, a judge dismissed most of her complaints. Despite this, mediation resulted in Grayson receiving a $60,000 settlement, highlighting that ex-employers sometimes opt to settle to avoid the costs associated with lawsuits.

Key lessons learned from this case:

  • Even when most claims are dismissed, mediation and settlements can still provide some form of compensation for plaintiffs.
  • Organizations may choose to settle disputes to avoid the higher costs and prolonged nature of legal recourse, even if they believe they have a strong defense.

2. EEOC Settles Age Discrimination Lawsuit Against Tandy Brands Accessories, Inc. for $95,000

In the case, EEOC v. Tandy Brands Accessories, Inc., Merta Withrow, aged 62, was terminated from her managerial position at Tandy Brands Accessories, Inc., a fashion accessory manufacturing company located in Victoria, Texas. Although her termination was presented as part of a reduction in force, the company retained a younger, much less qualified manager to take over her responsibilities.

Such actions violate the Age Discrimination in Employment Act (ADEA), which prohibits discrimination against employees aged 40 and over. The Equal Employment Opportunity Commission (EEOC) filed a lawsuit on Withrow’s behalf. The case was settled through a consent decree, resulting in Withrow receiving a settlement of $95,000.

Key lessons learned from this case:

  • The Age Discrimination in Employment Act protects qualified employees over 40 from being unfairly terminated in favor of younger, less qualified individuals.
  • The EEOC plays a crucial role in advocating for employees’ rights and securing settlements in cases of age discrimination.
  • Employers must ensure that reductions in force are conducted fairly and without bias against older employees to avoid legal repercussions.

3. Downhole Technology Settles EEOC Racial Harassment and Retaliation Suit for $120,000

In the case, EEOC v. Downhole Technology, LLC., Kenneth Echols, an African-American employee at Downhole Technology, a Houston-based manufacturer of oil industry equipment, faced racial harassment from his colleagues. They intimidated him by displaying a white hood reminiscent of the Ku Klux Klan. When Echols reported the incident to management, he was told it was merely a joke.

Echols was subsequently asked to sign a declaration stating that the company had thoroughly investigated his complaint, which he refused. In retaliation, he was terminated.

The Equal Employment Opportunity Commission (EEOC) filed a lawsuit on behalf of Echols, alleging violations of Title VII of the Civil Rights Act. The suit claimed that the company failed to prevent racial discrimination and retaliated against Echols for reporting the harassment. The case was settled through a consent decree, with Echols receiving $120,000 in monetary relief.

Key lessons learned from this case:

  • Companies must take all complaints of racial harassment seriously and conduct thorough investigations to prevent a hostile work environment.
  • Employees are protected under Title VII from retaliation for reporting discrimination or harassment, and employers must adhere to these protections to avoid legal consequences.
  • Regular sensitivity training for employees and management can help prevent discriminatory behavior and ensure a respectful workplace for all employees.

Learn more about Texas Labor Laws through our detailed guide.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.

Most Read