Employment relationships in Texas are governed by the “at-will employment” doctrine. This means that either the employer or employee can terminate employment for any reason, or even no reason, unless there is a specific law or agreement to the contrary. Nevertheless, employers must still navigate various legal requirements and exceptions to avoid potential liability. This guide will outline how to legally terminate an employee in Texas while complying with state and federal laws.
At-Will Employment in Texas
Texas, like most states, is an “at-will” employment state, meaning that the employer or the employee can end the employment relationship at any time for any reason, with or without cause, as long as it does not violate any legal exceptions.[1]
Exceptions to At-Will Employment
While the at-will doctrine is the general rule, there are notable exceptions when terminating an employee could lead to legal claims against the employer. Employers must carefully consider the following exceptions before proceeding with termination:
- Discrimination
Texas and federal law prohibit employers from terminating an employee based on discriminatory reasons such as race, color, disability, religion, sex, national origin, or age.[2] Discriminatory termination can lead to claims under local, state, and federal anti-discrimination laws.
- Retaliation
Employers cannot terminate an employee in retaliation for engaging in certain protected activities. For instance, firing an employee for filing a workers’ compensation claim, serving on a jury, or reporting unlawful workplace behavior is illegal.[3] Retaliatory discharge claims can lead to significant legal consequences for employers.
- Refusal to Perform Illegal Acts
An employer cannot lawfully terminate an employee for refusing to engage in illegal acts that carry criminal penalties.[4] Known as the “Sabine Pilot” exception, this rule prevents employers from firing employees solely for refusing to commit unlawful actions, ensuring they are not forced to choose between their jobs and breaking the law.[5]
Special Considerations for Termination During Arbitration
During a labor arbitration process, the employer’s right to terminate is limited to cases of inefficiency, violations of law, neglect of duty, or the need for a workforce reduction. These criteria must be strictly followed, or the employer risks violating the law.[6]
Employment Contracts and Termination
When an employee is subject to an employment contract, termination is governed by the terms of that contract. Texas law also allows termination “regardless of whether the employee is employed under an employment contract” if an employee falsified or misrepresented their military record.[7]
Notice and Final Pay Requirements
Texas does not require employers to give advance notice of termination unless specified in an employment contract or a collective bargaining agreement. However, the Texas Payday Law requires employers to pay a terminated employee within six calendar days of termination. Employers should ensure compliance with these requirements to avoid penalties.[8]
Severance Pay
Texas law does not require employers to provide severance pay unless included in an employment contract or negotiated as part of a severance agreement. Severance agreements often include a release of liability for the employer to protect them from future claims.[9]
Conclusion
While Texas follows the at-will employment doctrine, employers must consider many statutory and common-law exceptions to avoid wrongful termination claims. By following these guidelines, employers can protect themselves from potential lawsuits and ensure that terminations are handled in compliance with state and federal law.
Consult a Texas employment attorney for personalized legal guidance tailored to your unique situation to help you avoid potential pitfalls and ensure compliance.
Contribution to this blog by Camile Alvarez.
