Texas is a jurisdiction with at-will employment. Employers in at-will states do not have to provide employees with reasons for termination, termination or severance pay or notice prior to terminating their employees. However, federal laws and Texas labor laws prohibit employers from terminating employees for public policy reasons or termination based upon an employee exercising a federally protected right.
Although Texas is an at-will jurisdiction, employers who enter into written employment contracts or collective bargaining agreements with their employees must comply with the legal provisions of those contracts. Some employment contracts contain specific termination language allowing employers to terminate only for cause based upon performance or for an employee’s misconduct. These employment contracts may require employers to provide severance pay to terminated employees.
As provided in the Texas Labor Code, Title 3, Chapter 101, Texas is also a right-to-work jurisdiction. Right-to-work jurisdictions prohibit employers from terminating its employees for refusing to unionize or for exercising their rights to unionize.
Public Policy Exception for FMLA
The Family Medical Leave Act contains specific job and benefits protections for employees during medical or military absences. Employers may not terminate employees for exercising their federal leave rights.
Public Policy Exception for EEOC
Employers who work in at-will states may not terminate employees for exercising their federally protected rights or based upon federal or state fair employment laws. The Equal Employment Opportunity Commission enforces federal laws protecting employees from illegal workplace discrimination. Federal laws protect employees from illegal workplace discrimination based upon an employee’s race, color, age (over 40), religion, gender, pregnancy and disability. Employers who illegally discriminate against employees for any of these protected reasons face both criminal and civil penalties through the Equal Employment Opportunity Commission and through the U.S. Department of Justice.
Employers in Texas do not have to provide severance pay after terminating an employee. Employers can voluntarily provide its employees with severance pay upon termination. However, employers who violate the Worker Adjustment and Retraining Notification Act by failing to provide notice of upcoming mass layoff may need to pay severance pay or monetary damages to employees for every working day the employer failed to provide notice.
Worker Adjustment and Retraining Notification Act and COBRA
Texas employers who are performing massive layoffs must comply with the federal Worker Adjustment and Retraining Notification Act, or WARN. WARN requires all employers to provide notice before conducting large layoffs or before shutting down plants and facilities. Under the WARN act, employers must provide advance written notice to employees of impending termination if the employer lays off 500 or more employees or closes an entire plant or facility within a single site. Additionally, the Consolidated Omnibus Reconciliation Act, or COBRA, requires employers to provide employees with continuing health coverage at the employee’s own cost for up to 18 months or subsidized coverage under the American Recovery and Reinvestment Act if termination occurred during 2009 or before May 31, 2010.