Defending Your Business Against a Wrongful Termination Claim in Texas

There is no general wrongful termination claim in Texas

Texas is an at-will state. Absent a contract for a definite term, either the employer or the employee may end the relationship at any time, for any reason or no reason, with or without notice. A termination that was unfair, abrupt or badly handled is not, by itself, unlawful. The phrase “wrongful termination” in a demand letter or petition is a label; the claim underneath has to fit one of a limited set of exceptions, and the first job of the defense is to identify which one is being asserted.

That matters because the exceptions have different elements, different procedural requirements and different damages. A claim that is pleaded as “wrongful termination” without fitting any exception can be attacked early, sometimes by a Rule 91a motion to dismiss in state court.

The exceptions a former employee can actually use

Discrimination and retaliation

Texas Labor Code chapter 21 prohibits discharge because of race, color, disability, religion, sex, national origin or age, and prohibits retaliation against an employee who opposed a discriminatory practice, filed a complaint or participated in an investigation. It applies to employers with 15 or more employees and tracks the federal statutes: Title VII, the Age Discrimination in Employment Act and the Americans with Disabilities Act. These claims require an administrative charge before suit, discussed below, and they are the most common content of a wrongful termination letter.

The Sabine Pilot exception

In Sabine Pilot Service, Inc. v. Hauck (1985), the Texas Supreme Court recognized a single common-law exception to at-will employment: an employer may not discharge an employee for the sole reason that the employee refused to perform an illegal act that carries criminal penalties. The word “sole” does the work. If the employer had any other reason for the termination, even alongside the refusal, the claim fails. The exception does not cover employees who were fired for reporting illegal conduct rather than refusing to participate in it, and it does not extend to acts that are merely improper rather than criminal.

Workers' compensation retaliation

Labor Code chapter 451 prohibits discharging or discriminating against an employee because the employee filed a workers' compensation claim in good faith, hired a lawyer to represent a claim, instituted a proceeding, or testified in one. The causation standard is less demanding than Sabine Pilot's sole-cause test, so terminations that follow an injury claim closely in time draw this claim often.

Contract

An employee with a written agreement for a definite term, or with a contract that limits termination to cause, is not at will. Less obviously, handbook language or oral assurances can in some circumstances be argued to create a contract limiting the employer's right to terminate, although Texas courts require specific language and most handbooks disclaim it. Whether that argument has traction is covered in when a handbook becomes a contract in Texas.

Other statutory protections exist for specific situations, such as jury service, military leave, leave under the federal Family and Medical Leave Act, and complaints under the federal wage and hour law. A litigator will check each against the facts of the termination.

Deadlines the former employee must meet

Discrimination and retaliation claims under chapter 21 and the federal statutes cannot be filed directly in court. The employee must first file a charge with the Texas Workforce Commission Civil Rights Division within 180 days of the alleged unlawful practice, or with the Equal Employment Opportunity Commission within 300 days, since Texas is a state with its own enforcement agency. A charge filed with either agency is treated as filed with both. After the agency issues a notice of the right to sue, the employee has 60 days to sue under the Texas statute and 90 days under the federal statutes, and a Texas suit must in any event be filed within two years of the charge.

These deadlines are defenses, and they are often decisive. A letter that arrives seven months after a termination and threatens a discrimination suit may describe a claim that can no longer be brought under Texas law, even though the federal window is still open. The employer's response should be built around the calendar. What happens once a charge is actually filed is covered in what to do when the company receives an EEOC charge.

How the defense is built

Discrimination and retaliation cases usually turn on pretext: the employee concedes that the employer gave a reason and argues it was not the real one. The defense therefore depends on the decision record.

1. Who decided and when. Identify the actual decision-maker and the date the decision was made, which is often earlier than the termination date. A decision made before the employer learned of a protected complaint cannot have been caused by it.
2. The stated reason, consistently. The reason given at termination, in the unemployment response, in the position statement and in testimony must be the same. Shifting explanations are the most common evidence of pretext.
3. Comparators. How were other employees who did the same thing treated? Consistent discipline across employees inside and outside the protected class is the core of the defense; inconsistency is the core of the claim.
4. Contemporaneous documents. Performance reviews, warnings, emails and metrics that existed before the termination. Documents created afterward to support the decision are discounted and can backfire.
5. The company's own policies. Whether the handbook's progressive discipline or investigation procedure was followed. Deviation is not itself unlawful but is argued as evidence of pretext.

For a Sabine Pilot claim the defense is any legitimate additional reason for the termination, which defeats sole causation. For a workers' compensation claim it is evidence that the decision rested on neutral application of a policy, such as an attendance rule, applied the same way to employees who had not filed claims. For a contract claim it is the contract's actual language and the disclaimer in the handbook.

Example

Suppose a Dallas logistics company terminates a dispatcher two weeks after she reports to HR that her supervisor made comments about her age. The termination letter cites three documented attendance violations. Her lawyer's letter calls it wrongful termination and retaliation.

The company's litigator pulls the record: the three attendance write-ups predate the HR complaint by two to five months; two other dispatchers, both under forty, were terminated in the past year after their third violation under the same policy; and the operations manager, not the supervisor she complained about, made the termination decision and documented it before the HR complaint was logged. The company responds with a short letter stating that the termination followed a uniformly applied attendance policy, preserves all records, and later submits a position statement to the agency with the comparator data. The retaliation theory loses its timing argument, and the age claim has no comparator support.

What the former employee can recover

Under chapter 21 a prevailing employee can recover back pay, reinstatement or front pay, compensatory damages for emotional harm, punitive damages where malice or reckless indifference is shown, and attorney's fees. Compensatory and punitive damages together are capped by employer size under section 21.2585: $50,000 for employers with 15 to 100 employees, $100,000 for 101 to 200, $200,000 for 201 to 500, and $300,000 for more than 500. The federal statutes carry the same caps. Back pay and attorney's fees are not capped, and fees in a case that goes through trial can exceed the damages. Sabine Pilot and chapter 451 claims allow actual damages, including lost wages and mental anguish, and exemplary damages in appropriate cases.

What the business should do in the first week

• Preserve the personnel file, the decision-maker's emails and messages, the attendance or performance system data, and the files of comparators. Suspend any auto-deletion.
• Notify the employment practices liability insurer if the company has coverage. Policies require prompt notice and often control the choice of defense counsel.
• Do not contact the former employee directly about the claim, and instruct managers not to discuss it with staff.
• Pay final wages on time: by the sixth day after an involuntary termination under the Texas Payday Law. An unpaid final check is a separate, easily proven claim.
• Have a litigator identify the theory, calendar the deadlines and draft any response. How to handle the letter itself is covered in when a former employee's lawyer sends a demand letter.

Most wrongful termination claims are decided by the quality of the employer's records and the consistency of its explanation. A business with a clean decision record and uniform discipline can usually resolve the matter at the agency stage or early in litigation. Tina Wysk defends employers in termination, discrimination and retaliation disputes in Dallas state and federal courts; see employment-related business disputes.