Can You Be Guilty of Wrongful Termination in an At-Will Employment Environment?

Texas is an “at-will” state (just like every other state except Montana) which means that an employee can be terminated at any time, for any reason that is not prohibited by state or federal law. 

It is important to note, however, that most states have exemptions to at-will employment beyond the primary exemptions of non-discrimination, non-harassment, and non-retaliation. These exemptions may include public policy, implied contract, and covenant of good faith.  Employers who fire an employee for one these reasons could be guilty of wrongful termination. Here is what you need to know.

Public Policy Exemptions

Most states recognize the public policy exemption, and Texas is no exception. The law prohibits an employer from firing an employee when the termination defies an explicit, well established-public policy of the state.

Employees terminated for the following reasons may be successful at pursuing wrongful terminations under the public policy exemption:

  • Refusal to commit a crime.
  • Reporting an employer’s crime or violation of the law (depending upon other circumstances).
  • Exercising a legal right, such as filing a workers’ compensation claim.
  • Engaging in acts that are in the interest of the public (such as jury duty and other items).

Implied Contract Exemptions

If you have a written contract showing your dates of employment, that is easy to prove. An oral or implied contract is much harder, but in some states, implied contracts are legally binding and subject to the same legal rules as all other kinds of contracts.

An implied contract may be created in several different ways. For example, although rare, you may give out oral assurances to your employees such as, “We need good people like you around here. You have got a job for life!” An employer’s handbooks, policies, or other written assurances can also create an implied contract under certain circumstances. Therefore, as an employer, you need to watch what you say and how your policies are drafted. Your employee documents should not imply any type of employment for any length of time. If this is misconstrued, you could be charged with wrongful termination if you ever fire the employee.

Generally, courts will disregard any language that promises long-term or permanent employment and will consider the relationship to be at-will. However, employers can further protect themselves by using clear and unambiguous language. It’s important to include a statement in your employee handbook, and in written materials, stating that the sharing of the company’s policies and procedures do not create contractual rights.

Covenant of Good Faith Exemptions

The good faith exemption to at-will employment seeks to prohibit terminations motivated by malice towards an employee.  Examples of this would be firing an older employee to avoid paying retirement benefits or terminating a salesman before he receives a large commission. There have been very few cases where an employer has been found guilty of wrongful termination based on this exemption, and Texas does not recognize the covenant of good faith in an employment context.

Contact Our Frisco Employment Law Attorneys Today

Even in an at-will state, you can still be guilty of wrongful termination.  With the prevalence of remote work, it’s common to have employees in many states and keeping track of all the disparate employment laws can be tricky.  Be sure you understand all applicable laws in relevant states to ensure you don’t make a misstep.

If you need help with any employment or business law matter, the Frisco employment lawyers at Simon | Paschal PLLC can help. To schedule a consultation today, contact us online or call (972) 893-9340.

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