What Is the “At-Will” Employment Rule in Texas?

1. When Are You an At-Will Employee?

In Texas, and in most if not all other states, every employee is presumed to be an at-will employee.  There are two exceptions: (1) employees with certain types of employment contracts, and (2) most union members.

2, What Does It Mean to Be an At-Will Employee?

It means that you can be fired "at the will" of your employer.  You can be fired for a good reason, a bad reason, or no reason at all.  However, you cannot be fired for an illegal reason.  If you are fired for an illegal reason (such as race discrimination, retaliation for complaining about illegal activity, or exercise of your protected legal rights), you may have a claim for wrongful termination.

This also means that you can quit a job for any reason and at any time.  In essence, the employment relationship is voluntary.  You are not required to work for the employer, and the employer is not required to use your services.

3. What Kinds of Contracts Will Overcome the Presumption That I Am an At-Will Employee?

Most workers do not have employment contracts.  Your employer may require you to sign various agreements when you begin work, but these agreements will almost always specify that you are an at-will employee.  Likewise, many employers have employee handbooks that specify disciplinary procedures and grounds for termination, but the employee handbook will almost always specify that it is not a binding contract (or it will state that the employer is free to disregard the disciplinary procedures and do whatever the employer wants).

A few employees actually have written contracts that remove them from at-will status.  Such a contract will usually specify some specific period of time (such as three years) during which you will be employed, as well as specifying the specific grounds on which you can be terminated.  These grounds must be specific.  A general statement such as "Employee may be terminated for good cause" is not sufficient to remove the employee from at-will status.  For example, an enforceable contract might specify that the employee can be fired for being convicted of a crime, for failing to meet certain specific financial goals, or for failure to perform the employee's duties to the company.

It is possible for an oral contract to remove the employee from at-will status, but it is difficult to prove such a contract.  As one Texas court explained:

For such an agreement to exist, the employer must unequivocally indicate a definite intent to be bound not to terminate the employee except under clearly specified circumstances.  In other words, to be enforceable, an agreement to modify the employment at-will relationship must be (1) express rather than implied, and (2) clear and specific.

Miksch v. Exxon Corp., 979 S.W,2d 700, 703 (Tex. App. -- Houston [14th Dist.] 1998, pet. denied).

In addition, if the term of employment is specified as lasting for one year or more, the Texas statute of frauds will require the contract to be in writing.  For example, a promise to employ a worker for three years must be in writing.  Occasionally, an employee claims that the employer promised "lifetime" employment, rather than a specific number of years.  The weight of authority in Texas is that "lifetime" employment contracts must be in writing.

4, When Are Union Members Not At-Will Employees?

If the union and the employer have entered into a collective bargaining agreement that limits the right of the employer to fire employees, then a fired employee may have a remedy under the collective bargaining agreement.  This is normally handled through the union's grievance procedures.

If there is no collective bargaining agreement, or if the collective bargaining agreement does not limit the right of the employer to fire employees, then the union members are at-will employees.

5. If You Are an At-Will Employee, and You Are Fired, Do You Have Any Recourse?

The rights of an at-will employee are limited.  For an extended discussion of the subject, go here.

At-will employees can always invoke the discrimination statutes and a variety of other statutes and common law rules that prohibit an employer from firing an employee for illegal reasons.  The fact that you are an at-will employee does not allow your employer to fire you because of your age, for example.

Government employees may have additonal rights.  State and local government employees may be protected by civil service laws, and some federal employees have a form of civil service protection that is administered by the Merit Systems Protection Board or other agencies.  In addition, government employees may have constitutional claims -- such as denial of due process -- in connection with their terminations.  In some limited cases, government employees may be protected from termination due to the exercise of their constitutional rights, such as the right to free speech.

Otherwise, at-will employees have no recourse in Texas, other than to file a claim for unemployment compensation with the Texas Workforce Commission.

6. Can You Sue Your Employer for Fraud, Bad Faith, or Promissory Estoppel  If You Get Fired?

A few employees have tried to get around the at-will employment contract by claiming fraud , bad faith, or some similar theory.  With two exceptions, they have all lost.  In both of the exceptions, a court recognized a promissory estoppel claim against the employer.

The first exception is Roberts v. Geosource Drilling Services, Inc., 757 S.W.2d 48 (Tex. App. -- Houston [1st Dist.] 1988, no writ).  In that case, Geosource hired Roberts to work on an offshore project.  Roberts signed a written contract with Geosource, though the contract provided for employment at will.  Relying on oral promises and the written agreement, Roberts quit his current job and prepared to go to work for Geosource.  A few days later, Geosource called him and told him that it had changed its mind and that it would not employ him.

Roberts sued Geosource for breach of contract, promissory estoppel, and fraud.  The trial court ruled against Roberts, but the First Court of Appeals reversed with respect to the promissory estoppel claim:

Sturm's undisputed oral promise clearly imposed a duty on Geosource to employ Roberts -- but not for a fixed duration -- and that duty was breached by Geosource.  It is no answer that the parties' written contract was for an employment-at-will, where the employer foreseeably and intentionally induces the prospective employee to materially change his position to his expense and detriment, and then repudiates its obligations before the written contract begins to operate.

Id. at 50.

Several other courts have rejected Roberts or have found ways to distinguish it.  No court has followed Roberts.  It is not clear whether any court will follow Roberts in the future, but as of now it remains good law.

The second exception is Hernandez v. UPS Supply Chain Solutions, Inc., 496 F. Supp. 2d 778 (W.D. Tex. 2007).  The facts of that case are essentially the same as Roberts, except that the employee had actually moved from Illinois to El Paso based on the promise of employment.  Apparently, the only damages that the plaintiff sought were his travel and moving expenses.  The federal district court noted the conflict between Roberts and the other Texas state court cases, but declined to resolve the conflict:

The Court recognizes that a split exists between Texas state appellate courts, and declines to opine on that conflict.

Instead, the court simply held that UPS had failed to rebut the employee's claim of detrimental reliance.  The court ruled in favor of the employee on the basis of promissory estoppel.

Again, it is not clear whether any court would follow this decision, but as of now it remains good law.

David C. Holmes is a Houston employment lawyer with The Law Offices of David C. Holmes

One Comment

  1. avatar Frank
    Posted July 4, 2013 at 10:27 am | Permalink

    I am a Texas State Employee at a University. I was let go according to the at will employment rule with out any type of grievance clause. Basically I was told it was not working out for both parties and let go after close to two years of salaried employment.
    I was under the belief that working for a University that this was something that could not just happen as described. Was I mistaken?

Post a Comment

Your email is never published nor shared. Required fields are marked *

*
*