Employee-At-Will : Status in Texas and Employment Agreements

Texas is an “Employee-At- Will” state which gives few rights to an employee that are not created by statute or governed by labor regulations. At-will employees can be terminated for any reason, as long as the reason is not in violation of specific statutes or is not due to failure or refusal of the employee to commit an illegal act during employment. A Texas Employment Contract is of critical importance in order to create equal rights and obligations that are enforceable. An employment contract must directly limit the employer’s right to terminate an employee without good cause (a defined term) or provide for a “term” of employment that is firm. In the employment contract the employer should unequivocally indicate that termination of the employee’s job may only occur in specific defined circumstances. The contract may also set out the terms on which a company hires an individual or an individual hires a company.

If properly prepared, this employment contract is a legally binding agreement in Texas and is enforceable in a court of law. Discretionary flexibility in changing the job terms and conditions is limited by a Texas employment agreement and the newly created legal obligations of the employer.

Many common provisions included in employment agreements are:

• Employee’s job description

• Employee’s monetary and benefits compensation

• Protection of Trade Secrets and Confidential Information

• Non-compete covenants of varied length, time and geographic location

• Prior physical exam and/or drug testing program ongoing

• Notification of Company Policies and Procedures

• Terms of Notice of Resignation and Return of Company Property

• Terms of employment and duration of employment

• Severance issues

• For cause termination

An oral employment agreement in Texas with a term less than one year in duration or an agreement which can be fully performed within one year, is generally binding. Contract terms can flow from a number of sources which may include the following:

1. Verbal agreements
2. Agreements in writing or document form
3. Agreements required by law
4. Implied – not written but mutually understood to exist
5. An offer letter
6. An employee handbook
7. A company notice board
8. Collective agreements
9. Emails
10. Faxes

Wrongful dismissal is a breach in the way the employee is dismissed, i.e. without being given proper notice or following the procedures as terms or rights set out in the employment contract.

In order to modify a Texas employment contract, there must be a subsequent agreement (preferably in writing) between the parties. Under certain circumstances, the employer may need to make changes to the contract because of economic circumstances. Things that might may be modified include:

• Rate of pay
• Work time
• Duties and responsibilities
• Work Location
• Correcting an error in the contract
• Disciplinary action – check disciplinary procedures to make sure this is done properly

Employees may ask for a change in a contract to: 

• Improve their work environment
• Secure a raise in pay
• Secure more vacation or holiday time
• Change work hours

A breach of the contract occurs when either the employer or the employee  violates a condition or term in the contract. A breach may be the result of a verbal or an oral (implied) agreement. If you think a breach of contract has occurred, it is best, generally, about absent fraud or duress, to take the problem to the employer first and attempt to work out a solution. If you decide to take legal action, remember you will need to prove financial loss in order to receive compensation. Legal counsel action may prompt the employer to counter sue, if the employer thinks it has legal ground. An employer has the legal right to sue the employee for damages just as the employee has the right to sue the employer.