New Texas Supreme Court Case Helps/Hurts At-Will Status

texasOn April 25, 2014, the Texas Supreme Court issued a decision in the Sawyer, et al. v. Du Pont case, which can be found here. The case involved questions from the Fifth Circuit Court of Appeals regarding the scope of the at-will doctrine in Texas. The facts of the case are that a group of employees who worked for Du Pont claimed they were fraudulently induced into becoming part of a business unit being spun off into its own company instead of transferring to another Du Pont facility, which was an option. The employees claimed they were promised that the new company would keep their current pay and benefits, and that it would not be sold. After the deadline to make a decision passed, and most of the employees joined the new business unit, Du Pont announced a sale of the facility to a competitor, who promptly reduced the former Du Pont employees’ compensation and benefits.

The first question answered by the Supreme Court was whether at-will employees could sue for fraud. The Court easily answered “No” to that question. The second question asked whether the employees’ collective bargaining agreement which contained a “just cause” provision would affect the analysis. Again, the Court answered “No” and held that the employees’ exclusive remedy would be under the collective bargaining agreement, not common law.

Perhaps the most interesting part of the decision is in footnote 24, where the Court cites to a Restatement of the Law dealing with the commonly arising situation where an employee is induced to leave a job in another state and move to Texas after being promised a job which never materializes. The Restatement would allow such an employee to sue for “the costs of moving her family across the country and for other loss occasioned by her relinquishing her former position … but not the value of the promised career.” The Court does not adopt the Restatement per se, but states that it is “consistent with our analysis.”

The takeaway from this case is that the at-will doctrine is alive and well in Texas. That said, the Court adds new support for an exception to the at-will doctrine in the limited circumstance of an employee who incurs a financial loss in reliance on a promise of employment which is later rescinded.

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HR Headaches is a blog for Human Resources professionals, business owners, and in-house counsel to get the latest news, analysis and tips in the area of labor and employment law. Every day there are new court decisions, agency interpretations, and regulations which affect the workplace, making it difficult, if not impossible, for many employers to keep current. HR Headaches is dedicated to providing information in a practical, no-nonsense manner to help employers avoid legal disputes and keep policies up to date.
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