You have probably heard many people talk about the “good old days” when you shook your boss’ hand and agreed to an employment deal. In Texas those days are long gone.
Texas is an at-will employment state, which means that employees without a written employment contract may be fired for good reasons or no reason at all. Unless you have a written employment contract, nothing limits your employers from firing you.
Earlier this year, a case was filed in the Fifth Circuit (on appeal from Southern District of Texas – Houston Division) regarding how fraud claims intertwine with the at-will nature of employment in Texas.
The original case involves former employees at a DuPont facility who were covered by a collective-bargaining agreement. These employees claimed they were fraudulently induced to terminate their employment with DuPont, and were required to enter employment with a newly formed subsidiary. The fraud issue involves whether, at the time of negotiations with these employees, DuPont knew it intended to sell the subsidiary.
The Texas Courts of Appeal in Waco, San Antonio, and Houston have previously concluded that Texas law does not permit at-will employees to bring fraud claims against their employer for a resulting loss of their employment. The Beaumont Court of Appeals, however, has held otherwise. Because the Texas Supreme Court has not previously addressed this issue, the Fifth Circuit originally had to guess how Texas’ highest court would treat these claims. (2)
In Sawyer v. du Pont, the Fifth Circuit originally rejected the employees claims of fraudulent inducement, concluding the employees were in an “at-will” employment status.
However the Fifth Circuit subsequently changed its mind and issued an order certifying two important employment questions[1] to the Texas Supreme Court:
- Under Texas law, may at-will employees bring fraud claims against their employers for loss of their employment?
- If the above question is answered in the negative, may employees covered under a 60-day cancellation-upon-notice collective bargaining agreement that limits the employer’s ability to discharge its employees only for just cause, bring Texas fraud claims against their employer based on allegations that the employer fraudulently induced them to terminate their employment?
These questions have been accepted by the Texas Supreme Court and are scheduled for oral argument by the attorneys on both sides of the case. Clearly, the outcome of The Texas Supreme Courts’ ruling will be an important issue to Texas labor law because the ruling by the Texas Supreme Court, if it upholds that the fraudulent inducement claim against DuPont may process, may bring back the good old days where you could rely on your boss’ handshake. The Vethan Law Firm, P.C. prosecutes and defends employment and non-compete cases involving management and senior level employees. Call us if we can be of service to you.
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