If an Employee Can Only be Fired for Cause, What Situations Apply?

Most employers in Dallas know that Texas is an “at-will” state, which means that employees can be terminated at any time and for any reason as long as the reason is not prohibited by federal or state law. For example, an employer cannot terminate an employee because of that employee’s age, sex, or race (and a host of other protected categories). However, some employees are not subject to the at-will policy of the state because they have an employment contract that states otherwise. Most often, an employee with an employment contract has a “for cause” provision in his or her employment contract.  In such instances, it is important for all employers in Texas to consider the specificity with which they draft employment agreements and company policies, and to clarify what actions or inactions in the workplace might amount to “cause” for terminating an employee.

If you have an employee with questions about being terminated for “cause” and the types of situations that may allow you to end the employment relationship, you will need to gain a clear understanding of your rights and obligations as an employer under Texas law.

What Can “Cause” Mean

In an employment contract setting, “cause” can mean virtually anything that you want it to mean.  Accordingly, when providing a definition or examples, it is best to be specific.  For example, most companies indicate that “cause” includes conviction of crime that constitutes a felony or an act of moral turpitude, being under the influence at work, engaging in fraud, or a host of other activities.

When it comes to defeating unemployment claims in the area of for “cause” terminations, it is important to understand Texas law.  While other states might have a wider range of employee behaviors (or omissions) that might constitute “cause” for firing, employers should know that in the area of unemployment, the Texas Workforce Commission (TWC) specifically considers “cause” to be “misconduct.” To be clear, if you have an employment contract or a written policy that states certain employees can only be terminated for “cause” or even for “good cause,” you should know that the TWC likely will interpret this word or phrase to mean misconduct.

What is misconduct under Texas law? The Texas Labor Code (§ 201.012) defines misconduct as “mismanagement of employment by action or inaction, neglect that jeopardizes the life or property of another, intentional wrongdoing or malfeasance, intentional violation of a law, or violation of a policy or rule adopted to ensure the orderly work and the safety of employees.”

Steps Employers Must Take to Clarify What Constitutes Misconduct in the Workplace

There are many different kinds of behaviors that can constitute misconduct, and thus can result in an employee being lawfully terminated for “cause.” Yet employers are not required to outline every possible scenario that could result in a lawful termination for “cause” in an employee’s contract or in a written policy or employee handbook. Indeed, the Texas Workforce Commission underscores that “employer policies do not need to list every possible thing that might lead to discharge, but it is generally a good idea to identify the broad categories of offenses that would be immediately terminable, and those that would generally lead to some kind of progressive disciplinary action.”

In general, to be terminated for cause, a contract should indicate that an employee must do something (or fail to do something) that causes harm (or risks harm) to the employer, and that violates a lawful workplace policy or a state or federal law.

Examples of employee behaviors that may constitute misconduct include but are not limited to the following:

  • Violating the employer’s code of conduct or violating the employer’s written policy
  • Breaching one of the terms of the employment contract
  • Engaging in harassment at the workplace
  • Making threats of violence or engaging in otherwise threatening behavior
  • Stealing from the employer
  • Insubordination
  • Providing false information to the employer
  • Failing the employer’s required drug or alcohol screening
  • Being convicted of a criminal offense

The Texas Labor Code makes clear that misconduct never includes “an act in response to an unconscionable act of an employer or superior.” Related to that clarification, it is important for employers to know that federal and state laws prohibit employers from retaliating against employees for exercising their rights in many capacities, participating in any workplace investigations, or engaging in certain acts of whistleblowing. In other words, an employer in Texas never has “cause” to terminate an employee because that employee filed a discrimination claim or even because an employee violated an unlawful workplace policy.

Contact a Texas Employment Law Attorney

If you have questions about when an employee can be fired for “cause,” an employment lawyer in Dallas can help. Contact Simon | Paschal PLLC today.

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