The Good, The Dangerous, and The Unknown: Three Recent Employment Law Updates for Texas Employers

Between a change in power at the White House and a new Legislative Session in Texas, significant changes in employment law for companies here in Texas were to be expected in 2021. Ultimately, those changes have resulted in a bit of a mixed bag for employers, as briefly described below. 

The Good: Texas SB 6, a.k.a. Texas Pandemic Liability Shield Act

Arguably the best news to come out of the 87th Texas Legislature earlier this year was the passage of SB 6 into law, which some have referred to as the Texas Pandemic Liability Shield Act. SB 6 amends the Texas Civil Practice & Remedies Code to specifically address the potential liability of numerous actors for injuries or death related to “pandemic disease,” including physicians, first responders, products manufacturers, and educational institutions. While precisely how courts will apply the new law to employers has yet to be determined, assuming it does apply, the law creates additional procedural hurdles and requirements of proof for a plaintiff asserting that she suffered injury or damages due to a workplace exposure to COVID-19.

For example, SB 6 requires such a plaintiff to, within 120 days of the employer filing its answer, serve the employer with a report “authored by at least one qualified expert that provides a factual and scientific basis for the assertion that the defendant’s failure to act caused the individual to contract a pandemic disease.” The sufficiency of this report can then be challenged by the defendant employer, just like any other expert report. Perhaps most importantly, however, if the plaintiff ultimately fails to provide such a timely and sufficient expert report, the trial court “shall,” upon a motion by the defendant, dismiss the plaintiff’s claim with prejudice and award the defendant its reasonable attorneys’ fees and costs incurred in defending the action.

While SB 6 also places limits on the number of depositions that a plaintiff may take before serving the required expert report, it is the potential financial hammer of holding a plaintiff liable for the defendant’s legal fees that makes this a useful weapon in situations where it applies. Another protection SB 6 provides is that, for a defendant to be liable for the alleged workplace exposure, the defendant must have knowingly failed to take appropriate measures or actions rather than to have merely acted in a negligent manner. Importantly, SB 6 went into effect immediately upon being signed by Governor Abbott and applies retroactively to any active lawsuit commenced on or after March 13, 2020.

The Dangerous: Texas SB 45 & HB 21 Expand Employer Liability for Sexual Harassment

The news out of the 87th Legislature wasn’t all good for employers, though. The Texas Legislature also passed SB 45 and HB 21, which Governor Abbott signed into law and which will become effective September 1, 2021. SB 45 amends the Texas Labor Code to significantly increase the liability of Texas employers AND those in managerial and supervisory roles for sexual harassment, while HB 21 extends the time claimants have to file an administrative charge for sexual harassment.

SB 45 marks a substantial expansion of the Texas Labor Code’s reach with respect to sexual harassment claims by exponentially increasing the number of entities and even individuals who qualify as an “employer” for purposes of a sexual harassment claim under Texas state law. While most provisions of the Texas Labor Code dealing with discrimination and harassment only apply to employers with at least 15 employees, SB 45 defines an “employer” for sexual harassment purposes as any person or entity who employs “one or more” employees. Additionally, SB 45 appears to create individual liability for those who act “directly in the interests of an employer in relation to an employee.” This language is so vague and broad that it could arguably apply to business owners, managers, supervisors, human resources professionals, and even others who merely exercise some level of control over the plaintiff’s work. Furthermore, SB 45 requires an employer that becomes aware of potential sexual harassment to take “immediate” action to remedy it rather than “prompt” action, which had been the standard previously applied by Texas courts.

Meanwhile, HB 21 adds to employers’ headaches and further separates sexual harassment claims under Texas law from all other discrimination and harassment claims by extending the deadline to file an administrative charge with the Texas Workforce Commission from 180 days after the alleged harassment to 300 days after.

Given these very significant expansions to the reach of and potential liability for sexual harassment under Texas law, all Texas employers would be well advised to engage legal counsel to review and update their company policies on sexual harassment and other forms of harassment and discrimination, and also to conduct annual training on sexual harassment for any supervisory-level employees, at the very least (though training for the entire workforce is ideal, if feasible).

The Unknown: White House Executive Order 14036

At the federal level, President Joe Biden made clear during the 2020 election his intention to be the most labor-friendly commander-in-chief in history. While only time will tell how successful he is in meeting that campaign promise, one recent act that generated headlines was the issuance of Executive Order 14036 on July 9, 2021. It has been widely – and erroneously – reported that EO 14036 bans or will ban the use of non-competes nationwide. In fact, this order does nothing of the sort.

EO 14036 does, however, essentially demonize the use of non-competes outside of limited circumstances. Typically, those limited circumstances involve highly-compensated executives and managers with access to sensitive trade secrets and the like. As for what the order actually does, it merely requests that the Federal Trade Commission (“FTC”) consider using its rulemaking powers to “curtail the unfair use of noncompete clauses.” The FTC is likely to try to follow President Biden’s request, but before any actual changes to non-compete law can be implemented at the federal level, there are many hurdles that would have to be overcome:

  • First, the FTC has to decide that it has authority to address non-competes, which have traditionally been governed by state law.The FTC’s enforcement abilities are limited by federal statute to acts or practices that are likely to cause substantial injury to “consumers,” and it is far from clear that non-competes fit under that authority.
  • Then, the FTC would be required to create and publish a proposed rule, solicit public comments on the rule, and consider making changes to the proposed rule based on those comments; this process typically takes at least one year.
  • Finally, after going through all of the above steps, any rule the FTC adopted would be certain to face numerous legal challenges in court that would almost certainly delay actual implementation of the rule, if not block it completely.

Bottom line, EO 14036 makes clear the Biden Administration’s hostility toward non-competes, but that’s about it. Any action at the federal level will take years to be put into place, and that is only if it survives the court battles it would be sure to face. So, for now employers are free to continue business as usual with regard to non-competes, but they will also need to closely monitor developments at the federal and state levels because more and more states are taking steps on their own to limit the use of non-competes.

Cokinos | Young Is Here to Help!

The one constant with labor and employment laws is that they are always changing, and with the current climate of politics and the pandemic, changes happen faster than ever! Fortunately, employers can seek wise counsel from the labor and employment team at Cokinos | Young, led by Board Certified employment attorneys J. Shannon Gatlin and M. Wilson Stoker, who stand ready to answer any questions and to offer advice and solutions related to the above topics and any other employment law questions or concerns your company may have.