By Dutton H.B. No. 1141 75R4320 JMM-F A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to termination of employment requirements regarding 1-3 certain employees; providing a civil penalty. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Title 3, Labor Code, is amended by adding Chapter 1-6 103 to read as follows: 1-7 CHAPTER 103. REQUIREMENTS FOR TERMINATION OF CERTAIN EMPLOYEES 1-8 SUBCHAPTER A. GENERAL PROVISIONS 1-9 Sec. 103.001. DEFINITIONS. In this chapter: 1-10 (1) "Employee" means an individual employed by an 1-11 employer, including an individual employed in a supervisory, 1-12 managerial, or confidential position. The term does not include an 1-13 independent contractor. 1-14 (2) "Employer" means a person that employs five or 1-15 more employees for each working day in each of 20 or more calendar 1-16 weeks in the two-year period preceding the date of a termination. 1-17 The term does not include a parent, spouse, child, or other member 1-18 of the employer's immediate family or of the immediate family of an 1-19 individual that has a controlling interest in the employer. 1-20 (3) "Fringe benefit" means vacation leave, sick leave, 1-21 compensatory leave, a medical insurance plan, a disability 1-22 insurance plan, a life insurance plan, a pension benefit plan, or 1-23 another benefit of economic value, to the extent the leave, plan, 1-24 or benefit is paid for by the employer. 2-1 (4) "Wages" means hourly wages or periodic salary, 2-2 including tips, regularly paid to an employee. The term includes 2-3 nondiscretionary commissions and bonuses and regularly paid 2-4 overtime, but does not include fringe benefits. 2-5 (5) "Termination" means: 2-6 (A) a dismissal of an employee by an employer, 2-7 including a dismissal resulting from the elimination of a 2-8 position; 2-9 (B) a layoff or suspension of an employee by an 2-10 employer for more than two consecutive months; or 2-11 (C) the voluntary leaving of employment or 2-12 retirement by an employee as the result of an act or omission by 2-13 the employer that, after notice to the employer of the act or 2-14 omission and the failure of the employer to provide appropriate 2-15 relief, is so intolerable that under the circumstances a reasonable 2-16 individual would voluntarily leave or retire from employment. 2-17 (Sections 103.002-103.020 reserved for expansion 2-18 SUBCHAPTER B. GROUNDS FOR CERTAIN TERMINATIONS 2-19 Sec. 103.021. TERMINATION FOR CAUSE. (a) An employer may 2-20 not terminate the employment of an employee without good cause. 2-21 (b) A termination is for good cause if: 2-22 (1) there exists a reasonable basis for the 2-23 termination that is related to an individual employee taking into 2-24 consideration relevant factors and circumstances, including the 2-25 employee's duties, responsibilities, conduct on the job or 2-26 otherwise, job performance, and employment record; or 2-27 (2) the termination is made in the exercise of 3-1 business judgment in good faith by the employer, taking into 3-2 consideration: 3-3 (A) the employer's economic or institutional 3-4 goals and the methods necessary to achieve those goals; 3-5 (B) the need of the employer to organize or 3-6 reorganize the employer's operations or to discontinue, 3-7 consolidate, or divest operations or positions or parts of 3-8 operations or positions; 3-9 (C) the size of the employer's work force and 3-10 the nature of the positions filled by the work force; and 3-11 (D) changing standards of performance for 3-12 employees. 3-13 (c) Subsection (a) applies only to an employee who has been 3-14 employed by the same employer for not less than one year and who 3-15 has worked for the employer for not less than 520 hours during the 3-16 26 weeks preceding the date of the termination. 3-17 Sec. 103.022. DETERMINATION OF LENGTH OF EMPLOYMENT. (a) A 3-18 layoff or other break in service is not counted in determining the 3-19 length of an employee's period of employment. 3-20 (b) An employee is considered to be employed during a paid 3-21 vacation or other authorized leave. 3-22 (c) An employee who is rehired after a break in service that 3-23 exceeds one year, excluding an absence due to a labor dispute or 3-24 authorized leave, is considered to be a newly hired employee. 3-25 (d) The 26-week period for purposes of Section 103.021(c) 3-26 does not include any week during which the employee was absent 3-27 because of: 4-1 (1) a layoff of one year or less; 4-2 (2) a paid vacation or other authorized leave; or 4-3 (3) a labor dispute. 4-4 Sec. 103.023. APPLICATION OF COMMON LAW. (a) Except as 4-5 provided by Subsection (c), this chapter preempts any right or 4-6 claim under common law raised by a terminated employee against an 4-7 employer or the employer's officers, directors, and employees, to 4-8 the extent the right or claim is based on the termination or on an 4-9 act or statement that is reasonably necessary to initiate or effect 4-10 the termination if the employee's termination: 4-11 (1) requires good cause under Section 103.021; 4-12 (2) is subject to an agreement under Section 103.042; 4-13 or 4-14 (3) is permitted by the expiration of an agreement 4-15 under Section 103.043(a). 4-16 (b) An employee whose termination is not subject to 4-17 Subsection (a) retains all common law rights and claims. 4-18 (c) This chapter does not supersede a right or claim of a 4-19 terminated employee against an employer if the right or claim 4-20 arises under: 4-21 (1) state or federal law; 4-22 (2) an administrative rule or regulation having the 4-23 force of law; 4-24 (3) a municipal ordinance that is valid under state 4-25 law; 4-26 (4) a collective bargaining agreement between an 4-27 employer and a labor organization; or 5-1 (5) an express oral or written agreement relating to 5-2 employment that does not violate this chapter. 5-3 (d) A right or claim listed under Subsection (c) may not be 5-4 asserted under this chapter, except as otherwise provided by this 5-5 chapter. 5-6 (Sections 103.024-103.040 reserved for expansion 5-7 SUBCHAPTER C. EMPLOYMENT AGREEMENTS 5-8 Sec. 103.041. AGREEMENTS BETWEEN EMPLOYER AND EMPLOYEE. (a) 5-9 A right of an employee under this chapter may not be waived by 5-10 agreement except as provided by this subchapter. 5-11 (b) By an express written agreement, an employer and an 5-12 employee may provide that the employee's failure to meet specified 5-13 business related standards of performance or the employee's 5-14 commission or omission of specified business related acts 5-15 constitute good cause for termination under this chapter. The 5-16 standards or prohibitions contained in the agreement are effective 5-17 only if consistently enforced and not applied to a particular 5-18 employee in a disparate manner without justification. If the 5-19 agreement authorizes a change by the employer in a standard or 5-20 prohibition, the change must be clearly communicated to the 5-21 employee in writing. 5-22 Sec. 103.042. AGREEMENT TO PROVIDE SEVERANCE PAY. (a) By 5-23 express written agreement, an employer and an employee may mutually 5-24 waive the requirement of good cause for termination if the employer 5-25 agrees that on the termination of the employee for any reason other 5-26 than wilful misconduct of the employee, the employer will provide 5-27 severance pay in an amount equal to at least one month's pay for 6-1 each year the employee was employed by the employer, with a maximum 6-2 total payment equal to 30 months' pay, at the rate of the 6-3 employee's wages in effect immediately before the date of 6-4 termination. 6-5 (b) An employer may make a payment under Subsection (a) in a 6-6 lump sum or in a series of monthly installments. An installment 6-7 payment may not be an amount equal to less than one month's pay 6-8 plus interest on the principal balance. Payment under this section 6-9 must be made or begun not later than the 30th day after the date of 6-10 the employee's termination. 6-11 (c) An agreement under Subsection (a) constitutes a waiver 6-12 by the employer and the employee of the right to a civil trial, 6-13 including a jury trial, concerning a dispute over the nature of the 6-14 termination and the employee's entitlement to severance pay. 6-15 Sec. 103.043. TERMINATION UNDER AGREEMENT OF EMPLOYMENT FOR 6-16 SPECIFIC DURATION. (a) The requirement of good cause for 6-17 termination does not apply to the termination of an employee at the 6-18 expiration of an express oral or written agreement of employment 6-19 for a specified duration related to the completion of a specified 6-20 task, project, undertaking, or assignment. 6-21 (b) If the employment continues after the date of the 6-22 expiration of an agreement under this section, Section 103.021 6-23 applies to the termination of the employment unless the parties 6-24 enter into a new express oral or written agreement under this 6-25 section. 6-26 (c) The period of employment under an agreement described by 6-27 this section applies toward the minimum period of employment 7-1 required by Section 103.021(c). 7-2 Sec. 103.044. AGREEMENT TO PROVIDE ADDITIONAL RIGHTS. (a) 7-3 An employer may provide substantive and procedural rights in 7-4 addition to the rights provided by this chapter to: 7-5 (1) one or more specific employees by an express oral 7-6 or written agreement; or 7-7 (2) all of the employer's employees by a written 7-8 personnel policy or statement. 7-9 (b) An agreement under Subsection (a) may provide that the 7-10 additional rights are enforceable under this chapter. 7-11 Sec. 103.045. AGREEMENT TO BE SUBJECT TO CHAPTER. (a) A 7-12 person who employs employees and an employee not otherwise subject 7-13 to this chapter may become subject to this chapter to the extent 7-14 provided by an express written agreement. 7-15 (b) A person who employs employees who becomes subject to 7-16 this chapter under an agreement under this section is considered to 7-17 be an employer for the purposes of this chapter. 7-18 Sec. 103.046. GENERAL REQUIREMENTS FOR AGREEMENTS UNDER 7-19 SUBCHAPTER. (a) An agreement between an employer and an employee 7-20 subject to this subchapter imposes a duty of good faith in the 7-21 formation, performance, and enforcement of the agreement. 7-22 (b) By express written agreement, an employer and an 7-23 employee may settle at any time a claim arising under this chapter. 7-24 (c) By express written agreement before or after a dispute 7-25 or claim arises under this chapter, an employer and an employee may 7-26 agree to private arbitration or any other alternative dispute 7-27 resolution procedure for resolving the dispute or claim. 8-1 (d) By express written agreement after a dispute or claim 8-2 arises under this chapter, an employer and an employee may agree to 8-3 judicial resolution of the dispute or claim. 8-4 (Sections 103.047-103.060 reserved for expansion 8-5 SUBCHAPTER D. ENFORCEMENT 8-6 Sec. 103.061. POSTING. An employer shall post a copy of 8-7 this chapter or a summary approved by the Commission on Human 8-8 Rights in a prominent place in the employer's work area. 8-9 Sec. 103.062. CAUSE OF ACTION; REINSTATEMENT. (a) An 8-10 employer who terminates an employee from employment in violation of 8-11 this chapter is liable to the employee for reasonable damages 8-12 incurred by the employee as a result of the violation. 8-13 (b) An employee terminated in violation of this chapter is 8-14 entitled to reinstatement to the employee's former position of 8-15 employment. 8-16 Sec. 103.063. CIVIL PENALTY. An employer who violates 8-17 Section 103.061 is subject to a civil penalty not to exceed $200 8-18 per day for each day the violation continues. The attorney general 8-19 may bring a civil action on behalf of the state to collect a civil 8-20 penalty under this section. 8-21 Sec. 103.064. RETALIATION PROHIBITED; CIVIL ACTION. (a) An 8-22 employer may not directly or indirectly take adverse action in 8-23 retaliation against an individual who files a complaint, gives 8-24 testimony, or otherwise lawfully participates in a proceeding 8-25 arising under this chapter, regardless of whether the individual is 8-26 an employee having rights under this chapter. 8-27 (b) An employer who violates this section is liable to the 9-1 individual subjected to retaliation for: 9-2 (1) damages caused by the action; 9-3 (2) punitive damages, if appropriate; and 9-4 (3) reasonable attorney's fees. 9-5 SECTION 2. This Act takes effect September 1, 1997, and 9-6 applies only to an employee terminated from employment on or after 9-7 that date. An employee terminated from employment before the 9-8 effective date of this Act is governed by the law in effect on the 9-9 date the employee was terminated, and the former law is continued 9-10 in effect for that purpose. 9-11 SECTION 3. The importance of this legislation and the 9-12 crowded condition of the calendars in both houses create an 9-13 emergency and an imperative public necessity that the 9-14 constitutional rule requiring bills to be read on three several 9-15 days in each house be suspended, and this rule is hereby suspended.