​Employment at-will is a presumption that grants considerable flexibility in the workplace to both employers and employees in all aspects of the employment relationship, where either party may modify any of the terms or conditions of employment absent an express agreement stating otherwise.

The doctrine was designed to foster the freedom to contract and promote economic expansion and has remained fairly popular over time. It is no surprise that employment relationships are presumed to be at-will in nearly every U.S. state. Employers and employees alike benefit in the employment at-will system, but with greater flexibility comes greater potential for conflict. 

Under the employment at will doctrine, employees in Texas may quit at any time for any reason or no reason at all—although providing a two weeks’ notice is often recommended or expected.

The other side of that coin is that employers may terminate employees at any time without cause, explanation, or prior warning, subject to the condition that the reason for the termination is lawful.
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Most employers clearly state in their employee handbooks that employees are at-will. However, employment at-will is just a presumption; it may be overcome by direct evidence of fixed-term employment contracts or indirect evidence of an implied contract that requires good cause for termination. Only a minority of jurisdictions recognize the implied contract exception, and Texas is not one of them.

Although the employment-at-will doctrine permits employers to terminate employees for any reason, the reason must be legal. Federal and state laws exist to protect at-will employees from wrongful termination.

The Texas Labor Code prohibits discharge based on certain forms of discrimination or in retaliation for engaging in certain protected conduct, such as opposing a discriminatory practice; filing a charge or complaint; or participating in an investigation, proceeding, or hearing. Federal laws likewise limit employers’ ability to terminate employees.

The Age Discrimination in Employment Act of 1967 prohibits employers from discriminating against employees 40 years of age or older. The Pregnancy Discrimination Act of 1978 prohibits discrimination based on pregnancy.

Title VII of the Civil Rights Act of 1964 prohibits employers from subjecting employees to adverse employment action due to their status in a protected class, including their race, color, religion, sex, and national origin.

Recently, on June 15, 2020, the Supreme Court in Bostock v. Clayton County, Georgia held that an employer may not terminate an employee because of the employee’s sexual orientation or transgender status, reasoning that such discrimination was because of an employee’s sex and therefore illegal.

Many changes to the employment-at-will doctrine have evolved over time. Along with the exceptions mentioned above (including express or implied employment contracts requiring good cause for terminations), other exceptions to the at-will presumption exist.
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In 2020, 14.3 million Americans were employed under a union collective bargaining agreement [1], which afforded employees more protection by generally requiring employers to show just cause for termination. Texas is a right to work state, meaning employment may not be conditioned or denied on the basis of membership or non-membership in a union. Union status is essentially an exception to the at-will presumption.

Additionally, some jurisdictions impose upon employers a duty of good faith and fair dealing, which prevents employers from firing someone to avoid their obligation to pay for healthcare, retirement, or commission-based work. Although this issue is not well-settled in Texas, Texas courts, including the Texas Supreme Court, have held that employers may not terminate employees to avoid obligations to contribute to employee’s pension plans.

For public employees, the Texas Whistleblower Act protects employees from retaliation who have reported legal or ethical violations by their employer to an appropriate law enforcement agency. Public employers therefore may not suspend, terminate, or take other adverse action against an employee for reporting a violation. Texas courts have thus far declined to extend whistleblower protection to private employers.

However, the Texas Legislature has created protections to limited classes of employees who report particular violations, including physicians who report other physicians’ violations that present public harm to the State Board of Medical Examiners; employees who work with hazardous chemicals who report violations of the Hazard Communication Act; and registered nurses who report other nurses’ acts that expose a patient to risk of harm.

Most states also impose a public policy exception that prevents employers from firing an employee for certain conduct that state law considers contrary to public policy, and further prevents employers from firing or seeking damages from an employee who quits as a benefit to the public.

Only eight states do not recognize the public policy exception, including Alabama, Florida, Georgia, Louisiana, Maine, Nebraska, New York, and Rhode Island. Although Texas recognizes the public policy exception, it is limited to only preventing employers from terminating employees in retaliation for the employee refusing to commit a criminal act on the employer’s behalf.

A non-compete clause, or a non-compete agreement, is a contract between an employee and an employer in which the employee agrees not to enter into direct competition with the employer during or after employment, regardless of whether the employee is terminated or resigns. The employee is also barred from revealing any trade secrets learned during employment. Many times, these agreements are presented to employees on a take-it-or-leave-it basis, meaning employees must agree to the contract as a term of employment.
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Valid non-compete clauses may increase efficiency in industry by encouraging employers to entrust confidential information and important client relationships to key employees. Employers will be more trusting when they know their employees have agreed not to take the information or skills they obtain elsewhere. On the other hand, unreasonable limitations on employees’ ability to change employers or solicit clients or former co-employees could hinder legitimate competition between businesses and the mobility of skilled employees.

States vary widely in their enforcement and recognition of non-compete clauses. The Texas Constitution protects the freedom to contract—subject to reasonable restrictions. In Section 15.05(a) of the Texas Business and Commerce Code, the Legislature included such a restriction, stating: “Every contract, combination, or conspiracy in restraint of trade or commerce is unlawful.” So long as a non-compete clause is reasonable—and not merely a restraint of trade—it will be enforced.
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A non-compete clause is thus enforceable if it is: (1) ancillary to or part of an otherwise enforceable agreement; (2) supported by consideration; and (3) contains reasonable restrictions in time, geographic scope, and the scope of activity. The burden of proof is on the employer to show that the non-compete clause meets the statutory criteria.

These factors are viewed collectively, so even a clause that encompasses a large geographic area may be found valid if the time period is relatively short. A valid non-compete clause must serve to protect an employer’s trade secrets, business relationships, or a similar interest, and must not overly restrict the free market. 

In addition to the statutory requirements above, the Texas Business and Commerce Code imposes special requirements for physician non-compete clauses designed to protect a patient’s right to receive care from her preferred provider.

Like many areas of employment law, the validity of a non-compete clause is decided on a case-by-case basis, looking to the unique facts presented in each case.

Texas courts are more likely to uphold non-compete clauses if the employee held a sensitive position with access to vital information or trade secrets as opposed to those with little to no proprietary information. However, courts have the option of modifying or reforming over-broad non-compete clauses to ensure the time, geographic area, and scope of activity to be restrained is reasonable and does not impose a greater restraint than necessary to protect the goodwill or business interest of the employer.

If you are considering signing a non-compete clause or engaging in an activity that may constitute a breach of the agreement, consider consulting an experienced employment attorney to navigate your options.