The number of employee vs. employer lawsuits filed in federal court has increased by 400% in the last two decades, and a similar trend is occurring at the state level. Lawsuits are costly. It’s more cost effective to avoid litigation by designing effective personnel policies, implementing best practices, and treating employees fairly.
Employee complaints can be about almost anything, but those that lead to lawsuits typically involve wages, bonuses, denial of promotions, new work schedules, perceptions of preferential treatment or discrimination, harassment, and termination.
As an employer, it is essential to establish a process for resolving complaints and prohibiting retaliation.
Breach of Contract
Most employees are “at will,” which means they can quit or be dismissed at any time for any reason. However, some employees have employment contracts. Employment contracts are more common in certain professions such as health care professionals, financial consultants, or oilfield sales. They are also more common at the executive or managerial level. These employees can only be terminated under certain circumstances, usually defined as “cause.” It is to an employer’s benefit to define cause as broadly as possible. We can tailor an agreement that meets your needs.
A breach of contract occurs if either party fails to perform its duties under the contract. For instance, an employer may be sued for: a) failure to pay commissions; b) denial of employee benefits; and c) wrongful termination.
Many of our clients have questions about unemployment. In Texas, employees are entitled to unemployment unless they were fired for misconduct or they voluntarily resigned. The definition of misconduct, as administered by the Texas Workforce Commission (TWC), is very broad, and includes the intentional violation of rules or laws or endangering another’s life or property. Failing to perform one’s job is not considered misconduct.
Both employers and employees have the right to appeal unemployment claims. If either side appeals, an administrative law judge will conduct a hearing (usually over the phone), in which all parties have a chance to present their views, and will then issue a ruling. We have participated in dozens of these hearings. We are familiar with the TWC guidelines and understand how to best present your case.
Non-Compete Agreements/Restrictive Covenants
Non-compete agreements, sometimes called “restrictive covenants,” limit an employee’s ability to go to work for a competitor. They are especially popular in industries or geographic areas that have tight labor markets, since employers want to prevent valued employees – and the experience and knowledge they’ve accumulated – from going to competitors. There are rules employers must follow, though, regarding the creation and enforcement of these agreements.
A non-solicitation agreement prohibits former employees from soliciting their previous company’s customers or employees for business purposes.
Breach of Fiduciary Duty/Restrictive Covenants
In the absence of a non-compete agreement, an employee still owes certain fiduciary duties to his or her employer. A fiduciary duty is a legal or ethical relationship of trust between two or more parties. An employee may not use confidential information to benefit a competitor or set up a competing business.