2024 Texas Labor & Employment Year End Review

While there were no legislative developments in the Lone Star state, there were several appellate decisions of note for employers.

Texas Supreme Court Rejects Age Discrimination Claim, Refuses to Second-Guess Employer’s Weighing of Candidate Qualifications

In Texas Tech University Health Sciences Center-El Paso v. Flores, 2024 WL 5249446, the Texas Supreme Court held that passing references to a candidate’s age and to her ongoing claim of age discrimination against the same employer did not constitute evidence that a University President’s stated reason for hiring another candidate instead of the plaintiff was a pretext for age discrimination. As a result, the Court reversed the trial court and concluded that the employer was entitled to dismissal of the plaintiff’s age discrimination claim.

The case arose after a University President hired a 37-year old (Sanchez) for the newly created chief of staff position, over a 60-year old (Flores) who had previously sued for age discrimination. The trial court concluded that the plaintiff had stated the basic elements of an age discrimination case, relying in part on evidence of the President’s passing references to the plaintiff’s age during the interview, as well as evidence that the job description did not mention the areas of experience that distinguished Sanchez from Flores.

While acknowledging evidence that both candidates had their strengths, the Supreme Court refused to “lightly second-guess” the President’s evaluation of their respective qualifications. The Court conceded that an age-related comment by a decision-maker can be evidence of discrimination, but concluded it was not in this case when considered in context. The President was already aware of the plaintiff’s age and merely asked about her earlier lawsuit as a rhetorical question to address the “elephant in the room.”

This case reflects the strict standards that may prevail in Texas courts in evaluating evidentiary sufficiency challenges in employment cases, and the Supreme Court’s potential willingness to second-guess lower courts’ assessments of such evidence. With that said, the case also demonstrates the risk that employers run in referencing a candidate’s protected class during the interview process and underscores why employers are well-advised to steer clear of such comments in the workplace.

Texas Supreme Court Rules in Favor of Employer that Took Prompt Remedial Action to Address Sex Harassment

In Fossil Group, Inc. v. Harris, 691 S.W.3d 874, the Supreme Court concluded that reports of sexual harassment conveyed to non-managerial co-workers did not put an employer on notice of the harassment and did not trigger any obligation to take action to prevent further harassment. Thus, the employer in that case was entitled to summary judgment based on the remedial actions it took to prevent additional harassment within one day of a managerial employee learning of the alleged harassment.

The plaintiff, a sales associate at a retail store, told coworkers about sexual harassment by her assistant manager via social media but did not inform management. The store manager only learned of the harassment from another employee after the plaintiff resigned. The following day the manager alerted human resources, which commenced an investigation that resulted in termination of the assistant manager. The Court held that the employer’s actions were sufficiently prompt and remedial (in that they were reasonably calculated to end the harassment) to avoid liability. The Court further found that the employer neither knew nor should have known about the assistant manager’s harassing conduct prior to the store’s manager learning about the conduct from other employees. Although the plaintiff had informed at least three other employees about the harassment, none of those individuals were in positions to address the harassment, nor did they have an affirmative duty under Fossil’s employment policy to receive and report harassment complaints up the chain of command.

This case illustrates the importance of prompt remedial steps to investigate and stop harassment as soon as they become aware of it from whatever source. Such prompt remedial actions can be independently sufficient to protect employers from liability for hostile work environment claims.

Texas Court of Appeals Rules Professional Employer Organizations Can Be Directly Liable to its Clients’ Employees for Employment Discrimination

In an apparent case of first impression, the San Antonio Court of Appeals held that a professional employer organization (PEO) can (though will not always) qualify as an “employer” under the Texas Commission on Human Rights Act (TCHRA) and be held liable for employment discrimination at their clients’ workplaces. Harbor Am. Cent. v. Armand, 692 S.W.3d 777 (Tex. App.—San Antonio 2024, pet. denied).

PEOs provide professional employer services to their clients, such as temporary help and independent contractors. The relationship of the PEO and its client is governed by Chapter 91 of the Texas Labor Code. Harbor America is a PEO that provided professional employer services to its client, Legal Eats. Harbor America placed the plaintiff to work in Legal Eats’ cafeteria. She sued Harbor America for sex harassment and retaliation that occurred at Legal Eats. Harbor America argued that Chapter 91 supersedes the TCHRA and shields PEOs from liability for employment discrimination occurring at their clients’ workplaces.

The Court rejected Harbor America’s argument, concluding that neither Chapter 91 nor TCHRA contain language that determines whether a PEO qualifies as a joint-employer under the TCHRA. As a result, the Court held that a PEO’s status as an employer is a fact-specific question to be evaluated on a case-by-case basis. Accordingly, the Court remanded the case to the trial court to evaluate the conflicting evidence regarding the extent to which Harbor America had the ability to control the plaintiff and whether the economic realities of the situation showed the PEO to be her employer.

Since PEOs may be deemed co-employers under Texas law, and thereby subjected to liability for discrimination, harassment, or retaliation that takes place at their clients’ worksites. PEOs and their client employers should take such concerns into account in structuring their agreements and working relationships.

Texas Supreme Court Rejects Disability Claim Based on Requests for Accommodations of Neck and Back Pain Where Employee and Physician Denied That She Had a Disability

In Dallas County Hospital System v. Kowalski, 2024 WL 5249566, the Texas Supreme Court recognized that an employee’s requests for ergonomic accommodations for neck and back pain were not sufficient to support claims of either disability discrimination or retaliation where both the employee and her physician repeatedly denied that she was disabled.

After experiencing neck and back pain while working at her computer and learning that a co-worker had alleviated similar issues by requesting a new keyboard tray, the plaintiff requested ergonomic accommodations from her employer. She became frustrated by her the bureaucratic headaches of her employer’s accommodation process, and she claimed that her co-worker had not been required to satisfy that process in order to receive accommodations. The plaintiff complied with the process under protest, and both she and her physician repeatedly stated that she was not disabled. She was laid off minutes after the accommodation procedure was completed.

The trial court concluded that there were fact questions regarding the requirement that the plaintiff utilize an accommodation procedure and whether her complaints about that process constituted “protected activity” so as to support her claim of retaliation. But the Supreme Court reversed, concluding that the plaintiff’s neck pain, even though causing her discomfort, was not a disability, especially since both she and her chiropractor denied she had a disability. Further, the Court also held that requiring the plaintiff to go through a disability-related screening procedure alone was not evidence that her employer regarded her as disabled. Indeed, the process was meant to help the employer determine whether or not she was disabled, and her repeated denials of any disability meant that her employer was never on notice that disability discrimination was at issue.

This ruling should give employers additional confidence in adopting and adhering to established accommodation procedures, and it demonstrates the importance of an employee’s own statements regarding any alleged disability or requested accommodation.

Texas Supreme Court to Decide Whether Tort Claims Against Coworkers in Employment Cases Are Preempted

In Butler v. Collins, the Texas Supreme Court will soon decide whether employees can sue their supervisors and other work colleagues for tort claims under state common law when the conduct at issue relates to employment discrimination claims covered by the TCHRA. The U.S. Court of Appeals for the Fifth Circuit certified this question to the Texas Supreme Court.

In previous cases, the Texas Supreme Court considered whether employees can sue their employers for tort claims that are based on conduct that may also be covered by the TCHRA. In Waffle House, Inc. v. Williams, 313 S.W.3d 796 (Tex. 2010), the Court held that a former employee could not sue her employer for negligence in allowing her to be sexually harassed, because that claim was based on unlawful sex harassment that was specifically covered by the TCHRA. The Court ruled that the TCHRA provided her with her exclusive remedy for the harassment and preempted her negligence claim that was based on the same underlying facts. In contrast, in BC v. Steak N Shake Operation, Inc., 512 S.W.3d 276 (Tex. 2017), the Court held that an employee could sue her employer for assault, where she alleged she was sexually assaulted by her supervisor after her shift one night. In that circumstance, the Court reasoned that the essence of her claim was really assault and not sexual harassment, and therefore the TCHRA did not preclude her from suing her employer for the assault under Texas common law.

Neither of those cases specifically considered whether an employee can sue other individual employees for tort claims that are based on the same conduct as statutory employment claims against the employer, or whether those claims are preempted by the TCHRA. In the case now before the Court, a law professor sued the university for statutory employment discrimination based on the denial of her application for tenure, and also asserted fraud and other claim against individual administrators and professors involved in her tenure decision. A federal district court dismissed Butler’s claims against the individual defendants, and the Fifth Circuit Court of Appeals asked the Texas Supreme Court to answer whether her tort claims are preempted by the TCHRA.

For more information on these developments, contact the authors or editors of this alert. Visit our Labor & Employment Practice page for additional alerts in this area.

Authors:

Nicole Zerunyan, Associate

Brett Miller, Associate

Daniel Graves, Associate

Mason Wimberley, Associate

Editors:

John M. Lynch, Partner

Jason Rossiter, Partner

Jason Winford, Partner