"NEW YORK (MainStreet) — Let the worker beware: in Texas it is now entirely legal to lie to your staff.
A recent decision from the Texas Supreme Court has ruled that at-will employees can't sue their employer for fraud over the loss of their jobs. In his opinion, Chief Justice Nathan Hecht held that "while an employee can sue an employer for fraud in some situations... [a] claim cannot be based on illusory promises of continued at-will employment."
In 2002 E.I. du Pont de Nemours announced plans to turn some of its operations into a separate subsidiary. Most of the affected employees were under a union agreement that gave them the right to transfer within DuPont if they preferred, a decision which would have cost the company an enormous amount of money to retrain the transfers and hire their replacements.
The employees were worried that if DuPont sold the new subsidiary it would hurt both their pay and retirement funds. To convince them to work in the subsidiary instead of transferring within the company, DuPont assured its employees that it had absolutely no plans to sell the spin-off. Based on this promise almost everyone moved to the subsidiary, which a few weeks later DuPont sold to Koch Industries. Koch cut both salaries and retirement packages. DuPont had, as it turns out, been negotiating this deal the entire time.
The Texas Supreme Court sees no problem with any of this.
Writing for the court, Hecht noted that at-will employment in the state of Texas means that a worker can be fired "for good cause, bad cause or no cause at all." While this is true to some degree in every state except Montana, many have carved out exceptions to limit employer abuse. Two of the most common are the requirements of good faith and fair dealing, and the implied contract exception (when your employer makes a promise even if it's not in writing). Texas has specifically rejected both.
No fraud exception exists to at-will employment in Texas, Hecht ruled, meaning that DuPont was free to sell its subsidiary and effectively fire the entire staff without fear of consequence. The court also noted that fraud requires an element of reasonable reliance, which doesn't exist in at-will employment. Workers can't rely on any promise that involves them keeping their jobs because the employer is free to just fire them for something else instead.
"To recover for fraud," Justice Hecht wrote, "one must prove justifiable reliance on a material misrepresentation. A representation dependent on continued at-will employment cannot be material because employment can terminate at any time. Nor can one justifiably rely on the continuation of employment that can be terminated at will.
The Texas Supreme Court held, essentially, that fraudulent inducement is immaterial in at-will employment, because either way you're out the door. The employer could have gotten rid of you with or without the lie, so you can't claim fraud, because the deception was irrelevant.
Lawyers are fond of using hypotheticals to make a point, and ordinarily this is where I would do so to illustrate the dangers of giving employers a free hand to deceive their workers. It doesn't seem necessary here. DuPont has illustrated the potentially brutal consequences when employers, who already have most of the power in their workplaces, have no obligation to honesty. The company intentionally cobbled together this deception in order to save some money and keep people from exercising their rights. Holding that DuPont's lie was irrelevant ignores the protections that its workers would have had under their union agreement without it.
http://www.mainstreet.com/article/caree ... ourt-rules
This article goes on into editorializing the decision. You can read it if you want, or not, up to you. Essentially, DuPont's workers had a union agreement that stated that, rather than be spun off into a subsidiary, they had the right to transfer within DuPont. This would have cost DuPont a fortune. DuPont assured its workers that they had no intention of spinning off or selling the subsidiary.
They lied. They were brokering the sale even as they were assuring their workers they were not.
The subsidiary was purchased by Koch industries, who immediately cut salaries and retirement. Employees sued for fraud resulting in financial harm.
The court said to fuck right off. They could have fired you at any time anyway under Texas law, so fraud doesn't apply. This also ignores the union agreement. This is a very bad precedent to set.
What say you NSG?