Texas is booming. As of 2022, Texas had 89,600 more jobs than it did before the onset of the pandemic. According to the U.S. Bureau of Labor Statistics, the unemployment rate steadily declined from 5% in October 2021 to 4.4 % in March 2022. Texas has always touted itself as an employer-friendly state, with the Texas Economic Department advertising Texas as a “business-friendly climate” that offers a “highly skilled and diverse workforce, easy access to global markets, robust infrastructure, and a reasonable regulatory environment.” On April 26, 2022, the nation’s top CEO’s ranked Texas as the Best State for Business.
With Texas growing and business booming, the Lone Star State has changed its laws that affect employers in response to the #MeToo movement, including Senate Bill 45 and House Bill 21. Each went into effect on September 1, 2021, after being signed by Governor Abbott.
Senate Bill 45 expanded the definition of an employer for purposes of sexual harassment allegations. Codified in Tex. Lab. Code 21.141, an employer is now a person who: “employs one or more employees”; or “acts directly in the interests of an employer in relation to an employee.” These are two significant changes because, before this bill, only employers who had more than 15 employees could be liable for sexual harassment. Now, all employers who do business in Texas can be liable for sexual harassment. Notably, this change only affects sexual harassment claims and does not change the definition of “employer” in other claims of discrimination such as religion, age, race, or nationality.
Moreover, Tex. Lab. Code 21.141 now imposes individual liability on the individual who engages in sexual harassment, as well as the employer. The new law can theoretically benefit an employer because a complainant can now recover damages from an individual or sue the individual exclusively, thereby allowing an employer to potentially offset some of its damages. Practically speaking, however, because employers often enter into joint defense agreements with the individuals to jointly defend the case or otherwise indemnify individual defendant employees, the employer typically ends up shouldering the entire financial burden regardless. As such, naming individual supervisors in these cases works primarily as a tool to destroy diversity jurisdiction. Of course, if a plaintiff also makes claims under federal law (i.e., Title VII, ADEA, ADA, etc.), the case could still be removed under federal question jurisdiction where it was originally filed in Texas state court.
Finally, under Tex. Lab. Code 21.141, Texas now defines sexual harassment as:
An employer commits an unlawful employment practice if sexual harassment of an employee occurs and the employer or the employer’s agents or supervisors:
- know or should have known that the conduct constituting sexual harassment was occurring; and
- fail to take immediate and appropriate corrective action.
Critically, the law does not define “immediate and appropriate corrective action,” creating some uncertainty about an employer’s obligation after a claim of harassment has been reported since this law has only been in effect for eight months. As such, until the Texas courts define what immediate and appropriate means, we will rely on guidance from other courts and administrative agencies, such as the Equal Employment Opportunity Commission.
Finally, House Bill 21 expanded the statute of limitations for sexual harassment. Previously, Tex. Lab. Code Sec. 21.201 required an employee alleging sexual harassment to file a complaint with the Texas Workforce Commission (“TWC”) within 180 days of the alleged unlawful employment practice. The law now permits an employee to bring a complaint with the TWC “within 300 days of the alleged sexual harassment.” See. Tex. Lab. Code 21.201(g). Again, these changes only affect sexual harassment claims; all other discrimination claims still have the same statute of limitations of 180 days.
Despite its reputation as a “conservative” State, when it comes to employment law, Texas has passed laws in response to the #MeToo movement that belies that label. Time will tell how these new laws are applied.
About the Author: Adrian Acosta is an associate in the El Paso, Texas office at Dickinson Wright. He is licensed in both Texas and Michigan and assists clients in all areas of employment litigation, including discrimination, workers’ compensation, and wage and hour. Adrian conducts workplace investigations and provides compliance training to different industries. Adrian can be reached at (915) 541-9326 or at firstname.lastname@example.org. Adrian’s business biography is found here.