Legal Services

On the Job Injuries in Texas…Who Pays?

You do.  You will pay either by paying workers’ compensation insurance premiums or risking your own funds to pay for an employee’s injuries.  Injuries are inevitable, but armed with some knowledge of the law, you may be able to prevent any large damage to your pocketbook.  So, what does workers’ compensation mean and what does it cover?

            In 1913, Texas adopted a workers’ compensation system to provide medical care and lost wage reimbursement to employees injured in the “course and scope” of employment.  Evidence of an employer’s fault is not necessary—Texas is a no fault state.  Texas is also the only state that allows employers to “opt-out” of the workers’ compensation system and become a non-subscriber (about 37% of all Texas employers).

            A benefit of nonsubscriber status is simply that it saves the employer the cost of workers’ compensation insurance; however, the negative quickly follows.  Simply stated, the nonsubscriber employer is not safe from common law negligence claims brought by employees (lawsuits) and are legally deprived of their common-law defenses.  A very specific procedure must be followed to opt out of the system.

            A nonsubscriber loses its immunity from a lawsuit and if during a lawsuit an employee proves the company’s negligence was the proximate cause of the injury, the employee may recover damages.  The nonsubscriber in the suit cannot assert traditional common law injury defenses like contributory negligence or assumption of the risk to name a few.  In other words, the employer nonsubscriber at trial cannot argue that the employee should have seen the danger and known better or that they were partly responsible for the damages.

            In a lawsuit, a nonsubscriber may be responsible for damages to the employee including mental anguish, pain and suffering, lost-earning capacity and punitive damages.  A damages figure could be large and bankrupt your company.

            As you may also know, a negligence claim as would be asserted against the nonsubscriber could be asserted within two (2) years (statute of limitation) after the injury. 

            So, as you can assume, the pitfalls could be huge for a nonsubscriber if the employer is not careful.  Prior to deciding whether or not to opt out as a nonsubscriber analyze the type of business that you perform and whether your business would subject you to on the job injuries.  Obviously, if you operate an auto mechanic shop riddled with inherent dangers, you will likely have someone injured.  Nonetheless, as with all big decisions like this, consult a qualified professional and understand all your risks and choices.  This article is simply meant to be a general overview of the workers’ compensation structure in Texas. 

 

So you want to fire an employee…Read this First!

     At least once a week, I get a call from a client that asks about terminating an employee and as you can assume, I am usually involved at the last minute.  Normally, the employee has done some egregious acts or has violated an “unwritten” rule at the office or has been late everyday since they started.  Most employers are confused about when the can fire someone.  The general answer is Texas is an employment at will state and so absent some age, race or gender discrimination, an employer can terminate an employee any time.  However, I must qualify that answer with a few questions that an employer must ask first:

1. Is the employee working under a contract?

      While Texas is an at-will employment state, the existence an employment contract changes the employment dynamic.  More than likely, the contract details how an employee can be terminated (for cause) and what amounts, if any, must be paid to the employee. You must look to the contract to determine what rights and responsibilities the parties (employer and employee) have.

2. Does the employee have a basis for claiming that the termination is discriminatory?

      As stated above, Texas does recognize very distinct protected classes that must be considered prior to termination.  Be sure that the employee cannot later claim that they were terminated solely because of their age, race or gender.  It is best to have an employee manual and document any infractions of that manual.  In the manual, it should state that infractions could lead to termination.  The process should also be well defined.

      In addition, you must familiarize yourself or your human resources department with various statutes including Title VII, ADA, ADEA, IRCA, FMLA and USERRA.

3. Does the employee have a basis for claiming that the termination is retaliatory?

      An employee may have a cause of action if the termination was retaliatory for something they have done or something that happened to them while employed.  For example, has the employee filed a worker’s compensation claim recently, asked to perform an illegal act, complained about harassment and/or discrimination or recently complained about alleged illegal conduct?  Any of these circumstances may change the strategy and answer to terminating the employee.

4. Has the basis for termination been consistently applied to others?

      An employer must take active steps to remain neutral and enforce the rules fairly and evenly.  The best way to ensure fairness is to have a well drafted and concise employee manual that describes all duties and responsibilities as well as consequences for failing to meet expectations.  The manual should also describe the process for termination. For example, many companies will offer warnings and then written warnings.  And, upon the third like infraction, the employee is terminated. 

      Finally, I would suggest that the employer take active steps upon terminating an employee to avoid any risks.  The employer should:

1. Conduct an exit interview;
2. Do not comment about the legality of any employee’s actions and don’t disclose anything to anyone who does not “need to know”;
3. Control access to the network computers, email, internet and phone system;
4. If any trade secrets have been revealed, be sure to get them back and take active steps to avoid release of that confidential information to anyone who does not need it;
5. If there is a threat upon termination or any vague inference of violence, have the employee escorted off company grounds by the police or security;
6. If you offer a severance, get a signed release of claims;
7. Consider allowing the employee to resign;
8. Pay out any earned pay as soon as possible including any personal time off or earned vacation.  (Remember that Texas has a six day requirement for wages owed to an employee).

 

            With all that said and followed, you still may be in a position to pay unemployment benefits or even face a suit after termination.  The overwhelming advice is to be fair and document what your employees and company as a whole does.  That paper may come back to save you significant funds.