Texas Court Decides Companies Can Legally Lie To Their Employees


image via VIP fan auctions

If Mitt Romney is right and corporations are in fact people my friend, then they are definitely the kind you don’t want showing up at your parties.

The highest court in Texas decided that a company can legally lie to its employees if the bosses think the employees might bolt if they knew they were about to get screwed. Allow me to explain as you shake your head in disbelief.

Chief Justice Nathan Hecht ruled that a company can willfully mislead employees into thinking that they are going to continue being employed and still fire them whenever the company chooses. From a business angle, it makes sense: Employees that know they are on the verge of being laid off or sold out to a different company don’t work nearly as hard as the blissfully ignorant ones. From an ethical angle, these companies should probably do some soul searching and fast.

And the reason Hecht made this decision was because this has already happened. In 2002, the chemical company E.I. du Pont de Nemours decided to spin off some of its operations into a subsidiary. The employees were contractually allowed to transfer within the company if they so chose, but du Pont didn’t want them to do that. Instead they told the employees that they would be able to keep their jobs at the subsidiary and maintain their same wages and retirement funds. What happens next would make Ebenezer Scrooge cringe.

Du Pont, which had just convinced all of these long-time employees to stay with the subsidiary, turned around and sold the subsidiary – most of the employees were promptly laid off by the new management (In a twist good enough for Hollywood, the new company was none other than Koch Industries, the closest capitalism has to supervillians). They lost everything and du Pont got to squeeze out the last remaining productivity before they did.

Obviously, du Pont had just lied to its (former) employees faces, knowing full well that they were about to be sold away without a second thought. The employees took the company to court under the assumption that the justice system wouldn’t allow this to happen. Instead, the Texas Supreme Court favored with du Pont.

Twisting the knife in the backs of the employees who filed the lawsuit, Hecht noted that it wasn’t really his fault that du Pont to screw them, it was the fact that employees in Texas are given hardly any protection from this sort of thing. By living in Texas, Hecht reasoned, these employees should have known better than to trust anything the people they worked for said or did because the legal system was certainly not going to help them out.

Mainstreet writes:

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.

In Texas “good faith” and “fair dealing” do not apply to workers. Texas’ workers’ rights philosophy is “Hey, whatever keeps them slaving away. Right fellas?” Now, that extends to outright lying.


h/t Mainstreet