In a surprising move for what has historically been an extremely employer-friendly state, Texas Governor Greg Abbott recently signed two new bills (Senate Bill 45 and House Bill 21) that significantly expand the protections for employees who assert claims of sexual harassment under the Texas Labor Code.  Both laws will become effective on September 1, 2021.  These new laws include a number of significant changes for employers in Texas (related to sexual harassment claims), including a longer statute of limitations, a broader definition of who qualifies as an “employer,” the potential for individual liability of supervisors, owners, human resources professionals, and other employees, and a heightened standard for employers to respond to internal sexual harassment complaints. These changes do not apply to claims based on other protected characteristics under the Texas Labor Code, such as race, religion, color, age, etc.

State of Limitations (House Bill 21)

Currently, prior to filing a lawsuit relating to an unlawful employment practice under Chapter 21 of the Texas Labor Code, including sexual harassment, an employee must first file a charge of discrimination with the Texas Workforce Commission within 180 days of the alleged unlawful employment practice.  With the enactment of House Bill 21 (which amends Section 21.201(g) of the Texas Labor Code), Texas employees will now have a much longer period of time to file their complaint alleging sexual harassment.  Under this new law, for a sexual harassment complaint based on conduct occurring on or after September 1, 2021, employees will be allowed to file their charge with the Texas Workforce Commission within 300 days after the date the alleged sexual harassment occurred.  For claims based on any other protected class under the Texas Labor Code (e.g., race, color, age, etc.), the current statute of limitations of 180 days will continue to apply.

Expanded Employer Definition (Senate Bill 45)

Under current Texas law, employees can only bring a claim of harassment or discrimination based on protected characteristics (including sexual harassment) against their employer, if the employer has at least 15 employees.  Senate Bill 45 (codified at Section 21.141 of the Texas Labor Code) defines an “employer” as a person who employs one or more employees.  This means that, beginning September 1, 2021, effectively all employers in Texas may be held liable for sexual harassment claims asserted under the Texas Labor Code.

Risk of Individual Liability (Senate Bill 45)

Another key distinction from current Texas law is that, for purposes of sexual harassment claims only, the term “employer” also includes any person who “acts directly in the interests of an employer in relation to an employee.” Accordingly, after September 1, 2021, supervisors, managers, human resources professionals, other employees and third parties may be named individually as defendants in an employee’s sexual harassment complaint and held personally liable for damages. This change represents a seismic divergence from current Texas law, which did not previously provide for individual liability for any harassment or discrimination claims under the Texas Labor Code. 

A collateral effect of this new law will be its potential to foreclose an employer’s ability to remove a sexual harassment lawsuit to federal court, which is often viewed as being a more favorable venue for employers, in comparison to state courts.  Currently, out-of-state employers routinely remove sexual harassment claims filed in Texas state court to federal court, based on diversity of citizenship grounds.  If a non-diverse supervisor, human resources professional, or other employee (i.e., a Texas resident) is added as a defendant to the lawsuit, the employer will no longer be able to remove the case to federal court based on the diversity of the parties.¹  Thus, this new Texas law may result in far fewer summary judgments on sexual harassment claims, as federal courts are more likely to grant summary judgment, compared to state courts, as a general proposition.  If this occurs, then another collateral effect of this new law will likely be an increase in the settlement value of these types of claims.

Heightened Standard for an Employer’s Response to Employee Complaints (Senate Bill 45)

The new Texas law also provides that an employer commits an unlawful employment practice if sexual harassment of an employee occurs and the employer or its agents or supervisors: “(1) know or should have known that the conduct constituting sexual harassment was occurring; and (2) fail to take immediate and appropriate corrective action.”  This new standard deviates from current Texas law, which provides a potential defense to employers that take “prompt remedial action” in response to an employee complaint.  However, what constitutes “immediate and appropriate corrective action” is not defined in the new law, so the exact meaning of this phrase will certainly be the subject of litigation, and remain a disputed issue, until it is definitively addressed by the Texas courts.

Act Now: Considerations for Texas Employers

While there will be some uncertainty regarding these new laws, which will likely not be resolved without judicial interpretation, there are certain steps employers should take now to prepare for these changes.  First, before September 1, 2021, all employers in Texas, regardless of size, should review and revise their handbook policies addressing discrimination and harassment, in order to ensure compliance with the new Texas sexual harassment laws.  For example, in recognition of the heightened standards in Senate Bill 45 for sexual harassment claims, a Texas employer’s policies should clearly articulate reporting procedures for employees and provide for an “immediate” investigation of sexual harassment complaints, and if necessary, “appropriate” corrective action.  Second, robust sexual harassment training is also recommended for all employees.  Lastly, as individual employees could potentially be named as a defendant in an employee’s sexual harassment complaint, employers should also ensure that managerial and human resources personnel are well versed in the employer’s reporting and investigation procedures.