Texas Supreme Court Nixes Employee’s Defamation Claim, Reinforces At-Will Employment Doctrine

Historically, Texas employers have been able to avoid defamation claims from terminated employees by keeping mum about the cause of termination when asked to provide references. However,  some employees were able to bring defamation claims anyway by alleging that because they had to disclose the reason for their termination to potential employers, they were compelled to defame themselves – a so-called theory of compelled self-defamation.  Over the years, several Texas courts of appeals bought into this doctrine, creating a heartburn for many employers.  

However, last week, the Texas Supreme Court closed the loophole created by the doctrine of compelled self-defamation and expressly and unequivocally ruled that such doctrine was not recognized under Texas law.  In Exxon Mobil Corp, et al. v. Rincones, an employee terminated for alleged drug use, brought a defamation claim against Exxon and other parties and alleged the doctrine of compelled self-defamation on the grounds that each time he applied for a new job, he had to repeat his employer’s defamatory statements about himself, i.e. that he used drugs, to others.  The Supreme Court ruled that: 

“We expressly decline to recognize a theory of compelled self-defamation in Texas. In rejecting it, we join an emerging majority of state courts that have considered the issue, including those in Connecticut, Massachusetts, Hawaii, Tennessee, Iowa, Pennsylvania, and New York.”

The court explained that if it were to recognize compelled self-defamation, it would risk discouraging plaintiff employees from mitigating damages to their own reputations and encouraging them to publish defamatory statements just to increase the damages associated with their claim. Furthermore, allowing a claim based on compelled self-defamation would impinge on the at-will employment doctrine, which allows employers to terminate employees for any lawful reason, however unreasonable or careless that reason might be. Allowing these types of claims to proceed, would impose a burden on employers to conduct investigations and make accurate findings before taking any action against an employee or risk being sued for defamation.    

BOTTOM LINE: The Rincones decision reinforces the at-will employment doctrine in Texas and serves as a reminder that employers in Texas may terminate at-will employees for any lawful reason.  Employers, however, should continue to be cautious about disclosing the reasons for termination to third parties such as potential employers looking for references.

Leiza represents companies in business and employment litigation.  If you need assistance with a business or employment dispute contact Leiza for a confidential consultation at Leiza.Dolghih@lewisbrisbois.com or (214) 722-7108.

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