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COVID-19 and Texas Employees: Layoffs, Severances, Commissions, Paid Leave, & Unemployment

Kaplan Law • December 1, 2023

Here is what Texas workers need to know as of March 19, 2020 about Coronavirus affecting Texas layoffs, severances, commissions, paid leave, and unemployment.

LAYOFFS

Layoffs are coming. Some are already here. It is too early to tell how many to expect, but the State of Texas has issued a disaster declaration.


Texas companies have the right to lay off workers, subject to some exceptions. Businesses violate the law if they have laid-off Texas workers because they are pregnant, or because of their race, color, religion, national origin, gender, veteran status, age (over 40 only), or because they made a protected complaint (e.g., whistleblowers who report financial fraud, healthcare fraud, healthcare safety violations, or oppose sexual harassment or gender or race discrimination).


The WARN act also applies to certain layoffs like plant closings and mass layoffs, and WARN requires employers to provide 60 days of notice before the layoff. However, there is an “unforeseen circumstances” exception to WARN requirements that might be triggered by the novel coronavirus – it will depend on the facts and circumstances of the layoff.


Was your layoff illegal? There is no easy answer. In general terms, if a company lays off all workers or an entire division or class of workers (e.g., every single nail technician or every single server) because of COVID-19, and has not violated the WARN act, that layoff is painful but not likely not illegal. On the other hand, if the layoff hits only selected employees, or severance packages are offered to only select employees, that may be evidence of discriminatory conduct which may violate the law.


EXECUTIVES

If you are a Texas executive or otherwise have an employment contract, your employer is required to follow the terms of your contract. Many Texas executive contracts do not have force majuere clauses or any clauses that makes exceptions for an outbreak like this, meaning that if the firm tries to fire you because of outside circumstances that may not constitute a “for cause” firing under your contract, and you may be entitled to your pre-negotiated severance amount or some amount to make up for the breach of your employment contract.


SEVERANCE

Surprisingly, Texas businesses are not generally required by law to pay a severance in the event of layoffs. Most do as a matter of practice. Also, if there is a company policy stating employees are entitled to severance payments, or if the severance is pre-negotiated into contracts, the employer will have to pay it.


Employers cannot discriminate in determining how much severance to pay (e.g., cannot pay similarly situated men more severance than women because of their gender).


Severance agreements, like any contract, are 100% negotiable. Whether and what to negotiate is a fact-intensive inquiry. Some employees may also need to negotiate non-compete or non-solicit agreements that they signed earlier to give them more space to find replacement employment.


COMMISSION PAYMENTS

The law on Texas commission payments for folks like Austin software sales employees, including outbound sales, inbound sales, and sales engineers is complicated. Texas law tends to defer to your commission agreement. If you do not have a written commission agreement, the law will defer to your verbal agreement and consider the course of dealing.


Whether and how much commission the company owes you after a layoff or termination or wrongful termination is often a disputed issue. Sometimes there are hundreds of dollars in dispute, sometimes thousands, and sometimes hundreds of thousands or more. We recommend no matter the amount you are owed, calling a Texas sales commission lawyer to understand and enforce your rights.


PAID LEAVE

Shockingly, in 2020 most Texas workers are not entitled to paid sick leave absences. In Texas, only the City of Dallas currently has a paid sick leave ordinance in effect. Although it is unpaid, workers at companies with 15 or more people have the right to keep their job if they need leave for disabilities (under the Americans with Disabilities Act) and workers at worksites with 50 or more employees have the right to protected leave for serious health conditions under the FMLA (the 1993 Family and Medical Leave Act). But, neither of these laws require leave to be paid. Employers will often have their own paid leave policy and pay it by choice, and/or provide short or long-term disability insurance coverage that may apply (although short term disability coverage often provides only 2/3 of your pay).


None of this is particularly helpful in addressing the coronavirus pandemic upon us, during which hard-working Texans will get sick and we all need them to stay home without losing both their jobs and their paychecks.


So, this week, the United States Congress passed the extraordinary H.R. 6201, FAMILIES FIRST CORONAVIRUS RESPONSE ACT. This law is brand new. Here is an explainer of what it purports to do, here is another, and here is the bill.


The new law takes effect April 2, and provides emergency paid sick leave for 2 weeks at your regular rate of pay (capped at $511 a day or $5,110 total) if you are quarantined or seeking a diagnosis for COVID-19, and 2 weeks of paid leave at 2/3 your regular rate (capped at $200/day or $2,000 total) if you are caring for a family member who is quarantined or dealing with COVID-19 or caring for children whose school or childcare is closed due to COVID-19.


For some reason (presumably lobbying), these new emergency paid leave provisions apply only to companies with fewer than 500 employees, so big businesses are exempt from paid emergency leave for now. Covered employers will pay wages during the leave, then receive tax credits designed to cover the cost of the paid leave.


Here is a helpful chart, prepared by our colleague Dan Schwartz in Connecticut, laying out the differences between FMLA and the new EFMLA:

If you are sick, do NOT come to work. Employers: you are currently permitted to take employees’ temperatures to ensure the safety of the workplace, and are permitted to force employees who are a direct threat to the safety of themselves or others to stay home until they are not a direct threat.


UNEMPLOYMENT

If you are in a reduction in force (RIF) because of corona virus, and you are otherwise qualified, you will probably be entitled to receive unemployment benefits. Texas employees in a layoff are, under most circumstances, entitled to receive unemployment benefits. The Texas Workforce Commission administers those benefits for Texans. As of today, the TWC states: “TWC will be waiving work search requirements for all claimants and the waiting week for those claimants affected by COVID-19. Also, Extended Benefits (EB) and Disaster Unemployment Assistance (DUA) are NOT available at this time.“


In other words, if you qualify TWC will pay you benefits almost immediately (instead of waiting a week) and you do not need to immediately look for other work, but all other requirements are the same. Be sure to check the TWC website, we expect updates.


Our general suggestion for employees is to apply for unemployment benefits as soon you lose your job. If you have a negotiated severance agreement that waives certain legal claims, you may be eligible to receive payment under that agreement at the same time as you receive your unemployment benefits. Consult with a qualified Texas severance negotiation lawyer for more details about this.


We hope this post has some helpful information for our Texas community. There will be a light at the end of this tunnel. Stay safe, stay calm, stay home if you can, and flatten the curve.


*Nothing in this blog post is, should be considered, or should be substituted for legal advice. If you need legal assistance, consult with a lawyer.

Take Control of Your Career: How Kaplan Law Can Help When Work Goes Wrong

January 1, 2025
Sometimes, when companies mistreat their employees, it goes beyond just legal violations—it becomes personal. They make you feel like you're bad at your job, and it gets in your head. It can really take an emotional toll, leaving people upset and doubting themselves. This is where we step in, offering more than just legal advice—we help clients regain control over their situation. One of the most rewarding aspects of what we do is seeing the transformation in our clients. By the end of a consultation, many say, “I feel like I’m back in the driver’s seat of my career and my life.” It’s empowering to give people clarity, even in a single hour, by breaking things down into clear categories. We’re there to help them make informed decisions and move past a bad situation toward something better. It’s about getting unstuck and reclaiming control. Helping clients in this way is truly an honor—it feels amazing to collaborate and make a real difference in their lives. When things start going wrong at work, it can feel overwhelming. There’s often a mix of problems—some that look bad but aren’t actionable and others that may involve real legal violations. That’s where we come in. We help cut through the fog, sorting out the issues into clear categories: What’s unfair but not illegal. What is illegal and actionable. What steps you can take, potential outcomes, and damages you might expect. Our goal is to guide clients to the next step as efficiently as possible, ideally with more clarity, confidence, and money in their pockets. We’re not career coaches, but we do offer strategic planning for people who feel stuck. It’s important to understand that if your company is taking advantage of you, they likely have lawyers advising them on how to do it. You don’t want to be caught flat-footed. That’s why having your own lawyer, even for just an hour-long consultation, is invaluable. We make this process easy. You can book online and often get an appointment as soon as the next day. During the consultation, we’ll assess your situation, explain your rights, and provide actionable next steps. Sometimes, clients find out that what’s happening isn’t illegal, but we still offer practical advice to put them in the best possible position. And let’s be honest—most people have a story about a time they wish they had consulted a lawyer. Even I was misclassified and underpaid before law school and didn’t realize it. I signed documents without understanding my rights, and I missed out. That experience inspired us to create a system where anyone can access a lawyer quickly, affordably, and with peace of mind. Not every consultation leads to a legal claim, but the information and strategy you gain are always valuable. Even if the issue isn’t illegal, knowing your options can help you move forward with confidence. So, if everything at work is great, you probably don’t need us. But if things are going wrong, and you’re relying on advice from non-lawyers, random people on the internet, or just your gut, you might be missing something critical. Our service is unique—we’ve built it specifically to help current employees navigate these challenges and take back control of their careers. That’s how we approach these situations. It’s not just about the immediate fix—it’s about bringing years of expertise to the table so our clients can move forward with confidence and success.

A Guide for Sales Employees Facing Unfair Treatment

December 15, 2024
Almost every salesperson knows the drill: if your commission isn’t paid, you email, call, or escalate the issue to HR or your manager. You make a fuss and try to get the money you’re owed. Unfortunately, in states like Texas, there’s little protection if you’re fired for speaking up. Shockingly, it’s not illegal in many cases. Most people try to handle it themselves, which is understandable. But if that approach doesn’t work, and there’s a significant amount of money at stake, it’s time to consult an attorney. A lawyer can review your situation and help determine if your rights have been violated. For example, if your commission was withheld under a discretionary commission plan, there may not be a strong case. However, there could be other legal violations—like unpaid overtime—that you’re unaware of. In fact, we often uncover additional issues during our consultations, making it worthwhile to check in with a lawyer. One common mistake we see is people relying on advice from unqualified sources. Sales workers often turn to LinkedIn or other platforms for guidance, listening to "talking heads" offering free advice. The problem? Most of these individuals aren’t attorneys, and their advice is often incomplete or outright incorrect. This misinformation can lead to missed opportunities for salespeople to recover what they’re owed. Even at Kaplan Law, we don’t offer cookie-cutter advice. Each case requires a detailed analysis to understand how the law applies to your specific circumstances. That’s why taking the time to consult with a qualified attorney is critical. To put it in sales terms: there’s a lot of money on the table, and sales professionals are leaving it there by not seeking proper legal guidance when something feels off. If you suspect a problem with your pay or treatment, consulting with an experienced lawyer can make all the difference in getting what you deserve. If you’re a salesperson who feels mistreated or underpaid, here are the steps you should take: Understand Your Pay Structure: Review your employment contract, commission plan, and any policies regarding overtime or bonuses. Track Your Hours: If you’re inside sales, document the hours you work, especially overtime, to identify potential violations. Keep Records of Communication: Save emails, texts, and other documentation related to commission disputes, quotas, or workplace grievances. Know Your Rights: Learn about your protections under the FLSA and local labor laws. Consult an Attorney: Reach out to a law firm experienced in employment rights. We can help assess your case and guide you through your legal options. Why It Matters Sales employees deserve to be compensated fairly for their hard work. Companies that exploit their sales teams not only violate the law but also undermine the value of their workforce. In Austin, where tech companies frequently relocate for cost savings, ensuring fair treatment for sales employees is more important than ever. If you’re a sales professional facing unfair pay or workplace mistreatment, know that you don’t have to face it alone. We’re here to fight for your rights and help you get the compensation and respect you deserve.

Fighting for Fair Pay: Advocating for Sales Employees' Rights

December 2, 2024
Sales employees play a critical role in generating revenue for their companies. Yet, far too often, they are undervalued, overworked, and unfairly compensated. At our firm, we’ve seen countless cases where salespeople are promised fair pay—only to face broken promises, discrimination, or outright exploitation. Sales teams face unique challenges, from unrealistic quotas to retaliatory treatment when they stand up for their rights. In our work, we’ve had significant success in helping sales employees who’ve been wronged. Whether it’s recovering unpaid commissions, addressing overtime violations, or challenging discrimination, we’re here to ensure salespeople are treated fairly under the law. The Challenges Sales Employees Face Breach of Commission Contracts or Incentive Plans: We've noticed as a team that one major problem that is occurring for sales employees is companies are breaching their commission contracts or incentive plans. Many sales roles include a base salary plus commission. However, when it comes time for companies to honor their incentive plans, the promised commissions often vanish into "fine print." Companies frequently make earning commissions unnecessarily difficult, leaving salespeople shortchanged for the revenue they helped generate. We believe this is where we can truly make a difference for people. At Kaplan Law, we know the law and have many tactics in our toolkit to resolve these issues without litigation whenever possible. However, when litigation becomes necessary, we’ve had significant success, securing favorable outcomes for our clients. Overtime Violations: Shockingly, many salespeople don’t realize they’re legally owed overtime pay if their base salary outweighs their commissions. Many companies have adjusted their job descriptions to clearly classify employees as hourly roles with overtime, aiming to avoid the additional costs associated with overtime pay that commission-based employees are often entitled to. At Kaplan Law, we have brought numerous cases against various tech companies, including TikTok. When the sales force operates on a base-plus-commission structure, but w base salary exceeds the commission for inside sales roles, it violates labor laws. This practice is not allowed, and we’re committed to holding companies accountable. There seems to be a significant misconception about employment laws among both workers and management in the sales industry. Unfortunately, management often takes advantage of this misunderstanding. They might offer a high base salary with commission but then make earning that commission exceedingly difficult. While employees are led to believe meeting their targets will be straightforward, the reality is far more complicated. Companies often shift the burden onto employees, expecting them to work long hours—nights, weekends, early mornings—sacrificing personal time and family moments like attending their kids' games, all to close sales. Yet, despite the grueling hours, employees don't receive additional pay for their efforts. This creates a frustrating situation. While sales employees may earn decent pay, it’s often not proportional to the time and energy they invest. Oddly enough, we’ve noticed that employees struggling to meet their numbers often end up working the longest hours, trying desperately to catch up. And companies? They’re fine with it, as it costs them nothing extra. If this were a clerk or hourly employee, the law would mandate overtime pay for those additional hours. Under the Fair Labor Standards Act (FLSA), employees are entitled to overtime, yet many companies in the sales industry fail to comply. At Kaplan Law, we’re one of the leading firms tackling these issues. One particular area we focus on is what’s known as the 7(i) exemption under the FLSA, which governs how sales employees are compensated. Many salespeople don’t even realize their rights are being violated. That’s why we ask crucial questions when they reach out: How are you paid? How many hours do you work? Does your base salary exceed your commission? Are you predominantly working inside sales? In today’s world, most sales work is done remotely—via Zoom, WebEx, phone calls, or emails—whether from home, an office, or another location. Face-to-face sales interactions, such as meetings with customers at bars or restaurants, have become increasingly rare. This shift to inside sales has led to countless violations of labor laws, but few workers are aware of the problem. At Kaplan Law, we take pride in educating and supporting our sales clients. We understand the challenges they face—the relentless pressure to perform, the "what have you done for me lately?" mindset of many companies, and the lack of recognition for their efforts. Salespeople can bring in millions for their employers one quarter, only to face unreasonable demands the next. We’re here to help sales employees fight back, protect their rights, and ensure they are paid what they’re owed under the law. Discrimination and Retaliation: Sales employees are often subjected to unfair treatment, such as being penalized for taking medical or parental leave or being discriminated against based on pregnancy, age, or other protected statuses. Burnout and Underappreciation: Sales is a high-pressure field with demanding hours, yet companies often fail to recognize the toll this takes. Many salespeople work weekends, late nights, and holidays, only to face relentless pressure for results without fair compensation for their efforts. Our Commitment to Sales Employees At our firm, we specialize in protecting the rights of sales professionals. We’ve successfully resolved cases where companies failed to pay commissions, misclassified inside sales roles to avoid paying overtime, and mistreated employees who stood up for their rights. We understand the unique challenges of the sales profession. The pressure to deliver, combined with a lack of job security, can leave even the best salespeople vulnerable. We’re here to level the playing field, holding companies accountable and ensuring fair treatment for hardworking sales teams.
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