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Punitive Damages for Employees Terminated for Refusal to Perform an Illegal Act - Malice Required

In 2012, the Texas Supreme Court rendered an important decision that has the potential to expand an employer's liability for wrongful termination of employees in Texas.  Texas is an at-will employment state where employers have the ability to terminate the employment relationship at any time and for almost any reason.  One of the few exceptions to Texas's at-will employment doctrine is the public policy exception when an employee is terminated for refusal to perform an illegal act.  These causes of action are commonly referred to as Sabine Pilot claims, stemming from the seminal decision in Sabine Pilot Services, Inc. v. Hauck, 687 S.W.2d 733 (Tex. 1985).

These Sabine Pilot wrongful discharge claims were judicially created to prevent employees from having to choose between their livelihoods and breaking the law.  In Safeshred, Inc. v. Louis Martinez, III, the Texas Supreme Court considered whether punitive damages were available against an employer for Sabine Pilot claims, and what must be shown as a prerequisite for those damages.  The Court ultimately held that these claims bear the hallmarks of a tort claim and that punitive damages are available upon a proper showing of malice, which must exist separate and apart from the act of firing itself.

For a full discussion of the Court's holding and an examination of the facts and public policy considerations related to same, see our previously drafted Litigation Alert on this issue here.