September 13, 2021  | By McCathern Law

Now that the dust has settled from the 87th legislative session in Texas there are several key laws from the 666 new laws that went into effect on Sept. 1 that every business operator in Texas should understand. While the highly publicized and politicized “constitutional carry” (HB 1927) or “election integrity law” (SB 1) may have taken center stage in media coverage, the following laws should be on every business’ radar.

Partner Ty Sheaks of the McCathern Frisco office has provided the following summaries and analysis of those new laws. If you are a business operator in Texas and have questions about these or any other laws, please contact us today.

COVID-19 Civil Liability Protections for Large and Small Businesses

The Texas Pandemic Liability Protection Act (SB 6 or “PLPA”), which granted retroactive civil liability protections for large and small businesses and a variety of health care providers and first responders related to COVID-19 injury and death lawsuits, was signed into law on June 14, 2021. The general provisions of the act are now codified at § 148.003 of the Texas Civil Practice and Remedies Code. Specifically, the new law establishes a strong civil liability shield for businesses, regardless of size, against claims of injury or death from alleged exposure to a “pandemic disease”, whether the person harmed is an employee or third-party physically present on the business’ premises.

While not an absolute shield, claims may still result in liability for a pandemic-related injury or death if: (a) the business “knowingly” failed to warn the individual of, or fix, a condition within the business’ control, despite having a reasonable opportunity to do so, with the knowledge that the individual was more likely than not to come into contact with or be exposed to the pandemic disease, and the failure to warn or fix the condition was the cause in fact of the individual contracting the disease; or (b) the business “knowingly” failed to implement, refused to comply with, or acted in flagrant disregard of the standards, guidance, or protocols put forth by the government that are intended to lower the likelihood of exposure to the pandemic disease, despite having a reasonable opportunity to do so, and this failure or refusal to comply was the cause in fact of the individual contracting the pandemic disease. In the cases where federal, state or local government authorities have issued conflicting standards, protection from liability will remain intact as long as the business complied with one of the applicable, but conflicting, standards.

Notably, merely asserting a business knew of and failed to warn or implement or comply with a government-promulgated standard is not sufficient to establish liability. Instead, a claimant must provide “reliable scientific evidence” in the form of an expert report providing both factual and scientific basis for the assertion that a business/defendant failure to act caused the injury or death from a “pandemic disease”. Similar to the requirements for asserting medical malpractice negligence, this report must be provided no later than 120 days of a defendant filing a responsive pleading. If the report is not timely furnished or upon challenge to the sufficiency of the report and determination by the court, the claim shall be dismissed with prejudice and awarding of reasonable attorney’s fees and costs incurred by the business/defendant.

While the law is limited to claims filed on or after March 13, 2020 and only extends until a state of disaster no longer exists as declared by the governor, all businesses in Texas with any potential or pending COVID-related litigation should consult with experienced legal counsel to determine whether this law can be used to respond to any claims.

Anti-Vaccination Passport Law

SB 968 was signed into law on May 7, 2021 which banned government-issued “vaccine passports” for non-healthcare related purposes. While the new law doesn’t prevent an employer from requiring employees to provide proof of vaccination related to COVID-19, it does restrict businesses from requiring customers to show proof of vaccination before allowing them on the premises.

Specifically, the new law states “a business in this state may not require a customer to provide any documentation certifying the customer’s COVID-19 vaccination or post-transmission recovery on entry to, to gain access to, or to receive service from the business.”

While there is no monetary penalty (like the similar Florida law), businesses that fail to comply with the new law are subject to losing state funding, grants, and any licenses or permits needed to operate within the state.

For businesses that may want to require proof of vaccination from an employee, the current guidance from U.S. Equal Employment Opportunity Commission’s (EEOC) FAQs remains in effect and advises that federal anti-discrimination laws do not prohibit employers from requiring COVID-19 vaccinations for any employees physically entering the workplace nor do they prohibit offering employees incentives to get a COVID-19 vaccine or educating employees about its benefits.

Recovery of Attorney’s Fees from LLC’s and Partnerships Now Permissible

HB 1578 (finally) made revisions to revisions to Texas Civil Practice & Remedies Code §38.001 to expand recovery of attorney’s fees from most “organizations” for any lawsuits filed on or after Sept. 1, 2021. Under the “old” version of §38.001, recovery of attorney’s fees for breach of contract was permitted only from an “individual or corporation.”

Federal and State courts in Texas interpreting the “old” language routinely held that the legislature’s intent to use that specific language did not support the recovery of attorney’s fees from an LLC or other corporate forms not listed in the statute. Ganz v. Lyons Partnership, L.P., 961 F. Supp. 981 (N.D. Tex 1997) (LLP not subject to award of attorney’s fees); Sky Group, LLC v. Vega Street 1, LLC, 2018 WL 1149787 (Tex.App-Dallas 2018) (trial court cannot order LLPs, LLCs or LPs to pay attorney’s fees under the plain language of Section 38.001).

The “new” language of §38.001 replaced “corporation” with “organization” as defined in Section 1.002 of the Texas Business Organizations Code, which specifically now includes “a corporation, limited or general partnership, limited liability company, business trust, real estate investment trust, joint venture, joint stock company, cooperative, association, bank, insurance company, credit union, savings and loan association, or other organization regardless of whether the organization is for-profit, non-profit, domestic or foreign. Tex. Bus. Org. Code §1.002. There is still a caveat or exclusion for recovery of fees from certain quasi-government entities, religious organizations, charitable organizations and charitable trusts.

While this change certainly corrects a long-standing limitation on recovery of attorney’s fees it is still best practice to ensure agreements or contracts between parties spell out the fee-shifting provisions or ability for recovery of reasonable attorney’s fees and costs as an additional means to obtain recovery if there is a lawsuit.

All Texas Employers Are Subject to T.C.H.R.A. For Sexual Harassment Claims

SB 45, which was signed into law May 30, 2021, amends the Texas Labor Code by adding a new sub-chapter titled “Sexual Harassment” to separate sexual harassment from the realm of “discrimination” as commonly defined under federal law at Title VII of the Civil Rights Act of 1964.

Prior to the new amendments to the Texas Commission on Human Rights Act (“TCHRA”), it only applied to employers in Texas with 15 or more employees. Now, and specific to sexual harassment claims, employers in Texas with 1 employee are subject to potential liability for sexual harassment claims. Further, potential liability for sexual harassment is now extended to not only the employer, but also individual managers and/or supervisors. With these changes the TCHRA is now stronger than federal Title VII with respect to sexual harassment claims.

Specifically, the new language in the TCHRA defines an “unlawful employment practice” as one in which the not only the employer, but also the employer’s agents or supervisors: (a) know or should have known that the conduct constituting sexual harassment was occurring; and (b) fails to take “immediate and appropriate corrective action.” However, what constitutes “immediate and appropriate corrective action” is undefined and could create potential liability for employers.

Additionally, the new changes to the TCHRA allow for employees alleging sexual harassment claims up to 300 days (instead of 180 days under “old” language) to file a claim with the Texas Workforce Commission. Notably, the new law does not apply to out-of-state employees of Texas-based businesses.

To stay ahead of and properly address potential sexual harassment claims, ALL employers in Texas regardless of workforce size should be mindful of some of the following best practices and of course consult outside legal counsel to ensure compliance and/or craft appropriate policies and procedures:

  • Create and implement a comprehensive, written anti-harassment policy;
  • Conduct and document completion of training (at least annually) on your anti-harassment policy;
  • Provide additional training for supervisors and managers regarding their obligations for implementation, enforcement and reporting of your anti-harassment policy;
  • Ensure accurate documentation of all complaints (oral or written);
  • Work with HR, legal and your insurer(s) regarding creating, enforcing and investigating any sexual harassment claims.

Alcohol-To-Go (a/k/a Margaritas to Go)

While primarily focused on restaurants, the “Alcohol-To-Go” executive order was officially extended and made permanent with the passage of HB 1024. The law was signed and effective May 12, 2021 and authorized Mixed Beverage and Private Club permittees to sell alcohol (including mixed drinks) for pickup by customers or delivery as long as they meet the requirements in the law.

Specifically, under the new law, Mixed Beverage and Private Club permittees may: (1) allow customers to pick up alcohol (i.e. mixed drinks, wine and malt beverages, which includes both beer and ale) with food orders; (2) deliver alcohol with food orders to customers; (3) use third parties, including agents of the retailer or contracted holding a Consumer Delivery Permit, to make deliveries on their behalf. The new law also codifies key safety provisions, including requiring that all alcoholic beverages be sealed either in their original, manufacturer-sealed container, or in a tamper-proof container that is labeled with the business’ name and the words “alcoholic beverage.”

While navigating the new law and TABC’s enforcement may be tricky for restaurateurs, alcohol-to-go is most definitely a win-win for consumers and businesses.

In Conclusion

If Texas business owners have any questions about these or other new laws, please contact McCathern today. Our attorneys are experts on a wide range of legal matters relevant to Texas business owners, including: