Texas employers who have less than 15 employees are no longer protected from sexual harassment claims under the small employer exception. Senate Bill 45, signed by Governor Abbott on May 30, 2021, changes the standard definition of employer in the Labor Code for sexual harassment complaints from “employs fifteen or more employees” to “employs one or more employees”.

This is a major change for small businesses in Texas. It overturns a long-time affirmative defense that many small businesses have relied on to avoid litigation without really worrying about improving their behavior.

New Texas Sexual Harassment Law

Both the federal discrimination law, Title VII, and the Texas discrimination law, Labor Code chapter 21, have excepted small business from any liability for employment actions taken in whole or in part on the basis of sex, religion, age, disability, etc. While the 15-employees or more exception still applies to all of those other categories for the time being, preventing sexual harassment has received a new treatment by the Texas Legislature and, as of September 1, applies to every Texas employer, regardless of employee headcount.

In addition, Governor Abbott signed a companion bill, House Bill 21, on June 7, 2021, that extends the time for filing a sexual harassment claim under §21.141 from 180 days to 300 days after the last harassing act occurred. So now, any Texas employee claiming that they have been sexually harassed in any workplace will have ten months instead of six months to complain to the Texas Workforce Commission’s Civil Rights Division.

“Sex” includes Sexual Orientation and Gender Identity

Here is an interesting twist to this legislation. Last year, the U.S. Supreme Court ruled that the word “sex” in Title VII’s discrimination prohibitions includes sexual orientation and gender identity. Bostock v. Clayton County, 590 U.S. __ (2020). Recently, a Texas Court of Appeals addressed the issue of whether Bostock applies to Texas Labor Code Chapter 21, which bans discrimination in Texas “because of sex.” Tarrant Cnty Coll. Dist. v. Sims, No. 05-20-00351-CV (Tex. App—Dallas, Mar. 10, 2021).

The state appeals court in Dallas held that, in light of the U.S. Supreme Court’s decision in Bostock, they were compelled to read Chapter 21’s ban on sex discrimination “as prohibiting discrimination based on an individual’s status as a homosexual or transgender person.” It is no stretch to apply the Dallas court’s reasoning to sexual harassment, which is just a type of sex discrimination.

Small Businesses Need New Policies

With that background, even the smallest Texas businesses need to make sure they are not allowing any employee or customer to harass another coworker based on that coworker’s sex, sexual orientation or gender identity. While some courts may rule down the road that is not what the Texas Legislature meant to do in its ultra-conservative 2021 legislative session, you do not want your small business to be the test case on Texas’ new sexual harassment law.

Most small employers do not even have Equal Employment Opportunity language or Sexual Harassment policies in their employee policy manuals. That will have to change before September 1, 2021, when SB 45 goes into effect as Tex. Labor Code §21.141.

The new law only applies to harassment in a small business that occurs after September 1, 2021, so if you are a small business owner, now is the time to clean up your employees’ language and offensive behavior (and your own, if any). 

There are other preventative steps every Texas employer needs to take besides just adding a written policy.