Texas employers should review a recent decision by the Texas Supreme Court that will affect the resolution of wage claims made under the Texas Payday law. In a case of first impression, the Texas Supreme Court has held that a final adjudication of a wage claim by the Texas Workforce Commission denying the claim precludes the subsequent filing of a common law wage claim in state court. The decision in Igal v. Brightstar Information Technology Group, Inc., 2007 WL 4276545 (Tex. 2007), emphasizes for all companies with employees in Texas the importance of responding forcefully to wage claims made to the TWC, as a victory in that forum will not prevent an employee from later pursuing the same claim in court.
Igal was terminated by Brightstar and contended that under his employment agreement, he was entitled to a post-termination salary. 1989, the Texas Legislature amended the Texas Payday Law to provide for an administrative procedure under which a claimant could file a wage claim with the TWC. Accordingly, Igal filed a claim with the TWC, asserting a violation of his employment agreement and claiming unpaid wages. The TWC concluded that Igal’s claims failed on the merits and that it lacked jurisdiction because Igal filed his claim more than 180 days after his wages became due for payment. Instead of filing a motion for rehearing or seeking judicial review of the TWC’s decision, Igal sued Brightstar in a Texas state court for breach of contract and declaratory judgment. The trial court granted summary judgment for Brightstar, holding that res judicata barred Igal’s claims, and the Court of Appeals affirmed.
The Supreme Court agreed, concluding that “res judicata attaches to TWC’s final administrative decision.” Res judicata bars the relitigation of claims that have been finally adjudicated on the merits in a prior action. The court concluded that res judicata does apply to claims previously determined by an administrative agency. In deciding wage claims, “TWC acts in a judicial capacity.” Because the parties “had an adequate opportunity to litigate their claims through an adversarial process in which TWC finally decided disputed issues of fact,” res judicata applied.
The court rejected Igal’s contention that the TWC procedure was only intended to be an alternative, and not an exclusive, remedy. According to the court, agencies and courts may both “provide remedies for injuries actionable under the common law.” The Payday Law was intended to provide an alternate remedy to employees when it would be too difficult to pursue a traditional lawsuit. When an employee chooses this alternative, that employee cannot later relitigate the same claims in a court. The holding in Igal will therefore prevent employees who are unsuccessful in a TWC proceeding from pursuing the same claims against their employers in a Texas court.
Full Opinion Text: http://www.supreme.courts.state.tx.us/historical/2007/dec/040931.pdf