Is Modification of An Employment Contract Legal In Texas ?
In Hathaway v. General Mills, Inc., 711 S.W.2d 227 (Tex. 1986), the dispute centered on whether an employer and employee agreed to modify their employment-at-will contract to provide that the employee would be entitled to a lower commission rate.
The court first noted that although parties have the power to modify their contracts, a modification must satisfy the elements of a contract, namely, a meeting of the minds supported by consideration. See Hathaway, 711 S.W.2d at 228.
The court then set out the following rules applicable to employment-at-will situations:
In employment at will situations, either party may impose modifications to the employment terms as a condition of continued employment.
The party asserting the modification still must prove that the other party agreed to modify the employment terms.
Generally, when the employer notifies an employee of changes in employment terms, the employee must accept the new terms or quit.
If the employee continues working with knowledge of the changes, he has accepted the changes as a matter of law.
Thus, to prove a modification of an at will employment contract, the party asserting the modification must prove two things:
(1) notice of the change;
(2) acceptance of the change.