The Texas Supreme Court’s opinion in Igal v. Brightstar Information Technology Group, Inc. may hinder employees’ rights to be paid under the Texas Payday Act. The Court’s holding strongly favors employers. The Igal case states that a final decision by the Texas Workforce Commission (“TWC”)  denying recovery of wages prevents a claimant from later filing a civil lawsuit to recover the same damages.

Under Chapter 61 of the Texas Labor Code, known as the “Payday Act,” a claimant may file claims for unpaid wages either with the TWC in an administrative claim, or in a private lawsuit in a Texas court. The filing deadline to file an administrative Payday Act claim with the TWC is 180 days after the date the wages became due. The deadline, or statute of limitations, for filing a civil action under the Payday Act in a Texas court is two years after the date the wages became due.

In Igal, the claimant did not file the Payday Act claim with the TWC within the 180-day deadline. The Texas Supreme Court’s decision in Igal bars a claimant that filed a claim administratively with TWC that was too late (e.g. after the 180 deadline) to later file a private lawsuit in a Texas court, even when it is filed within the two year statute of limitations.

In Igal, the TWC concluded that Igal’s claim failed on the merits and that the TWC lacked jurisdiction because Igal filed the claim too late. Instead of seeking a rehearing or judicial review of the TWC’s decision, Igal sued his former employer in Texas state court for the unpaid wages.

The Texas Supreme Court first found that the TWC had jurisdiction to decide the wage claim (even though TWC itself stated it did not).  The court then examined whether res judicata should bar Igal’s lawsuit. Res judicata bars the re-litigation of claims that have been finally adjudicated in a prior action. The Texas Supreme Court concluded that res judicata barred Igal’s lawsuit because the necessary elements were present: the TWC acted in a judicial capacity when determining the wage claim and the parties had adequate opportunity to litigate their claims through an adversarial process in which the TWC decided disputed issues of fact.

The outcome of Igal has made a serious impact on Texans seeking payment of unpaid wages. In order to collect unpaid wages under the Texas Payday Act, employees must be careful not to take actions that could forever bar future recovery of the wages. Contact Austin Employment Lawyers Dominic Audino and Andrew Traub for a free consultation on the Texas Payday Act or employment discrimination in the workplace.