How Texas SB 45 Changes Sexual Harassment Claims for Small Businesses and Startups

For decades, workers at small businesses in Texas faced an uphill battle when dealing with workplace harassment. Previously, state and federal laws required a company to have at least 15 employees before they could be held liable for a toxic environment. This left thousands of employees in cities like Austin, Houston, and Dallas without standard legal recourse. However, the landscape shifted dramatically with the passing of Texas SB 45. Today, human resources and business owners can no longer hide behind the "we are too small" defense. If you are experiencing harassment at a small company and need professional guidance, you can easily find a dedicated local lawyer through our US Lawyer Directory.

Step-by-Step Process in Texas for Navigating SB 45

Understanding how the updated Texas Labor Code applies to your specific workplace is the first step toward stopping the abuse and seeking justice. The law now casts a much wider net, encompassing almost every type of business structure and employment relationship in the state.

Step 1: Holding Mom-and-Pop Shops and Solo Practitioners Accountable

Under Tex. Lab. Code § 21.141, the definition of an "employer" for the purpose of sexual harassment was drastically expanded. It now includes any person who employs one or more employees. This means that if you work for a local bakery in San Antonio or are the sole receptionist for a solo law practitioner in El Paso, your employer is legally bound to prevent and address sexual harassment. A single incident of severe misconduct or a pattern of inappropriate behavior can now be actionable against the smallest of enterprises.

Step 2: Applying Protections to Small Tech Startups

Austin has become a massive hub for fast-growing tech startups. Often, these companies operate with skeleton crews of 3 to 10 people in high-pressure, informal environments. Startups often lack formal HR departments, leading some founders to believe standard employment laws do not apply to them. Under SB 45, this is entirely false. Even if a startup only consists of two founders and one hired coder, they must strictly adhere to state anti-harassment regulations. An employer commits an unlawful practice under Tex. Lab. Code § 21.142 if they know or should have known about the harassment and fail to take immediate and appropriate corrective action.

Step 3: Freelancers and Independent Contractors (Misclassification Issues)

Many workers in Texas are labeled as 1099 independent contractors or freelancers rather than traditional W-2 employees. While SB 45 drastically expanded the definition of an employer, it did not directly grant true independent contractors the right to sue for sexual harassment under the Tex. Lab. Code § 21.001. Under Tex. Lab. Code § 21.142, an employer's liability applies specifically to the sexual harassment of an "employee." Furthermore, the definition of an employee under Tex. Lab. Code § 21.002(7) excludes bona fide independent contractors. However, if a business controls the details of your daily work, hours, and equipment, you may be misclassified. If an attorney proves worker misclassification, you can establish employee status and pursue full remedies under the statute.

Step 4: Filing a Charge with the State Agency

Before you can file a formal lawsuit in a Texas civil court, you generally must file an administrative complaint with the state. You will need to submit your claims to the Texas Workforce Commission, Austin or one of its regional offices. Claimants can submit an inquiry through the state's online Employment Discrimination Inquiry Submission System (EDISS) or dual-file using Form 5, FED, Equal Employment Opportunity Commission, Charge of Discrimination. This filing establishes an official record of the harassment, detailing who was involved, the dates, and how the small business failed to protect you.

Step 5: Obtaining a Right to Sue Letter

Once the agency investigates your claim, they will likely issue a Right to Sue notice. This letter allows you to take your employer to a state court, such as the Harris County District Court, Houston or the Bexar County District Court, San Antonio. Due to the complexities of navigating administrative exhaustion, relying on local precedent like Waffle House, Inc. v. Williams, 313 S.W.3d 796 (TX Supreme Court 2010) is crucial to understanding employer liability standards, even for newly covered micro-businesses.

How Much Does it Cost to Pursue a Claim in Texas?

Filing the initial administrative charge with the state is completely free. However, if you pursue a lawsuit, there will be associated costs. Fortunately, many employment lawyers in Texas take sexual harassment cases on a contingency fee basis. This means they do not charge upfront hourly rates; instead, they take a percentage (usually 33% to 40%) of the settlement or jury award if you win.

How Long Does the Process Take?

One of the most critical changes implemented in the Texas Labor Code is the expanded timeline enacted alongside SB 45 by Texas HB 21 (2021). Under Tex. Lab. Code § 21.202(a-1), you have 300 days from the date of the alleged sexual harassment to file your administrative claim with the state agency, extending the traditional 180-day limitation period. If you miss this deadline, you may permanently lose your right to sue under state law. Once filed, the administrative investigation can take 6 to 10 months. If the case proceeds to a civil lawsuit, it typically takes 1 to 2 years to reach a settlement or trial date.

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