Mass layoffs and plant closures do not affect only laid-off employees and their families. The state and impacted communities need adequate notice to prepare for an increased demand for unemployment assistance and related services. The Worker Adjustment and Retraining Notification Act (WARN) requires covered employers to issue formal notice to “warn” employees and state entities. The WARN Act penalizes covered employers who fail to give employees 60 days’ notice.

The Texas Workforce Commission (TWC) publicly posts WARN layoff notices. Only halfway through 2026, over 10,000 Texas employees have received WARN notice. Spirit Airlines laid off almost a thousand Texas employees in May of 2026. School districts in El Paso and Fort Worth have reported layoffs in the hundreds. Tyson Foods was the largest single reported layoff in Texas so far this year, reporting 1,761 employees laid off.

But not all employers comply with their obligations under WARN. And even if they do, some employment terminations may not be legal.

Can a Layoff Be Illegal in Texas?

The WARN Act does not make any layoffs unlawful. In Texas, many layoffs are perfectly legal. Instead, the WARN Act establishes procedural requirements for some employers. They must provide adequate notice ahead of a layoff event. And if the employer fails to meet their obligations, the WARN Act provides aggrieved employees the ability to seek remedies in federal court. Restoration of employment is not a remedy WARN provides to laid-off employees.

But in the event your employer uses a layoff as pretext to dismiss you for unlawful reasons, you have rights above and beyond WARN. Your inclusion in an otherwise legal layoff may be illegal under any number of employment laws, including USERRA, Title VII, the ADA, and more. Many of these are far more protective than WARN.

Your termination may be illegal if you were laid off because of:

• Military service
• Jury duty
• Voting
• Union activity
• Whistleblowing activity
• A protected characteristic (race, sex, religion, disability, etc.)
• Requesting or using a benefit like FMLA leave
• Refusing to break the law

And if a termination violates your employment contract or collective bargaining agreement, it may be unlawful.

Some Actions to Take Beyond Unemployment

When facing a layoff in Texas, it is critical to apply for unemployment with the Texas Workforce Commission (TWC) as soon as possible. But there are additional legal considerations to bear in mind when laid off.

Review your employment contract

While Texas State law does not require severance pay or mandate notice for all cases, an individual employment agreement may provide for benefits upon separation or require notice. Texas employers are beholden to their employment agreements. If you have an employment contract that guarantees payout of unused leave, for example, your employer is obligated to honor it. An attorney can determine whether or not your employment agreement is enforceable, and whether your employer is in compliance.

Review any collective bargaining agreements

If your collective bargaining agreement guarantees special considerations like advanced notice, bumping rights, or severance pay, your employer is required to provide it to you.

Take stock of your salary, pension plans, and benefits

Your employer must pay you for all hours worked. Be sure you receive your final paycheck and that it reflects your hours worked. Your employer cannot withhold your final pay to pressure you into signing a severance agreement, for example.

Review your pension plan; you may be entitled to benefits when laid off.

401K accounts are highly regulated. Your 401K contributions belong to you, not your employer. If your employer contributes to your 401K, review the vesting schedule. It is possible these funds are not “yours” because you have not yet met the years of service requirement. Contact your 401K administrator (who should be entirely separate from your employer).

Do not sign a severance agreement without careful review

Some Texas employers may leverage benefits like severance pay to avoid legal liability by offering you a severance agreement. At-will-employment state or not, Texas employees have rights. But it is possible for you to waive your rights by signing them away.

Severance agreements can be negotiated. Be sure that any benefit received is worth the cost. By waiving claims under WARN, Title VII, USERRA, or any other statutory employee protection, you are effectively surrendering your rights. You may lose the option to sue your employer for wrongful termination, discrimination, or other unlawful employment practices. Consult a Texas employment attorney before signing away your rights. A given severance agreement may be to your advantage, but it may not be. One frank and confidential conversation with an employment attorney may spare you from agreeing to something against your interests.

Example of a Questionable Severance Agreement with WARN Waiver

For WARN violations, employees are entitled to seek wages and other collateral benefits (like healthcare costs due to loss of employee insurance coverage) for the covered period: up to 60 days.

Say your employer fails to issue notice to their employees before conducting mass layoffs, thereby violating the WARN Act. They offer you a severance incentive: two weeks’ pay in exchange for signing a waiver, agreeing to release the employer from claims under the WARN Act. If you had filed suit, you may have been entitled to 60 days’ of pay, as well as other collateral benefits (like healthcare coverage). This is especially critical for those who face steep healthcare bills as a result of losing their employer’s insurance coverage. If those medical costs were incurred during the 60-day failed-to-warn period, the employer may be ordered to cover those costs. You lose this option if you waive your WARN rights.

If your employer tries to withhold your entitlements to pressure you into signing a severance agreement, contact an attorney. Threats like these do not hold legal water:

• Refusing to issue your final wages
• Threatening to withhold your 401K

Think carefully before waiving your WARN rights or any other legal protections. Be sure the benefits of a severance agreement outweigh any costs. For example, if you are 40 or older, you have additional protections regarding severance agreements under the Age Discrimination in Employment Act (ADEA). Consider consulting a Texas employment attorney so you can make an informed choice.

Final Note: Unemployment

If you require unemployment assistance, it is imperative to apply as soon as possible through the Texas Workforce Commission (TWC). Be mindful of your tax obligations. The IRS considers unemployment benefits to be taxable income; you may ask the TWC to withhold taxes for you.

Texas employment is subject to laws and regulations that differ significantly from those in other states. Consulting with a Texas employment lawyer can make all the difference. Tully Rinckey’s team of dedicated employment attorneys is available to assist you today. Please call  8885294543 to schedule a consultation, or schedule a consultation online.

Sean C. Timmons’ years of experience as an active-duty U.S. Army Captain in the selective and prestigious U.S. Army Judge Advocate General’s (JAG) Corps are a valuable asset to Tully Rinckey PLLC’s military law practice group. As Managing Partner of Tully Rinckey PLLC’s Houston office, Sean oversees all of the office’s operations while concentrating his practice on military law; routinely handling cases involving Article 15s, letters of reprimand, courts-martial and officer/enlisted separation proceedings. Sean also handles federal labor and employment law cases and security clearance representation. He is also a member of the National Security Lawyers Association (NSLA).