I am a California attorney and not eligible to give legal advice in your state. The following is information only, based on federal law and general legal principles. YOUR STATE MAY HAVE ITS OWN LAWS THAT PROVIDE SIMILAR OR GREATER PROTECTION. If I refer to your state's laws, that only means I did a quick Internet search and found something that appeared relevant. However, you should not rely on any comment I make regarding your state's law. You MUST check with an attorney licensed in your state.
I know nothing in particular about the laws in your state. That said, every state in the country has at-will employment, other than Montana. Although Texas' at-will law will be different from California's at-will law, you can get a general idea of what you are up against by looking at my Avvo guide on California's at-will employment law. http://www.avvo.com/legal-guides/ugc/a-short-summary-of-california-at-will-employment.
Your issue is one of strategy, not law. Confronting your boss is probably not going to get you anywhere you want to go, and indeed may get you fired. If the woman is getting preferential treatment, you may have some legal claims under sexual harassment law, but this is not crystal clear because you are not getting harassed. However, if a person having an affair with the boss gets her better treatment, there could be a claim that a sexual relationship with the boss is required in order to get good treatment. It's a stretch, but possible.
For your protection, whatever action you take (if any), please do it on behalf of yourself AND the other employees. It's best if you and at least one other person take the action, but if you cannot get anyone else to join you, make it absolutely clear that what you are doing is on your own behalf AND on behalf of the other employees. This is because employees have a right to concerted activity (acting together, acting "in concert") for things related to wages, hours and terms of employment. This right is guaranteed by the National Labor Relations Act, as amended, 29 U.S.C. §§ 151 - 169 (NLRA, also known as Labor Management Relations Act or LMRA), the same law that allows workers to organize into unions. It does not matter that Texas is a right-to-work state.
*** All legal actions have time limits, called statutes of limitation. If you miss the deadline for filing your claim, you will lose the opportunity to pursue your case. Please consult with an experienced employment attorney as soon as possible to better preserve your rights. *** Marilynn Mika Spencer provides information on Avvo as a service to the public, primarily when general information may be of assistance. Avvo is not an appropriate forum for an in-depth response or a detailed analysis. These comments are for information only and should not be considered legal advice. Legal advice must pertain to specific, detailed facts. No attorney-client relationship is created based on this information exchange. *** Marilynn Mika Spencer is licensed to practice law before all state and federal courts in California, and can appear before administrative agencies throughout the country. She is eligible to represent clients in other states on a pro hac vice basis. ***
In Texas, employees are generally hired on at at will basis. That means that they can quit or be fired for about any reason, as long as the reason is not an illegal reason. Being fired for filing a worker's compensation claim is an example of an illegal reason.
In your case, office affairs are generally not illegal (it does depend on who the employer is). If the employee consents, it generally is not sexual harassment (again it depends on who the employer is).
If you were to get fired, fighting an allegedly wrongful termination is expensive. Few attorneys would take such a case on a contingency fee, as there generally is not enough money at stake for a single employee (although the money is significant for you).
I don't know enough about your situation, but my gut reaction is to recommend that you not confront your boss in a hostile or aggressive manner. Insubordination itself could be grounds for termination. Perhaps an aside comment to your boss about what all his paramour is saying could have a beneficial effect. But, I suspect not. But I do believe that the more that you get involved, the riskier your continued job prospects are.
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