How to Steer Clear of Wrongful Discharge Claims
08/22/08
“Wrongful discharge.” It’s a phrase that sends shivers down the spines of experienced HR people. And with good reason. It’s a serious charge that sometimes results in serious consequences for employers.
But exactly what is wrongful discharge? According to attorney Joy Waltemath, principal analyst with CCH Inc., in Chicago, “Wrongful discharge is a catch-all term that generally describes discharge claims that don’t fall neatly under federal anti-discrimination laws — or under other laws that specifically restrict an employer’s right to discharge an employee for any reason.”
At-Will Employment: The Heart of the Matter
Unless you live in Montana or operate under a collective bargaining agreement, you are most likely an “at will” employer. Simply put, that means you can fire any employee, for any reason, at any time, and an employee can quit for any reason at any time. At-will employment sounds neat and clean, but in practice it is not. That’s because there are exceptions to at-will employment — and these exceptions often give rise to claims of wrongful discharge. Explains Waltemath, “Courts have started reading into the at-will relationship a requirement that the parties deal with each other fairly, and in good faith.” This implied covenant of good faith and fair dealing, she adds, “means that some courts, particularly state courts, will recognize a claim for wrongful discharge if an employee was fired for reasons of bad faith or reasons that violate public policy.” What’s more, courts in some states say the language you use in employee handbooks and policies, or promises you make in job interviews, can create an implied contract. Says Waltemath, “That will prevent discharge in some instances.” Example: Your handbook tells employees they will receive three warnings before you dismiss them. If you then fire an employee after one warning, you could set yourself up for a claim of wrongful discharge. Don’t Mess With Public Policy
Many wrongful-discharge cases fall under the “public policy” exception to at-will employment. Public-policy exceptions include retaliating or firing an employee for whistle-blowing (reporting an employer’s illegal or unethical conduct to the authorities), seeking workers’ compensation, revealing safety problems, testifying in a court proceeding, performing jury duty, or taking military leave, among other things. “Generally,” says Waltemath, “the public-policy principles that are violated in such cases are embodied in state or federal law, professional regulations, or codes of ethics. But to be wrongful, a discharge doesn’t have to actually violate a specific law.” For example, terminated workers sometimes claim wrongful discharge based on what they claim is the intentional infliction of emotional distress. Such a situation might come about when an employer, in a misguided attempt to get an employee to resign, makes his or her life at work miserable.
Wrongful Discharge Damages Severe
Wrongful discharge suits, if successful, can be financially painful. Employers can be liable for lost wages and benefits, as well as provable physical or emotional injuries that result from the discharge. “In severe cases in which the employer’s conduct is seen as particularly offensive, the business might have to pay punitive damages. Those can be very high,” Waltemath says. Take Action!
Fair dealings with employees at all times will go a long way toward eliminating the threat of a wrongful discharge lawsuit. Waltemath recommends these practical steps to keep a plaintiff’s attorney at bay:
- Audit your policies, handbooks, and practices.
Waltemath: “Make sure that you’re not making statements that could be construed as promises that create contractual obligations.” And train managers and supervisors on the law. You don’t want them telling employees: “Once you finish your probationary period, your job is secure.” - Inform and investigate. Put specific work rules and policies in writing and train employees to ensure they understand the rules and policies that apply to them. If you suspect or observe an infraction, investigate carefully before you impose any kind of discipline. That goes double for terminations. “Monitor discipline and discharge situations to make sure that you are being consistent and evenhanded in applying your policies. The punishment should always fit the crime,” says Waltemath.
- Get a second opinion. “One of the most important things an employer can do,” concludes Waltemath, “is to have someone within the company confidentially and impartially review any proposed firing. And it should be someone other than the employee’s direct supervisor.”
In short, make sure you know all the facts of a discipline case and that you consider the possible outcomes of a decision to fire. Taking care now improves the possibility that you’ll avoid a day in court.
_______________
Try these G.Neil products, all designed to keep you on the right side of the law.
Separation Agreement Kit
MyBiz™ Employee Handbook
Receipt of Employee Handbook
Receipt of Updated Company Policy
Federal Employment Laws – A Desk Reference
Performance Appraisal Form
Employee Warning Notice
Counseling Report
How to Become a Great Boss
Learn more about lawful employee termination.