Emplpyment Termination: How to Avoid Legal Ramifications

Employment Termination:

How to Avoid Legal Ramifications

Tonya Walker

Employment & Recruitment

Emmanuel College

Prof. Julie DeCosta

October 15, 2014

Summary

        Termination is one of the most difficult tasks a manager or supervisor will have to perform.  Managers & supervisors, or those responsible for the hiring and firing in an organization, need to have a good understanding of everything that is involved in an employee exiting the company.  The decision to terminate an individual’s employment carries with it a risk of possible legal challenges.  In today’s society, it is much, much harder to terminate an employee.  Employees are aware of their rights under the law and are likely to seek advice from an attorney if they feel they’ve been wrongfully terminated.  

        Employers should always make sure that when the need arises to terminate an employee that the motive is honorable, necessary and legitimate. To help employers avoid wrongful termination lawsuits, I will discuss some legal guidelines and facts that will help avoid such ramifications in the future.

A termination occurs when an employer or employee ends employment with the company. Termination can be voluntary- occurs when an employee resigns from his/her job for various reasons such as a new job, relocating out of state, returning to school on a full time basis, personal/family health issues and retirement; or Involuntary- occurs when an employer fires or removes an employee from his/her job.

        Involuntary termination usually results from an employee’s poor work performance, violation of a work policy or negative behavior.  It also can occur when a company faces economic downturn or some kind of financial hardship where layoffs are the only option in order for the company to survive.  Other events that trigger involuntary terminations can include merger and acquisitions and company relocation.

        Whether a voluntary or involuntary termination, employers should always document everything-documentation is key! Without proper documentation, employers cannot build a strong defense when charged with a lawsuit of wrongful termination or discrimination.  To avoid the possibility that an employee may try to base a wrongful termination action or alleged illegal conduct or motives, employers should be prepared to show real legitimate reasons for the firing.  A few reasons that may support a firing include poor work performance, abusing sick time, excessive absences, habitual tardiness, violation of company rule(s), alcohol/drug use and/or abuse while on the job, violent behavior on the job and dishonesty, just to name a few.  

        The decision to terminate an individual’s employment carries with it the risk of legal challenges if not done properly.  In most states, if there is no employment contract, employees are employed on an “at-will” basis. This means an employer and/or employee may terminate employment for any reason and at any time with or without cause.  Neither the employer or employee is obligated to give a reason for why they are terminating employment. Employers however should always keep documentation on file to defend themselves against charges of wrongful terminations or discrimination.

        Over the years, the employer’s right to fire at will has been limited as courts have recognized exceptions to the at-will doctrine. Four major exceptions are:

Violations of Public Policy: Many states now recognize a violation of Public Policy as an exception to the at-will doctrine. Courts have held that it’s against Public Policy to fire an employee for refusal to file false or phony reports with State Agencies, bribe public officials, commit perjury, commit an illegal act or for Whistle blowing.

Breach of Contract: Many employers sometimes make promises to job applicants to entice them to work for them.  “A number of judges have ruled that if a person relies on such promises, an enforceable contract of employment can be created” thus making the employer liable for wrongful termination if the employee is fired in violation of said contract.  The employer must demonstrate they had good cause to terminate the employee in order to avoid the Breach of Contract lawsuit.

Breach of Implied Contract: An implied contract is usually an agreement created by actions of the employer and the employee but that is not written or spoken, but understood by both parties. This type of contract is known to include verbal statements made by an employer offering some type of job stability or the promise of promotions, and how employees are to be treated.  Implied contracts are assumed to have been drawn.  If an employer tells an employee or potential employee they will be fired for cause only or otherwise establish guidelines that spell out how and when terminations will be handled, then the employer may be creating an implied contract.  Most company policies are reflected in a handbook.  Since most, if not all, employers want to protect themselves from a potential breach of an implied contract, they will have their employees sign a form stating that the company’s employee handbook/manual does not comprise a formal contract.  If an employee signs this form, then it may override the potential implied contract breach claim.