By L. A. Hynds
“Wrongful discharge” is a generic term encompassing more than 20 legal theories under which employees who have been terminated or undergone some other undesirable employment decision (e.g., demotion, pay cut, being passed over for promotion or the like), can sue their employers. While not all inclusive, the list of legal theories encompassing wrongful discharge includes such theories as race discrimination, national origin discrimination, age discrimination, sex discrimination, religious discrimination, handicap discrimination, height discrimination, weight discrimination, arrest record discrimination, marital status discrimination, whistleblower retaliation, breach of contract (nonunion), breach of public policy, concerted (union or union like) activities, defamation, and assault and battery. In most counties, plaintiffs win more than half of the wrongful termination cases which go to a jury. In some counties, that statistic exceeds 70%. While the average plaintiff in wrongful termination cases has earned approximately $35,000 – $40,000 per year, the average verdict against their former employers exceeds $300,000. In some counties, the average verdict, inclusive of statutory interest, costs and attorneys’ fees approximates one half million dollars. In order to best protect themselves against wrongful discharge cases, employers need to take some basic steps. These include:
Proper Hiring Techniques
This means that all applicants should be very carefully screened, checked and verified before they are hired. Each applicant should be required to fill out, sign and date a comprehensive and well written employment application form when he or she applies. In most circumstances, this employment application form should contain a statement clearly indicating that the employer is an “at will” employer and that only a designated high-ranking representative of the employer has any authority to make any promises to the contrary and then only in a signed writing addressed to a specific employee. One representative within the company should be appointed to assist in the hiring of employees and the handling of all other aspects of human resources. This includes the interviewing process – a process which must be done properly. An interviewer should never inquire about such issues as marriage plans, pregnancy plans, child care plans, religion, age, national origin, height, weight, arrest record, or physical condition or handicaps unrelated to the ability to perform the job in question. At the same time, however, employers are perfectly free to inquire (and indeed should inquire) about an applicant’s job related education, experience, references and the like. While an employer remains free under the current law to require a physical examination of an applicant, a physical examination can no longer be required until the applicant is informed that he or she will be hired contingent upon the results of the exam.
While employment manuals come in many sizes and styles, certain contents should appear in every nonunion employment manual. These include a statement regarding to whom the manual applies. In many cases, it will be appropriate to simply say that “this manual will apply to all of the employees of the company.” It is also important that the manual contain a statement to the effect that the manual, as well as the benefits described therein, can be terminated at any time within the sole discretion of the employer, and without advance notice. It is critical that a manual clearly and correctly state that employees of the company are employed “at-will,” if the employer wants to remain an at-will employer and thereby minimize any chance of later being held liable for alleged breach of verbal employment contracts. Such statements will not be fully effective unless they additionally make it clear that only a designated high-ranking representative of the company has any authority to make any promise to the contrary, and then only in a signed writing addressed to a specific employee. Additionally, employment manuals should contain concise and well written sexual harassment policies, employee search policies, and leave of absence policies.
All employment records should be maintained for at least six years after the employee is no longer employed by the company. In other words, the employment records of an employee who terminates after 10 years of service to the company should be maintained for six years thereafter – a total of 16 years. The employment application forms of applicants who are not hired should be maintained for at least three years.
The most common reason for employers losing wrongful discharge cases is a lack of well-documented progressive discipline. Jurors want to see that an employer has been fair prior to administering what has been referred to as the “capital punishment of employment relations.” The very best way to do that is with well written disciplinary memoranda which clearly tells the story or the history of the termination and why it was necessary. A well written disciplinary memoranda should contain four elements. First, it should make it clear in the opening that the employee has been and remains well aware of the employer’s concerns and that nothing in the memo should come as a surprise to the employee. The memo should also clearly articulate in specific terms how the employee’s performance or other conduct has been unacceptable. General terms (e.g., failure to communicate) should be avoided. As a third step, the memo should specifically delineate what the employee must do to correct the performance deficiencies. As a fourth and final step, the memo should make it clear that any further misconduct or any continued failure of performance on the part of the employee can and will result in further disciplinary action up to and including discharge from employment.
The Termination Process
When it becomes necessary to terminate an employee, the termination process should be undertaken as humanistically as possible. In each case, an employer should at least consider providing the terminated employee with a modest severance package containing some form of continuation of pay, and possibly, health care benefits. At the same time, however, an employer should insist on receiving a comprehensively and properly written release of liability from any terminated employee to whom a severance benefit is paid. Employers who pay severance benefits to terminated employees without getting such a release, may well find themselves financing litigation against themselves. An appropriate management witness should participate in each termination and employers should take great care not to say anything to anyone either inside or outside of the company which could later be alleged to be defamatory. Other employees should be involved in the termination process only on a “need to know” basis.
Finally, no termination or other severe employment action should be undertaken without first consulting with an attorney experienced in employment law.
This summary was prepared by L. A. Hynds. For further information on this subject, or to schedule a seminar on this or other management training seminars, please contact Mr. Hynds at 313-256-7710.
The material provided on this site is for information purposes only and does not constitute legal or professional advice. Before you fire anyone, we strongly recommend that you have just cause, including supporting documentation. Contact your attorney for more information.
Copyright – 1998 L.A. Hynds and Honigman, Miller, Schwartz and Cohn. Honigman, Miller, Schwartz and Cohn is a premier national law firm committed to furthering their clients’ business goals, while delivering personalized service. Visit their website, http://www.honigman.com