Public sector and unionized employers have constraints on their ability to terminate their employees. However, many private sector employers are not unionized, and their employment relationship with their employees is called “at-will.” Some employers assume that at-will employment means that they have an unfettered right to fire employees. To the surprise of many employers, their ability to freely terminate at-will employees is undermined by the common law legal claim of “wrongful termination” (also called “wrongful discharge”). Over the years the at-will doctrine has eroded. In addition to potential claims under the growing list of federal and state laws, claims for wrongful discharge remain as a viable option for some displaced employees.
The Wrongful Termination Exception to At-Will Employment
As a starting point, courts have long recognized the concept of at-will employment. In general, an at-will employment relationship means that either the employer or the employee is free to end the relationship at any time, with or without advance notice, and for any reason or no reason at all. On its face, the concept of at-will employment seems to give at-will employers free reign to fire employees.
However, the law of “wrongful termination” is one major exception to this concept of at-will employment. To win a wrongful termination claim, the former employee must satisfy two requirements. First, the former employee must prove that his or her termination was motivated by the employer’s bad faith, retaliation or malice. Second, the former employee must prove that he or she was terminated for performing an act that public policy would encourage or for refusing to do something that public policy would condemn. See MacKenzie v. Linehan, 158 N.H. 476, 480 (2009). The first requirement focuses on the employer’s behavior, and the second element focuses on what the former employee did or refused to do and whether the former employee’s conduct related to a recognized public policy.
What does this wrongful termination theory of liability mean as a practical matter for at-will employers? The reality is that an at-will employer who arbitrarily fires an employee without giving any reason proceeds at the employer’s own risk. Yes, the at-will employer can do so, but the real question is should the employer do so. If an employer doesn’t have a reason for a termination decision, even for a termination concerning an at-will employee, it is possible the former employee will incorrectly speculate that he or she has been wrongfully terminated.
Practical Considerations for At-Will Employers
If the at-will status of the employment relationship is not a complete shield for the employer’s termination decisions, what are some practical steps that an at-will employer can take to help avoid or defend against potential wrongful termination claims? Here are some things an employer can do before, during and after a termination decision has been made to help minimize the potential for a wrongful termination claim.
- Steps an Employer Can Take Beforea Termination Decision
Of course, an employer’s goal is avoid making termination decisions altogether by hiring and retaining good employees. Here are some steps that an employer can take to manage an employee before a termination decision is made in order to mitigate any potential argument by the employee that the reason for the termination was not legitimate or came as a surprise to the employee.
- Develop Written Employment Policies — It’s a good idea for an employer to clearly communicate its expectations of employees through easily understandable written policies. Policies can address what the employer considers unacceptable workplace conduct and the employer’s expectations about basic workplace issues like employee attendance, punctuality, and use of the employer’s computer and communications systems. Although employer unwritten practices are important, it is easier for an employer to defend a wrongful termination claim if the employer can point to written policies that the employee violated.
- Effectively Implement Written Employment Policies — Policies can be stand-alone documents, but most times it is easier and a more effective communication tool for the employer to include its written policies in an employment handbook. The goal is to have the employment handbook effectively implemented so that employees have easy access to it. Employers can give employees their own hard copies of the handbook, make handbooks available at a variety of locations through the workplace, and make the handbook available on the employer’s intranet system.
- Conduct Effective Orientation of New Employees — The employer can educate the new employee about the employer’s expectations at the very start of the relationship. Orientation should include a thorough review of the employer’s written policies with the new employee.
- Effectively Train and Communicate with Employees on an Ongoing Basis — It is helpful if the employer can periodically reiterate its expectations and policies to employees so that employees have these workplace expectations in mind. Also, an employer’s policies can evolve as its business evolves. Periodic training of employees about the employer’s policies, and effective communications to notify employees about changes, updates or new policies, are helpful ways to ensure employees know (or have no excuse to claim ignorance) about the employer’s expectations.
- Conduct Accurate Performance Evaluations — Performance evaluations inevitably play a meaningful part in wrongful termination claims. Sometimes performance evaluations are non-existent for a number of years. Sometimes a supervisor, out of kindness or to avoid confrontation, may give an employee higher ratings than the employee actually deserves. Employers and employees are stuck with the written performance evaluations which will likely be evidence in any wrongful termination case. An employer should thoughtfully decide what its performance evaluation process will entail, including how and when and by whom the employee’s performance is measured, summarized and communicated to the employee. It is helpful to train supervisors on the importance of performance evaluations and how to write an accurate and professionally-worded performance evaluation.
- Provide Ongoing, Accurate and Documented Feedback to Employees — Obviously, an employer doesn’t have to wait for an annual or semi-annual performance evaluation to give an employee necessary positive or negative feedback. Employers should encourage supervisors to provide accurate, constructive feedback to employees on an ongoing basis to alert employees to problem areas in their performance that need correction or to recognize the employee’s positive contributions. To be effectively captured for later review, this feedback should be briefly documented.
- Steps an Employer Can Take Duringa Termination Decision
There are also steps an employer can take during the course of a termination decision that may help in the defense of a future wrongful termination claim.
- Analyze the Termination Decision — On occasion, an employee will do something so drastic that immediate termination is necessary without the employer being able to prepare for the termination decision in advance. Most times, however, the employer does have the ability to think about the termination decision and to prepare for how the employer will communicate it to the employee. The employer should carefully think through the termination decision. Has the employee done something that violates the employer’s policies? Does the employee’s performance warrant termination? Is termination, as opposed to some lesser form of discipline or counseling, the right decision under the circumstances? Are there specific facts, such as the potential for colorable discrimination or retaliation or whistleblower’s claims by the employee, which make this particular termination particularly risky for the employer? The employer should take the time to think through these and other considerations unique to the termination decision.
- Analyze the Reason for Termination — Part of this process is understanding the reason or reasons for the termination. What are the reasons? Why is termination necessary? An employer’s ability to clearly and consistently explain its reasoning for a termination decision is helpful in a wrongful termination case.
- Plan How the Termination Decision will be Communicated to the Employee — Before the termination decision is communicated to the employee, the employer should plan ahead and decide who will communicate the termination decision, how the termination decision will be communicated and what will be communicated and when. If there is an in-person meeting, who will be present and how will the reasons for the termination be accurately and effectively communicated to the employee?
- Effectively Communicate the Termination Decision — The employer must decide the appropriate and professional way for the employer to accurately communicate the termination decision under the circumstances. Generally, a termination decision is important to both the employer and the employee, and an in-person meeting is the most courteous and effective way to communicate the termination decision. There may be reasons why an in-person meeting is not feasible, or there may be reasons for the employer to take various safety precautions in advance of any meeting. As noted above, ideally the employer’s communication of the termination decision should be planned in advance to ensure that the employer accurately and effectively relays the termination decision to the employee to minimize the possibility that the employee will incorrectly conclude that the employee has been wrongfully terminated.
- Steps the Employer Can Take Aftera Termination Decision
Sometimes the employer will later learn that the employee has threatened to bring, or has actually filed, a wrongful termination claim or some other form of a legal claim against the employer because of the termination decision. The employer should:
- Notify or Seek Legal Counsel — If the employee has filed a wrongful termination claim in court, or filed some other type of claim against the employer with a court or an administrative agency, the employer will be under deadlines to appropriately respond. If an employee has threatened litigation, there may be an opportunity for the employer to successfully negotiate a confidential resolution to avoid a wrongful termination claim or other claim being filed. The employer should consult existing counsel, or seek counsel experienced in the defense of employment claims, to advise the employer about the defense of the case, the negotiation of a potential resolution and the employer’s obligations to preserve information related to the termination and/or the actual or threatened litigation.
- Promptly Verify the Status of Insurance Coverage and Place the Insurance Carrier on Notice of a Wrongful Termination Claim – When confronted with a claim for wrongful termination or other employment claim, the employer should promptly contact its insurance advisors, notify the insurance carrier(s) of the claim and confirm if the claim is covered by any insurance. If coverage exists, the insurance carrier will likely coordinate with the employer about an attorney to represent the employer’s interests and the scope of what the insurance covers in the defense of the case. The existence of insurance coverage may greatly assist the employer in defraying the significant costs of defending against such employment claims.
The at-will employment relationship does provide the employer and the employee with the freedom to easily end their working relationship with one another, but as a practical matter it does not completely shield an employer from potential liability for a wrongful termination claim. The at-will employer can take many proactive steps before, during and after a termination decision to minimize the risk of a potential wrongful termination claim.