The Wall Street Journal recently asked this simple question: What's the Best Way to Fire Someone?
I recently came across an interesting blog, entitled, 10 Workplace Rights You Think You Have — But Still Don't. Written by plaintiff-side employment lawyer Donna Ballman, it suggests that employees have far fewer workplace protections than they might think, and rights like wrongful termination, free speech, and workplace privacy simply do not exist.
One does not return from an FMLA leave with a clean performance slate. Instead, one returns with the same warts with which they left. And, if those warts merit discipline, or (gasp) even termination, then so be it.In response, one commenter cautioned about being too cavalier with discipline or termination in the wake of an FMLA leave.
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| http://dilbert.com/strip/2015-09-08 |
Carcorp hired Barry Elam to work in its finance department. A few months into his employment with Carcorp, Elam sued his prior employer, Bob McDorman Chevrolet, claiming that it had wrongfully fired him in retaliation for his cooperating with an investigation by the Ohio Attorney General into fraudulent credit applications. A year later, Carcorp fired Elam.
Elam then sued Carcorp, claiming that it wrongfully fired him in retaliation for his lawsuit against his prior employer, in violation of Ohio’s public policy.
In Elam v. Carcorp, Inc. (4/23/13), the appellate court affirmed the trial court’s dismissal of Elam’s wrongful discharge claim.
For the uninitiated, some background on wrongful discharge in violation of public policy claims under Ohio law. These claims act as an exception to the presumption of at-will employment permitting a claim when an employee is discharged or disciplined for reasons that contravene a clear public policy. To establish a claim that an employer wrongfully discharged an employee in violation of public policy, the employee must demonstrate all of the following:
After an extensive analysis of Elam’s claimed public policy—the Open Courts provision in the Ohio Constitution—the appellate court rejected Elam’s public policy claim, on the basis that “Elam did not articulate any clear public policy that his termination from employment violated.”
In the final analysis, Elam did not demonstrate the Open Courts provision represents a clear expression of legislative policy barring an employer from discharging an employee as a result of the employee’s lawsuit against a third party. To hold otherwise would expand the public policy inherent in the Open Courts provision beyond the provision's clear meaning and infringe upon the legislature's duty to make and articulate public policy determinations.
While academically interesting, this case raises a more interesting practical consideration. These “public policy” retaliation cases often hinge on the creativity of plaintiff’s counsel to find a legislative or constitutional hook on which to hang the alleged public policy, and the court’s willingness to approve of the creativity. Indeed, the more creative the public policy, the more unpredictable the outcome of potential litigation. For this reason, employers should treat all employees complaining about anything in the workplace as ticking time bombs, as if their complaints are protected by some law or another. If a court later rejects a public policy claim, all the better.
Last Friday I had the pleasure of appearing on Huffington Post Live, in a segment entitled, “You’re Fired! No really.” We discussed the current state of employment at-will, and whether American workers need greater protections from being terminated without just cause.If you’ve read my blog for any length of time, you know what I have some pretty strong feelings on this topic. Heck, I’ve even written an entire book on this issue of employer rights.
If you missed the show, you can watch it here, or in the imbedded video below:
Following my appearance, Texas plaintiff-side employment lawyer Chris McKinney tweeted that he was surprised at my statement that it could cost a company $250,000 to defend an employment lawsuit:
Chris was responding to my comment that the myriad laws that already protect employees from arbitrary or capricious terminations (Title VII, ADA, ADEA, FMLA, etc.), coupled with the threat of defending an expensive lawsuit, serve as enough of a deterrent to most reasonable employers from firing an employee without a good reason.
The reality is that defending a discrimination or other employment lawsuit is expensive. Defending a case through discovery and a ruling on a motion for summary judgment can cost an employer between $75,000 and $125,000. If an employer loses summary judgment (which, much more often than not, is the case), the employer can expect to spend a total of $175,000 to $250,000 to take a case to a jury verdict at trial.
Most employers, if acting rationally, will chose to retain an employee instead of assuming the risk of a $250,000 legal bill with an uncertain outcome. Moreover, employers cannot avoid this risk simply by settling every claim that is filed, lest the company risk the perception of being an easy mark by every ex-employee.
If you must terminate an employee, however, the safest, most prudent course of action is to offer a severance package—but only in exchange for a waiver and release of claims, and covenant not to sue—for all terminated employees except those terminated for some egregious or intentional misconduct. By offering severance in exchange for a release, you are capping your exposure and buying off the risk of a costly, time consuming, and burdensome lawsuit.
The NLRB has confused me with its apparent reasonableness. Last week, the NLRB published an advice memorandum from its Office of General Counsel, in which it opined that the at-will disclaimer in an employer’s handbook did not violate employees’ Section 7 rights to engage in protected, concerted activity.
Recall that last year, the NLRB launched a preliminary offensive against handbook at-will disclaimers.
In its most recent proclamation [pdf], the Board considered the following at-will language:
Employment with the Company is at-will which means the employment relationship may be terminated with or without cause and with or without notice at any time by you or the Company. In addition, the Company may alter an employee’s position, duties, title or compensation at any time, with or without notice and with or without cause. Nothing in this Handbook or in any document or statement and nothing implied from any course of conduct shall limit the Company’s or employee’s right to terminate employment at-will. Only the Company President is authorized to modify the Company’s at-will employment policy or enter into any agreement contrary to this policy. Any such modification must be in writing and signed by the employee and the President.
The NLRB’s Office of GC concluded that the italicized language is lawful because it cannot reasonably be interpreted to restrict employees’ Section 7 rights to engage in concerted attempts to change the employment at-will status. The Office of GC contrasted this language with other language that an NLRB Administrative Law Judge has previously found unlawful: “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.” The difference, according to this memo, is the ability to modify the at-will nature of the employment in the future.
The take-aways?
I’ll leave you with one final thought. In a footnote, the Office of GC made the following comment: “The Board repeatedly has said that potentially violative phrases must be read in context and that it will not find a violation simply because a rule could conceivably be read to restrict Section 7 activity.” If that statement is true, how can the NLRB continue to justify its over-the-top policy statements on social media policies? If the NLRB can carry its reasonable position on at-will disclaimers over to social media policies, I think we might just become friends.
If you are a non-union employer, you likely have an employee handbook that sets forth the policies and procedures that guide your relationship with your employees. And, if you have an employee handbook, it likely contains a disclaimer stating that employees are at-will, that employees can be fired at any time for any reason, and that nothing in the handbook alters that at-will status. Indeed, employers commonly deploy these disclaimers to avoid claims by employees that the handbook creates a binding and enforceable contract.
Consider the following three at-will disclaimers, taken from real, live employee handbooks:
I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.
The relationship between you and Mimi’s Cafe us referred to as “employment at will.” This means that your employment can be terminated at any time for any reason, with or without cause, with or without notice, by you or the Company. No representative of the Company has authority to enter into any agreement contrary to the foregoing “employment at will” relationship. Nothing contained in this handbook creates an express or implied contract of employment.
Employment with Rocha Transportation is employment at-will. Employment at-will may be terminated with or without cause and with or without notice at any time by the employee or the Company. Nothing in this Handbook or in any document or statement shall limit the right to terminate employment at-will. No manager, supervisor, or employee of Rocha Transportation has any authority to enter into an agreement for employment for any specified period of time or to make an agreement for employment other than at-will. Only the president of the Company has the authority to make any such agreement and then only in writing.
What’s the difference between these three policies? According to the February 1, 2012, opinion of a National Labor Relations Board Administrative Law Judge, #1 is an illegal and overly broad restraint on the right of employees to engage in protected concerted activity. According to two advice memoranda published yesterday by NLRB Acting General Counsel Lafe Solomon, #2 and #3 pass muster and are not illegal.
What’s the difference? According to Mr. Solomon, the distinction lies in the use of the personal pronoun, “I.”
The ALJ found that the signing of the acknowledgement form, whereby the employee—through the use of the personal pronoun “I”—specifically agreed that the at-will agreement could not be changed in any way, was “essentially a waiver” of the employee’s right “to advocate concertedly … to change his/her at-will status.” Thus, the provision in American Red Cross more clearly involved an employee's waiver of his Section 7 rights than the handbook provision here.
By comparison, the Mimi’s Cafe and Rocha Transportation disclaimers merely serve to reinforce the unambiguously-stated purpose of the employers’ at-will policies, and do not require employees individually to agree never to alter their at-will status.
These distinctions are nuanced, and the NLRB recognizes their unsettled nature. From the NLRB’s website:
Because Board law in this area remains unsettled, the Acting General Counsel is asking all Regional Offices to submit cases involving employer handbook at-will provisions to the Division of Advice for further analysis and coordination.
It is refreshing (surprising? relieving?) to see that the NLRB’s Office of General Counsel is backing off the position that any at-will disclaimer violates the NLRA, and is willing to evaluate them on a case-by-case basis.
For now, you should take a look at your handbook disclaimers and consider scrubbing them of personal pronouns. Instead, consider using the examples from either Mimi’s Cafe or Rocha Transportation as a template.
Of course, the validity of that template to avoid a binding contract under state law could vary from state to state. For this reason, you are best served running any disclaimer by your employment counsel before rolling it out to your employees.
On Donna Ballman’s blog, Screw You Guys, I’m Going Home, she argues for a radical change to at-will employment. She believes that unemployment hearing officers should have the power to reinstate, with back pay, anyone fired without just cause:
Most employers can fire you for any reason or no reason at all…. Then, to add insult to injury, our tax dollars pay for the cost of unemployment compensation and the side-effects of unemployment, all because your boss had a hissy fit one day and fired you without just cause…. Every state in the nation already has a set of hearing examiners or referees who hear unemployment cases. If the employee is fired for misconduct, they don’t get to collect. But what about the employer who fires without just cause? Why not give the unemployment hearing officers one more power: the power to reinstate with back pay.
I applaud Donna’s bravado in arguing for a radical solution to a problem she perceives. But, is it really a problem at all? In reality, few employers act on whims of fancy. We can debate what qualifies as “just cause,” but the fact is that few employer fire good employees. It is not a good business decision for a company to let a good worker go. Good employees keep their jobs, marginal employees are at risk, and bad employees are fired. And, when an undeserving employee is fired, there are myriad employment laws to protect their rights from an unjust dismissal.
Moreover, placing into the hands of unemployment hearing officers the power to reinstate (with back pay) would cripple workforce mobility and hiring. If employers face a risk of having overturned all but the clearest of terminations, they will be reluctant to fire all but worst of employees. Businesses will be stuck with the middling and marginal, harming their ability to employ the best and the brightest. Donna’s scheme would therefore result in fewer job opening, which, in turn, would irreparably damage hiring and create longer periods of unemployment for those searching for work.
Finally, at least in Ohio, the premise that individual taxpayers foot the bill for employers’ whims is faulty. In Ohio, unemployment is funded by a tax on employers. Employers’ tax rates go up and down based on the number of claims paid (like any other insurance scheme). For 2012, that rate can be as high as 9.1%. So, it is in employers’ best interests not to fire on a whim, because the resulting unemployment claim will raise their contribution rate, resulting in a higher tax. In other words, bad firing decisions hit an employer where it hurts, the bottom line.
Donna, if you’re still convinced that your idea makes sense, I’ll make you a deal. When you agree that we need to adopt my Employer’s Bill of Rights, I’ll agree that at-will employment is a dinosaur (and, watch out for the flying pigs).
David Yamada is a law professor and the director of the New Workplace Institute at Boston’s Suffolk University Law School. He is also the author of the Healthy Workplace Bill, draft model legislation that, if ever passed, would impose liability on employers for employees who are bullied in the workplace, regardless of any protected status.
Yesterday, on his blog (Minding the Workplace), Professor Yamada made the following argument in favor of generalized anti-bullying legislation:
In the U.S., the combination of at-will employment and the lack of protections against workplace bullying make for a brutal combo punch that often leaves mistreated workers legally powerless…. In America—in contrast to many other nations—at-will is the presumptive employment relationship. This leaves workers especially vulnerable when they are subjected to severe workplace bullying by a supervisor, enabled by the employer. Because most bullying falls outside the protections of current employment law, workers have scant legal recourse, and employers have little incentive (at least from a liability standpoint) to act preventively and responsively.
In other words, Professor Yamada argues that states need to pass the Healthy Workplace Bill because at-will employees can be fired for any (not otherwise unlawful) reason. This argument validates a point I made all the way back in May 2007: the passage of anti-bullying laws will destroy employment at-will.
To quote another point I made just last year:
Employers who turn a blind eye to bullying … are doing their businesses and their employees a disservice. But, the issue is not whether bullying impacts its victims. We can all agree that it does. The issue is whether we need legislation that has the probability of turning every petty slight and annoyance in the workplace into a lawsuit…. Indeterminate bullying … should be self-regulating, and not a tort that has the likelihood of obliterating at-will employment by hamstringing supervisors and managers from supervising and managing.
Businesses need to have the discretion to manage their workforces. Anti-bullying laws will eviscerate that discretion. Just because generalized bullying is not illegal does not mean that employers lack “incentive to act preventively and responsively,” as Professor Yamada argues. To the contrary, the marketplace creates the incentive to treat employees well. Bad bosses beget revolving-door workforces, doomed to failure. Good bosses create loyalty and retain good employees, which breeds success. Imposing liability merely for being subjected to a bad boss sets a dangerous precedent that will eliminate the “at will” from all employment relationships.
suspension, or immediate termination of employment—depending on the seriousness of the offense.
Reading this, one might conclude that because progressive discipline policies are unnecessary they should be avoided. In fact, the contrary is true. Progressive discipline (with sufficient discretion built in) provides an early warning system to employees. While I have no empirical data to back me up, I would bet that employers who use progressive discipline systems face fewer lawsuits from terminated employees. Those that perceive fair treatment should be less likely to sue than those who perceive that they had the rug pulled out from under them.
The Employer Bill of Rights is now available as a book. It is a practical handbook designed to help business owners, managers, supervisors, and human resources professionals navigate the ever-changing maze of labor and employment laws, rules, and regulations.
You can purchase your copy in a variety of formats:
According to Liz Ryan, writing at Businessweek.com. “Actual employee rights in the U.S. are fairly limited.” She posits that because “it’s legal to make hiring and termination decisions for random (nondiscriminatory) reasons” (such as an employee’s favorite sports team), employees need a “Bill of Rights” to protect themselves.
After nearly 15 years representing employers in workplace disputes, the one conclusion that I can reach with absolute certainty is that American employees do not lack workplace rights. There is a veritable alphabet soup of laws that protects employees:
The only group in the country that lacks workplace rights is employers. We are the marginalized and the unprotected, living in fear of making any personnel decisions because they might result in expensive lawsuits. Employers, I feel your pain, and present the Employer Bill of Rights:
Sterilite is an “at will” employer in that your employment may be terminated with or without cause and with or without notice at any time at the option of either you or Sterilite, except as otherwise provided by law…. No statement or promise by a supervisor, manager or department head, either verbal or written, may be interpreted as a change in policy nor will it constitute an employment agreement with any employee.Additionally, the employee signed the following acknowledgement form upon receipt of the handbook:
I understand that this handbook is not a contract of employment, express or implied, between Sterilite and me and that I should not view it as such, or a
guarantee of employment for any specific duration.
I further understand that no manager or representative of Sterilite, other than the president, has the authority to enter into any agreement guaranteeing employment for any specific period of time. I also understand that any such agreement, if made, shall not be valid or enforceable unless it is in a formal written agreement signed by both the president and me.Based on this language, the Court affirmed the dismissal of the employee’s claims, which were premised on the handbook constituting a contact of employment:
As a general rule in Ohio, employee handbooks do not constitute an employment contract. The handbook is simply a unilateral statement of rules and policies creating no obligations or rights…. [A]n employee handbook that expressly disclaimed any employment contract could not be characterized as an employment contract.Reviews of disclaimers should be part of any handbook audit. They will likely make the difference between whether your handbook is a series of aphoristic aspirations and guidelines, or a policy manual that binds your conduct as a contract between your business and your employees.
110.1 Employment At Will
An employee of Mount Carmel Health System is an employee at will. The employee or Mount Carmel Health System can terminate the employment relationship at any time for any reason. No statement in this manual will be interpreted or applied as a contract of employment.The signed acknowledgement stated:
I recognize Mount Carmel Health System has the right to change provisions in this manual and other policies…. I understand that no representative of Mount Carmel Health System has the authority to make an agreement contrary to the provisions of this manual.
I recognize this manual does not constitute a contract of employment. I understand that, at any time, for any reason, I can separate my employment relationship and that Mount Carmel Health System has the same right regarding my employment status.Based on these two statements, the appellate court affirmed the trial court’s dismissal of Fennessey’s promissory estoppel and breach of implied contract claims.
White was an at-will employee of Wal-Mart. At the start of her employment, Wal-Mart provided her an employee handbook that contained, among other provisions, an Open Door Policy. That policy provided:
If you have an idea or a problem, you can talk to your supervisor about it without fear of retaliation. Problems may be resolved faster if you go to your immediate supervisor first. However, if you feel your supervisor is the source of the problem, or if the problem has not been addressed satisfactorily, you can go to any level of management in the Company. But remember, while the Open Door promises that you will be heard, it cannot promise that your request will be granted or that your opinion will prevail.
White claimed that the open door policy created an implied contract between her and Wal-Mart, and terminating for using the policy violated that contract. The court of appeals disagreed:
The policy provides an avenue an employee may use in the event he or she has a work related concern, idea, or grievance. Within the context of the policy, therefore, Wal-Mart admits it will not terminate or otherwise punish an employee for choosing to share his or her ideas or problems with management. Read plainly, this is neither an implied or express promise of continued employment. Rather, it is merely an assurance that an employee can utilize the policy without concern of unfair reprisals on behalf of management or the company at large. ...[W]e hold the plain meaning of the open door policy assured an employee he or she would not be retaliated against for utilizing it as a means to air his or her grievances. This does not imply the policy guaranteed an employee continuous employment if, for example, he or she breached a separate policy set forth in the manual in the course of utilizing the open door policy. ...
Nothing in the open door policy states that an aggrieved employee who decides to use the policy may utilize or threaten to utilize vigilante tactics if a particular supervisor does not handle the grievance in a manner the employee demands. Quite the contrary, the policy provides that, while an employee will assuredly be heard, an employee's view or opinion regarding the resolution of a problem will not always prevail.
Appellant does not specifically allege Chuba refused to hear her complaint, nor did she provide any evidence that her termination was retaliatory in nature. Appellant acknowledges, and the record demonstrates, she was fired for threatening Jeppe in violation of the workplace violence policy. Nothing in the record indicates Wal-Mart acted inappropriately in terminating appellant on this basis.
This opinion, however, may not be as pro-employer as it seems. It does not say that the employee handbook cannot create a contract, but merely that it does not in this case because Wal-Mart terminated White because she violated its workplace violence policy. The court did not find that White had no legal claim, but that Wal-Mart had a good reason to fire her. Thus, this opinion leaves the door open to the possibility that an employee can make a breach of contract claim if the employer does not have good cause for the termination.
Although unclear from the opinion, it is safe to assume that the handbook contained an at-will disclosure, such as: "This handbook is not a contract, express or implied, and does not guarantee employment for any specific period of time. Although we hope that your employment relationship with us will be long term, you are at all times an at-will employee, which means that either you or the company may terminate this relationship at any time, for any reason, with or without cause or notice." If that is the case, I fail to see how any employee could complain that the handbook creates an implied contract that the employer can breach, even if the employer admitted it fired an employee for using a handbook provision such as the open door policy.
Unless handbook disclaimers are to be rendered meaningless, employees cannot be permitted to bring breach of contract claims based on an employer's failure to follow a policy in the handbook. The claim must be based on some other recognized legal right, such as statutory retaliation or some public policy separate and apart from the handbook language itself.
In Colorado, labor unions are trying to change the rules. The Rocky Mountain News reports that a coalition backed by labor organizations is trying to get a constitutional amendment on the November ballot that would eliminate Colorado's at-will employment system and require just cause for all terminations. Under this "just cause" initiative, employers would be restricted from firing or suspending an employee unless the employer can prove incompetence, policy violations, willful misconduct, conviction of a crime involving "moral turpitude," employer bankruptcy, or economic circumstances that provide for layoffs of 10% of the workforce.
This measure is exactly the type that could gain popular support, and would alter the landscape of employer/employee relations in this country if it catches hold. It's not so much that it will restrict reasons for termination, although that would be a problem. Most businesses (or at least those that want to retain good employees) do not terminate arbitrarily, but only for a good reason. This law would put a premium on having well-defined employment policies on which employers could hang a "for cause" termination. The more troubling aspect of this proposal is that it places the burden on employers to prove just cause, as opposed to employees to prove that a termination was not justified. In the typical employment case, proving unlawfulness (such as discrimination) falls on the employee. If this law passes, terminations will be presumed unlawful unless the employer can prove otherwise. For the sake of businesses everywhere, let's hope that this proposal dies a quick legislative death, and does not catch on and begin to spread. [Hat tip: Point of Law]
This case is significant for two reasons. First, it continues the Ohio Supreme Court's trend towards the reinvigoration of employment at-will, which started in Wiles v. Medina Auto Parts (as an interesting side note, the same lawyer was on the losing side of both Wiles and Leininger). Given the decision in Wiles, though, Leininger's result is not a surprise.
Perhaps more significant is the underlying effect of this decision on the statute of limitations for age discrimination claims. Common law wrongful discharge claims have a four-year statute of limitations. Because state age discrimination claims are now limited to the statute, such claims will be controlled by the statute's 180-day statute of limitations for age claims (unless the employee elects to pursue the lesser remedies of reinstatement/back pay and attorneys' fees available under R.C. 4112.14 and its six-year statute of limitations). It is safe to assume that this case will also do away with public policy claims for all other forms of discrimination, although that effect will most likely not be felt, since R.C. 4112.99 has a six-year statute of limitations for all types of discrimination other than age. As a result of Leininger, and at least as far as state age claims are concerned, employers will have a greater degree of certainty regarding adverse employment decisions after six months (as opposed to four years) have elapsed.
Traditionally, any employer can terminate the employment of any at-will employee for any reason. In 1990, however, the Ohio Supreme Court recognized an exception in tort to the employment at-will doctrine and allowed actions for a wrongful discharge that violates public policy. To assert this tort claim, the employee must show, among other things, that the dismissal jeopardizes a clear public policy manifested in a state or federal constitution, statute, or regulation, or the common law. In 2002, the Ohio Supreme Court in Wiles v. Medina Auto Parts limited the scope of the public policies that can support such a tort claim by holding that the claim is not available if there exists any alternate means to promote the claimed public policy. The Court reasoned that if a statutory remedy that adequately protects society's interests already exists, there is no need to recognize a common law tort claim for the same purpose.
Catherine DeMell was a 30-year employee of the Cleveland Clinic. After the Clinic terminated her employment, she claimed that she was wrongfully discharged for complaining that she was underpaid and for being forced to falsify her time records. She claimed that the public policy set forth in the Ohio Minimum Wage Standards Act supported her claim. The court of appeals disagreed and affirmed the dismissal of her claim, because the specific statute provides a criminal penalty for violations. Thus, even though DeMell could not personally be made whole under that specific statute, the statute's criminal enforcement protected society's overall interest. This case is part of growing trend of Ohio courts' following the lead of Wiles, limiting the public policies that will support a wrongful discharge claim, and giving employers more latitude in terminating employees.