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Avoid costly wrongful termination charges with proactive steps

September 12, 2013

Article courtesy of SBAM Approved Partner AdvanceHR

If there’s anything worse than being accused of making a wrongful termination, it is having to go to court to prove your organization’s innocence. That’s because you could have acted entirely legally, but lose the case anyway if jurors believe your action was “unfair.” Here’s what you can do to improve your chances of avoiding this costly, reputation-damaging fate.

What is wrongful termination? If you are accused of this after firing an employee working under a contract, the answer is simple: You violated the terms of the contract (or concrete labor law provisions described below). But if, more typically, the charge comes from an employee without a contract, the “employment-at-will” doctrine prevailing in most states is not absolute. Also, state labor laws can trip you up if you don’t know them well.

Under federal labor and civil rights law, a firing would be deemed “wrongful” in any of these scenarios:

  • You are retaliating against an employee who filed a discrimination charge or participated in a discrimination investigation.
  • You terminated an employee who refused to commit an illegal act requested by a superior in the company.
  • You singled out the employee based on race, nationality, age, gender or sexual orientation.
  • You have violated your own termination procedures as described in your employee handbook.
  • You terminated an employee based on a physical or mental disability without providing reasonable accommodations to enable the disabled employee to perform essential required tasks.

When to Seek Expert Advice

Wrongful termination charges based on assertions of a violation of the Americans with Disabilities Act are very common because the laws governing disability “are particularly complex,” notes Elizabeth Falcone, a Portland-based labor lawyer with Ogletree Deakins. “Pick up the phone and talk to an expert before terminating anyone with a disability,” she urges.

State labor laws (on disability and other issues) often vary widely and may add tougher standards than those under federal law. In Oregon, for example, the threshold for age discrimination begins at age 18, with the intention of protecting the rights of young workers as well as older ones (under federal law, the age discrimination threshold covers individuals age 40 and older). Oregon also prohibits employees from being fired if they are absent for long periods to participate in the Olympics, Falcone says.

Constructive Discharge

Terminations can be deemed wrongful not only when the employee is explicitly fired, but also under the doctrine of “constructive discharge,” when an employee is, in effect, forced to quit. State definitions vary. California’s Supreme Court has defined constructive discharge as a situation in which “the employer either intentionally created or knowingly permitted working conditions that were so intolerable or aggravated at the time of the employee’s resignation that a reasonable employer would realize that a reasonable person in the employee’s position would be compelled to resign.”

Your goal is not only to stay within the boundaries of legally defensible terminations, but to prevent employees from filing claims in the first place, no matter how easily they could be shot down in court. Most employers settle to avoid the high cost of taking the case to court. Terminated employees generally are seeking monetary compensation, not reinstatement to former jobs.

Many wrongful discharge suits originate from what Falcone calls a “gotcha situation”– the employer has been looking for an opportunity to fire an employee whose performance or behavior has been a problem for a long time, and finds one. It’s far better to manage and discipline such employees from the start. At least this way if they are terminated, they won’t be angered by a perception of being caught in trap.

Other steps to minimize the prospects for a wrongful termination case include:

If performance issues are involved, be sure to have documented prior discussions of performance issues, and also ensure you have given the employee a reasonable opportunity to address those performance concerns. While this is not technically required in an employment-at-will state, if it comes down to a jury trial, the law may be irrelevant if jurors simply believe you have been unfair.

If the planned termination is based on misconduct, carry out a prompt and complete investigation with interviews of all parties before making a decision. Take care not to threaten, intimidate or confine the accused employee during the investigation.

During the termination interview, state the grounds for the discharge clearly, confidently and succinctly. Be polite, professional and do not allow the discussion to digress to unrelated topics. Failing to state the grounds for termination may puzzle and anger the employee, increasing the likelihood of litigation. Also, if litigation ensues and the grounds for termination are given subsequent to the termination, the employee’s attorney may assert persuasively, that there was no original legitimate reason for the termination, and that you had to invent a plausible explanation after the fact.

To recap, your goal should be less about winning wrongful termination lawsuits and more about preventing them in the first place. Even a case which is deemed frivolous and transparent is going to cost you. If ever there was a time to “let cooler heads prevail,” it is when letting an employee go.

Case Study — Indiana Employer Loses Wrongful Termination Case

A power-grid operator in Carmel, Indiana may have believed it did everything to accommodate an employee with a claim of disability, but the EEOC disagreed.

A human resources coordinator employed at Midcontinental Independent Transmission System Operator (MISO) asked for leave to resolve her condition, described as postpartum depression.

MISO denied her request for leave and terminated her. The employer said the firing was justified because it was critical to have the position filled.

The EEOC pointed out the company waited more than a month after the employee’s anticipated return-to-work date to hire a replacement. Subsequently, the new employee was permitted to delay her start date for three additional months.   

MISO has agreed to pay $90,500 to settle the case, and to provide training to its employees on its obligations under the ADA. The employer must also:

1) post a notice for employees about the lawsuit, informing workers of MISO’s duty under the law to maintain a discrimination-free workplace.

2) report to the EEOC on the handling of subsequent requests for accommodation,

3) and submit to compliance monitoring from the EEOC.

“The EEOC takes seriously its charge to eliminate employment discrimination against people with disabilities and remains committed to enforcing the ADA. The ADA provides protections to employees suffering the debilitating effects of postpartum depression, and we applaud this person for standing up for her rights.”

(EEOC.gov, 7-11-13.)

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