Wrongful Termination

by Todd N. Travis, AU in Underwriting Matters

“It was Johnson, Sir!”

“Johnson, you’re fired!”

Thus begins what can be a long journey down the road of wrongful termination and its legalities. Susan M. Heathfield, a noted human resources professional, describes wrongful termination in her article on About.com as ending a person’s employment for reasons that are discriminatory and unlawful. Wrongful termination also occurs when an employer fails to follow its written procedures for employee termination.

In just about every state there is what is known as “employment at will.” This defines the relationship between employers and employees as that the company does not offer a tenured or guaranteed employment for any period of time to any employee without an employment contract or written direction from the CEO/president. In this arrangement the company or the employee can terminate employment at any time, with or without cause and with or without notice.

This does not, however, allow a Wild West-type environment for the employer. There are certain laws in effect that protect employees from wrongful termination, and there are a host of situations that are protected and overseen by the Equal Employment Opportunity Commission.

The EEOC was created through the Civil Rights Act of 1964 and officially began its operations July 2, 1965. The EEOC is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or employee because of the person’s race, color, religion, sex (or pregnancy), national origin, age (40 or older), disability or genetic information. It is also illegal to discriminate against a person because they complained about discrimination, filed a charge of discrimination or participated in an employment discrimination investigation or lawsuit. These laws apply to all types of work situations, including hiring, firing, promotions, harassment, training, wages and benefits.

Headquartered in Washington, D.C., the EEOC has 50 field offices serving every part of the United States and has the authority to investigate charges of discrimination against employers who are covered by the law. The agency’s role in an investigation is to fairly and accurately assess the allegation of the charge and then make a finding. If its staff finds that discrimination has occurred, they will try to settle the charge. If they are not successful in reaching a settlement, they have the authority to file a lawsuit to protect the rights of individuals and the interests of the public. The EEOC also serves as an educational and technical resource to prevent discrimination before it occurs.

In its early days, the EEOC was sometimes referred to as the “toothless tiger” by many civil rights groups because of its lack of enforcement powers. Its reach has improved in recent years, however, and if one were to receive a notice of complaint from the EEOC, it would be prudent to respond swiftly and try to rectify the situation.

Federal law is but one way to determine a wrongful termination. Others include:

Breach of contract: The employer has a legal obligation to uphold all components of an employment contract, union-negotiated or otherwise. You will find that the majority of these contracts include specified employment-termination clauses that must be honored by the employer.

Breach of implied contract: The employer must take care that it does not imply in writing or verbally that employment is protected or guaranteed. This is where a good employee handbook comes into play. A thorough employee handbook will outline the guidelines and expectations of employment, and specify that it is not a contract. Most employers have their employees sign off on an employee handbook statement. If you have employees and you do not have an employee handbook in place, you are just asking for trouble. We have resources to help with templates if you need help developing a handbook.

Breach of covenant of good faith and fair dealings: A terminated employee will try to prove that their termination was unfair, that they were fired for no reason. If the employer follows its own guidelines outlined in an employee handbook, unfair termination will be very difficult to prove if the employer has kept good documentation regarding the employee’s job performance, annual reviews, performance problems, managerial counseling and probation warnings and periods.

Another area of public policy that brings the possibility of a wrongful-termination finding is the Family Medical Leave Act of 1993, which requires employers to provide job protection and unpaid leave for qualified medical and family reasons. These include personal or family illness, pregnancy, adoption or foster care placement of a child. Also included in this act is family military leave, a situation that has become very prevalent in the last 10 years with so many of our reservists and National Guard forces being called back into active duty to serve in our nation’s recent conflicts.

Also, a person cannot be fired who has been injured on the job and is currently under a workers’ compensation program. To be clear, they can be fired for cause, but not solely because they filed a workers’ compensation claim.

Even in cases where an employer has a good employee handbook and where an employee has followed the law and taken all the steps necessary to avoid a wrongful termination, you can still be accused and have a suit filed against you. In fact, the one thing I noticed while I was doing my research for this article was that whenever I searched the internet for information about wrongful termination the first items that appeared were lists of attorneys and law firms that handle wrongful termination cases.

You as an employer can obtain some protection in the form of an EPL (Employment Practices Liability) policy. These policies can be obtained on a standalone basis or as part of an Executive Management or Directors & Officers liability package policy. Contact a Telcom account executive that services your area to learn more about these valuable products and to find out how to put this protection in place. And, if you already have a policy in place and receive a notice from the EEOC, it’s time to put your carrier on notice of a potential claim.