February 2014

By: James B. Sherman, Esq.

Having represented employers in the field of labor and employment law for more than 25 years, I have had the opportunity to work with thousands of companies from more than 30 states and virtually every industry imaginable. As I am sure holds true for many veteran human relations professionals, I sometimes feel that I have “seen it all.” Among the things I have seen – the uplifting, the bizarre, the exciting as well as mundane – there remain certain assumed conventional wisdoms when it comes to terminating employees that simply do not hold water, yet they continue to exist and cause employers trouble in many a workplace, year after year. I would like to expose two of the more common misconceptions about employee terminations, once and for all, in an effort to get employers to do away with them before they cause any further legal problems:

“WE DON’T NEED A REASON TO FIRE JOHN/JANE – HE/SHE IS AN “EMPLOYEE AT WILL.” Those employers who still think “employment at will” literally means they can fire an employee for any reason or no reason at all, are putting themselves in grave danger of being successfully sued – and for a lot of money! While the so-called doctrine of employment at will ostensibly means that either the employer or employee may end the relationship at any time, for any lawful reason or no reason at all, it is a concept that is hundreds of years old. Employment at will may have meant a lot at one time, but that was long before such laws as Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1993, and the Family and Medical Leave Act of 1995 were enacted, not to mention many more state and local employment laws.

A very simple way for employers to realize how employment at will does little for them when contemplating a termination, is to ask themselves: “If we discharge John/Jane and he/she alleges we did it in violation of one or more of the vast multitude of federal, state and/or local discrimination, retaliation, whistleblower, wrongful discharge, or other laws, can we defend against the claim(s) simply by invoking the “employment at will doctrine” and give no reason for our decision? Obviously the answer is “no.” In this day and age employers always need a reason – and a very good one at that – well supported in the facts and prior to discharging anyone in order to defend against a discharged employee’s allegations that the decision was somehow unlawful. Invoking employment at will to say that no reason is needed, is a dead loser in this scenario. Want my advice? Besides still being careful to include “employment at will” language in handbooks, offers of employment and employment contracts, leave that doctrine to lawyers to use in legal briefs and don’t rely on it at all in the context of any termination decision.

• “WE DON’T NEED A REASON TO FIRE JOHN/JANE – WE ARE GIVING HIM/HER A SEVERANCE.” This school of thought typically winds up hurting employers in one or both of two ways. Employers who simply provide a terminated employee with a voluntary severance payout, thinking it will serve to buy good will, frequently find that their money has served as the individual’s down payment on a retainer fee for a lawyer to sue them! For employers who do not volunteer severance payments without getting a solid waiver agreement signed by the employee in return (highly recommended), there remains a trap for those who think this means they do not need to be just as careful about their reason for firing the employee. To be sure, if an employee signs an enforceable waiver agreement in exchange for severance monies, he or she will not be able to then sue over their termination. But what if the employee rejects the severance and decides to challenge their termination? This happens more often than one might think and unfortunately, many employers disregard their need to have a solid reason and defensible position for firing an employee simply because they are using a severance agreement with a waiver provision. Consequently, an employer that assumes an employee will waive his or her right to challenge its decision to terminate in exchange for a severance payment is taking a huge risk. My advice? Always have as “Plan A” a very solid, defensible position for terminating any employee. Severance agreements with waivers are a great “Plan B,” but they should never be “Plan A.”

There simply is no getting around the need to always have a sound, justifiable and lawful reason for firing anyone, anytime, anywhere. No, at will employment is not dead but it is of no use in defending against a claim of unlawful discharge. By the same token, using a severance agreement with a waiver of claims in the context of a termination very well may get an employer by any need to explain the reason for its decision, but only IF the employee accepts the offer. Every year the lawyers of our law firm see dozens and dozens of law suits and charges of discrimination and/or retaliation filed with the EEOC or its similar state agencies, with allegations to the effect that: “I was discharged and my employer gave no reason why.”

In summary, always remember that employers must always have a reason for discharging an employee and taking away his/her ability to earn a living. Don’t be another employer that allows employment at will, or severance and waiver agreements, to give the false sense of security that you do not need a solid reason for terminating any employee.