How To Fire Properly

Statistics indicate that 3.8 of every 100 employees are fired or resign from their jobs each month. Experts suggest that more than 250,000 workers each year are terminated illegally or unjustly. Until recently, employees had few options when they received a "pink slip," because a legal principle called the employment-at-will doctrine was generally applied throughout the United States. Under this rule of law, employers hired workers at will and were free to fire them at any time with or without cause and with or without notice. Beginning in the 1960s however, courts and legislatures began handing down rulings and enacting legislation to safeguard the rights of unionized employees. Congress passed laws specifically pertaining to occupa- tional health and safety, civil rights and freedom to complain about unsafe working conditions.

Thirty years later, there has been a gradual erosion of the employ- ment-at-will doctrine. Many states, for example, have enacted public policy exceptions that make it illegal to fire workers who take time off to serve as a witness in a criminal proceeding, participate as a juror, disclose or threaten to disclose an employer's alleged violation of public safety or health laws, or participate in military service. Some courts have ruled that statements in company manuals and handbooks constitute implied contracts which employers are bound to follow. Other states now recognize the obligation of companies to deal in fairness and good faith with long time workers for example, prohibiting employers from terminating workers in retaliation when they report on abuses of authority, or denying individuals an economic benefit (a pension that is vested or about to vest, commissions, bonus, etc.) that has been earned or is about to become due.

A few states even allow wrongfully terminated workers to sue in tort (as opposed to asserting claims based in contract) and recover punitive damages and money for pain and suffering arising from the firing. Employees who have sued under tort theories for wrongful discharge have recovered large jury verdicts. Innovative lawyers are asserting federal racketeering (RICO) claims, seeking criminal sanctions and treble damages against companies, in addition to fraud and misrepresentation claims against individuals responsible for making wrongful termination decisions.

Firing an employee, especially a long time worker, can be hard. Besides the emotional difficulties which sometimes arise, companies must be aware of and prepare for the possibility that the terminated employee will seek legal advice and action. Thus, you must prepare properly for the firing decision before taking action. This chapter will recommend a series of strategies to reduce company exposure from termination litigation, including ways of minimizing legal exposure from breach of contract, wrongful discharge, and discrimination lawsuits.

A. Terms of Employment

B. Personnel Records

C. Progressive Discipline Guidelines

D. Employee Manuals

E. Employment Contracts

F. Statutory Considerations

G. Public Policy Exceptions

H. Implied Covenants of Good Faith and Fair Dealing

I. Implied Contract Exceptions

J. Discrimination Laws

K. Advantages of an Independent Review

L. Plant Closings

M. Employer Legal Options and Strategies