In 49 out of 50 states (Montana being the exception) the default status of employment arrangements between employers and employees is “at will.” This ostensibly means what it sounds like it means—i.e., employees can quit whenever and for whatever reason they choose, and employers can fire an employee for any reason so long as it’s not illegal. For employees, this is generally true. There is not much that an employer can do to prevent someone from quitting (although, depending on the jurisdiction, they can implement policies requiring proper notice be given or accrued paid time off will be forfeited). However, for employers, the situation is more complicated. There are a host of reasons why terminating an employee could be deemed improper, and an employer who is not aware of them opens themselves up to potential legal liability.
An employer cannot fire someone based on that employee’s status as a member of a protected class. Some examples of protected classes include race, religion, national origin, gender, sexual orientation, gender identity or expression, disability status, pregnancy, marital status, age, and veteran status. Employers sometime underestimate the scope of these protected classes. For example, let’s say that you want to fire your long-time employee John, who is 60 years old. If you had no reason to fire John and you retained a younger female employee, Jane, who is 40 years old performing a similar function, John may be able to bring a claim against you for age or gender discrimination.
Similarly, an employer cannot fire an employee if it would violate public policy. For example, an employer cannot fire an employee for reporting illegal activity or refusing to violate workplace safety guidelines. Additionally, an employer cannot fire an employee for exercising various rights, such as the right to serve on a jury, perform military duty, or take reasonable time off work for a disability or a covered health condition.
Finally, an employer cannot fire an employee “at-will” if they have a specific contract in place stating their scope and term of employment. These types of contracts are generally in writing and most common among union employees and executives. In the absence of a written contract, an employer may still open themselves up to liability if they represented to an employee that the employee would not be fired for a certain amount of time and the employee reasonably relied on that promise. For example, let’s say you hired Sally to be a new project manager and during the hiring process you said “Don’t worry, this role takes a little getting used to. You won’t have to worry about being fired for the first year while you learn the ropes.” If you then terminate Sally’s employment after three months for poor performance, Sally could bring a lawsuit alleging breach of contract.
So, when can you terminate an employee’s employment? Again, while not strictly legally necessary, it is certainly a best practice to terminate an employee’s employment for cause. Acceptable causes would be poor work performance, misconduct, a downturn in business, or a consistent failure to improve based on past performance reviews. If you want to terminate an employee, having a process in place that creates a documented record showing why that employee was fired will be helpful in limiting potential legal exposure. Ideally, the disciplinary process would involve written warnings, performance reviews, and opportunities for improvement. If the employee fails to achieve the goals set forth through this process (and those goals are clear and fair), termination would then be appropriate. Of course, there are common sense exceptions to this general rule of thumb if an employee’s conduct is especially egregious.
Ultimately having a clear, fair disciplinary process in place which creates a record that the employer can retain will provide the best protection against employer liability, but potential liability can never be eliminated entirely.
This information is for educational purposes only to provide general information and a general understanding of the law. It does not constitute legal advice and does not establish any attorney-client relationship.