The scene

“Let’s go over this one more time,” HR manager Tina Rice said. “Did you tell Norman he could have a job here ‘as long as you want’?”

“Not exactly,” Michael answered. “At a meeting with some other employees, I congratulated him on completing his probation period and said something like, ‘Now you’re on the right track to be a lifetime employee here.’”

“Maybe I also said something about how we ‘never’ fire anyone here, too.”

“That about matches what the others say they heard,” Tina nodded. “But that’s the basis for a lawsuit Norman is bringing against us.”

“But the guy made a mess of things right after he got off probation,” Michael insisted. “I had no choice but to fire him. Everyone who worked with him realized that.”

“Agreed,” Tina affirmed. “The question now is whether what you said amounted to a promise. We’re in an at-will state. That means we can terminate anyone for any reason, as long as we don’t discriminate.”

‘It’s settled’
“Then that settles it,” Michael concluded.

“We’ll see,” Tina said.

Norman went ahead with the suit, saying he had an oral employment contract with the company. The company said no such agreement existed.

Did the company win?

Answer

Yes, the company won.

Three key factors shaped the judge’s decision:

• An implied, vague oral promise isn’t strong enough to overcome the at-will agreement (which also says an employee can quit at any time).
• The company had plenty of obvious performance-related causes to terminate.
• Although the supervisor’s comments could be broadly interpreted by some as a promise, holding the company to that interpretation would tie the supervisor’s hands and stifle any encouraging conversation.

The judge recognized there was no attempt to pull a fast one or renege on an agreement between employer and employee, and that the supervisor’s comments couldn’t be considered a “contract.”

Don’t ignore the obvious
This one went the company’s way, but there are steps a supervisor can take to ensure there are no misunderstandings with employees – and no messy lawsuits.

Certainly, supervisors want to praise employees when they’re doing a good job. But when offering praise, bosses should try to avoid comments about continued employment or, for instance, promises regarding promotions.

[Based on: Wright v. Northrop Grumman Corp.]

The common ploy involves the employee arguing that there’s an oral or written agreement changing the terms of at-will employment. That’s what happened in the case of Chauvin v. RadioShack Corp. — a case the company won.

The terminated employee charged that RadioShack wrongfully terminated her employment following an absence from work for medical issues. More specifically, she said RadioShack breached an agreement to provide her with a leave of absence and guaranteed return to work when that leave ended.

RadioShack submitted three different documents the plaintiff had signed in connection with her employment – all of which detailed and confirmed her at-will status:

• In one, the ex-employee agreed with the terms of her “Preliminary Online Application” that, if hired, she’d be employed at-will. The document also provided that if she was hired, her at-will employment could only be modified by a separate written document signed by the employee and an appropriate company manager.
• Second, in her formal “Application for At-Will Employment,” the plaintiff again agreed to these same terms.
• Third, in acknowledging receipt of her employee handbook, she signed a form confirming her at-will employment status with the company.

On top of that, there was evidence of a personnel record noting she had taken a leave of absence, and which stated that “The below named person is an AT-WILL employee and no information on this form shall change the employment status.”

After reviewing the documents, a judge threw the case out of court, essentially a victory for RadioShack.

A down economy is an up time for wrongful-discharge lawsuits by employees who have been let go — and are angry about it.

That’s why every employer should know and understand the seven relevant legal facts about wrongful discharge:

1. Although many employment relationships are “at-will,” meaning that either the employer or the employee may terminate the relationship at any time with or without reason, that doesn’t give employers a blank check. If an employer terminates an employee, even one who is at-will, in violation of federal, state, or local anti-discrimination laws, that’s illegal.
2. Federal anti-discrimination laws protect employees from being discharged or otherwise penalized with respect to the terms and conditions of employment on the bases of race, color, national origin, sex, religion, disability, pregnancy, and age. State laws may mirror these categories of protections and, in some instances, be tougher than the federal laws.
3. Not all wrongful-termination claims are discrimination-based. An employee who given a contract of employment, either written or implied, and is terminated before the expiration of, or in violation of, the contract, may be able to bring a claim for wrongful discharge and breach of employment contract.
4. Wrongful discharge suits may also be brought in situations where the employer has retaliated against an employee for exercising a right that is supported by the law. For example, if an employee is terminated because he or she reported the employer to a governmental body for violation of workplace safety laws, the employee may be able to successfully bring a wrongful discharge lawsuit.
5. If an employee refuses an employer’s order to perform an illegal act and is subsequently terminated, there may be a wrongful discharge cause of action. For example, if a supervisor orders an employee to perform a duty in violation of safety laws, the employee may refuse and cannot be fired for refusing.
6. An employee who’s terminated for taking time off under a law which gives him or her a legal right to have that time off — such for voting or military service — may also have a wrongful discharge cause of action.
7. An employer who has not followed specific disciplinary and termination policies that are in place can also face a wrongful-discharge suit. For example, if an employer has a handbook that states that employees are entitled to receive two written warnings for misconduct or poor performance before they are terminated, and an employee is terminated after receiving only one verbal warning, that employee may be able to successfully bring a wrongful discharge action.

You can twist yourself in knots trying to dodge a lawsuit, but it really comes down to the avoiding the Big Six Mistakes.

Whitney Warner, an employment attorney with the firm of Moody & Warner, says these are the problems that come marching into her office most often: 

Not giving a reason for firing. You’re an at-will employer, so you can fire at will, right? Wrong. Most employees think they’re wonderful workers, and if they get fired for a mysterious reason, they’ll make up their own reason – or their lawyer will. The reason for termination needs to be clear.

Firing an employee for bad performance when the employee has good performance reviews. This is the cousin to “not giving a reason for firing.” Supervisors need to understand that they’ll need a poor-performance paper trail if they want to fire someone. Or else a judge will smell something fishy.

Poor timing. (a) An employee files an internal complaint about the employer or a supervisor, and then (b) shortly after is disciplined for a supposedly unrelated event.  It won’t be hard for a lawyer to connect the dots in court between (a) and (b). Employees who file complaints can be disciplined, but the supervisor better have the documentation in order before making the move.

Delayed internal investigations. When employees file complaints, they want them thoroughly investigated and they want it done now. If you can’t investigate immediately (because, for instance, a key player is on vacation), let the complaining employee know why and when the investigation is likely to begin.

Improper response to an EEOC charge. If you’re contacted by the Equal Employment Opportunity Commission regarding an employee complaint, respond promptly and courteously – and treat the complaining employee courteously, too. If you’re tardy in your response or treat the employee like a leper, expect to hear about it in court.

Failing to follow your own policies. You can have the best policies and training in the world – and indeed some companies have used that as a defense against a complaint. But you better be able to show that your supervisors followed those policies and applied the training.

Bonus: How to lose a lawsuit
Getting sued is bad enough, but after a lawsuit is filed, employers can make the situation worse: Being unprepared for depositions, an inability to locate key documents and responding “I don’t remember” to questions about key events will sink you every time. All of that makes good record-keeping even more important.

The facts:
An employee sued after being fired for arguing with a customer. The employee insisted his company’s handbook had a “three strikes” provision barring his firing unless he committed three offenses and had been warned at least twice.

The employer said:
The company’s handbook wasn’t a binding contract. Instead, it just contained a set of guidelines for managers and workers. No one was bound to act strictly according to those guidelines. In fact, a manager could recommend termination after one offense if the manager decided that offense was serious enough.

Who won the case?

Answer: The employer.

Why: A judge said that unless the handbook clearly stated that it was a contract between employer and employee, the employee couldn’t argue that the three-strikes provision was binding upon the employer.

Most courts, particularly those in states that have at-will-employment laws, recognize that handbooks aren’t contracts and that employers can terminate employees for offenses that are outside the scope of the handbook.

Exception: In some states, courts have ruled the other way when the employer required the employee to sign a statement acknowledging receipt of a handbook and an understanding of its contents.

Cite: Katsifos v. Pulte Homes Corp.