business builder human resources
You can avoid
common wrongful
termination suits
by Susan Fitzke
Firing someone is never easy, but watching that employee sue for wrongful termination can be much worse.
Minnesota employers are somewhat less likely to suffer these types of claims because of the state’s at-will presumption, but it never hurts to cover all bases. Here are a few suggestions that can help to keep you out of court when letting someone go.
As an employer in Minnesota, the most important factor in avoiding wrongful termination claims is maintaining your at-will status. Unless you provide a valid contract of employment, employment of an individual is generally considered “at will.”
Employment at will means that either the employer or employee may terminate the employment relationship at any time for any legal reason, with or without cause or notice. Discrimination, unlawful retaliation and other unlawful means are still out of bounds.
Watch the terms in your employee handbook. The most common cause of wrongful termination claims arises when an employee contends that the terms of the handbook altered the at-will status, creating a contract of employment.
Some employment policies stated in the handbook may, in fact, be found to constitute an employment contract. In addition, the continuation of employment by an at-will employee after receiving the handbook shows the employee’s acceptance of the offer set forth in the policy and may support an argument that it is an employment contract.
Ultimately, employment contracts based on employee handbooks are determined by what you put in writing, regardless of your subjective intentions. To avoid this dilemma, employers should prominently feature a clear disclaimer statement, stating the employer’s intention that the policies are not intended to create a contract of employment or alter the at-will employment relationship. Minnesota courts have consistently held that such contract disclaimers are a valid expression of the employer’s intent not to alter the status of their at-will employees.
It’s also a good idea for employers to have their employees sign an acknowledgement form that reiterates their understanding that they are employed at will and have received and reviewed the employment handbook. Following these simple steps should protect employers from liability for breach-of-contract claims.
Watch discipline details
Another source of wrongful termination claims arises when the employer includes detailed disciplinary procedures in the employee handbook. Employees often contend they were not afforded all of the rights provided under the disciplinary policy prior to their termination so sue for breach of contract. To avoid such claims, make sure to follow all disciplinary procedures set forth in the handbook to the letter .
An additional common wrongful termination claim: When employees reasonably rely on a pre-employment promise of the employer only to be terminated without a good-faith opportunity to perform.
For example, a company puts an ad in the paper for a new sales manager, hires the best candidate, and encourages the young go-getter to move to Minnesota to begin work. Shortly thereafter, the company identifies a better candidate and decides to hire that person to fill the new sales manager position. As a result, the company withdraws the prior offer of employment to the young go-getter.
In such circumstances, employees are permitted to seek damages against the employer under a promissory estoppel theory. Promissory estoppel claims are recognized if an employee accepts an offer of employment, takes some action in reliance on this offer, such as resigning a former position, and the employer subsequently withdraws the offer of employment prior to the employee’s first day of work. This employee may be entitled to recover damages for wrongful discharge.
The belief is that the employee is entitled to a good faith opportunity to perform prior to the termination of otherwise at-will employment. To support such a claim, the employee must be able to prove that the employer made a clear and definite promise that was intended to induce reliance, and that the employee did rely on the promise to his or her detriment.
The courts have failed to provide much guidance regarding what constitutes a good-faith opportunity to perform. However, one court did find that terminating an employee after one day on the job who resigned his position and incurred moving expenses in reliance on a new position did not meet the standard for good faith opportunity to perform.
The lesson for employers is that if a definite offer of employment is made and accepted, they must allow the employee a reasonable period of time to meet the employer’s legitimate expectations prior to terminating the employment, even if the employment is at-will. What constitutes a reasonable period of time will depend on the circumstances of each situation.
While Minnesota employers do have the protection of at-will employment, this agreement is not ironclad. Following the steps in this article can help employers avoid the most common wrongful termination claims.
[contact] Susan Fitzke is an employment law and commercial litigation lawyer with Meagher & Geer in Minneapolis: 612.347.9131; sfitzke@meagher.com; www.meagher.com
