DISCIPLINE AND DISCHARGE OF EMPLOYEES:
STRATEGIES FOR MINIMIZING RISKS

1. THE BIG PICTURE:  LIMITATIONS ON EMPLOYER’S RIGHT TO DISCIPLINE AND DISCHARGE AT-WILL

   1. Breach Of Implied Contract

      • Essence:   The employee argues that the employer gave up its right to terminate at-will by saying or doing something in the course of employment which implied that the termination had to be for good cause.

      • Employee Handbooks are classic examples.  Providing for grounds and procedures for discipline or dismissal creates an employment contract unless there is a clear and prominent disclaimer.
        
        BEST PRACTICE TIP:
        
        If you add at-will language at a later date, have existing employees acknowledge at-will status when they receive raises, promotions, etc.  This will help the argument that there was “consideration” for the acknowledgment of at-will status.

      • Administrative Manuals (for management eyes only) can also be contracts, especially with the managers themselves.  Make sure that the language in those manuals mirrors the language in the Employee Handbook.

   2. Breach Of Express Contract

      • An express contract can be oral as well as written.
        
        BEST PRACTICE TIP:
        
        Put an express, unambiguous at-will agreement in offer letters.  Make sure employees sign the offer letter.  Watch out for and caution against unauthorized promises.

      • Collective bargaining agreements.

      • Other express contracts requiring “just cause”

      • Meaning of “just cause” for termination

        • Misconduct

        • Performance issues

        • Other legitimate business reasons  [poor economic conditions, desire to restructure company, reductions in force]

      • Tests for determining existence of just and proper cause for discipline or termination

        • Did the employee know and understand the rule?

        •  Was the employee aware of the possible disciplinary consequences?
          
          Note:   Some offenses (e.g., theft or intoxication on the job) are so serious that employees are expected to know that such conduct is prohibited without prior warnings.

        • Is the rule necessary for the orderly, safe and efficient operation of the business?

        • Did the company investigate to determine whether the employee actually violated the rule?

        • Was the investigation conducted fairly and objectively?

        • Did the investigation result in substantial evidence that the employee was guilty?

        • Have the rules (and penalties) been enforced consistently ?

        • Is the degree of discipline reasonably related to the seriousness of the offense as well as the employee’s length of service and work record?

   3. Implied Covenant Of Good Faith And Fair Dealing

      • Essence:   Contracts contain an implied term requiring each party to treat the other party fairly and in good faith.  (Note: This does not apply to discharge of an at-will employee, assuming the relationship is truly at-will.) 

      • A claim for the breach of implied covenant of good faith and fair dealing depends on the existence of a valid contract. 

      • When the claim for breach of implied covenant requires interpretation of a collective bargaining agreement, the claim may be preempted by federal labor law.

   4. Wrongful Termination In Violation Of Public Policy

      • Essence:   Where the reason for the termination is repugnant to a clearly established public policy, the courts may overturn the termination to uphold that public policy. 

      • Exercise of a legal right as an employee.

      • Satisfying a legal obligation.

      • Refusal to further an unlawful employer purpose.

      • Whistle Blowing

        • An employee need only complain in good faith about working conditions reasonably suspected to be unsafe or unlawful in order to maintain a public policy claim––actual violation need not be proven.

        • Where the subject of the complaint is entirely internal, most courts hold that the employee cannot maintain a public policy claim.

   5. Discriminatory Employer Motive

      • Essence:   Employee claims that he or she was terminated for unlawful discriminatory reasons, such as the employee’s age, race, sex, or other protected class.

      • These can derive from federal, state or local statutes or regulations.

   6. Retaliation

      • Essence:   To establish a case of unlawful retaliation, a plaintiff must prove that (1) he engaged in some protected activity; (2) the employer subjected him to some adverse employment action; and (3) there is a causal connection between the protected activity and the adverse employment action.
        
        BEST PRACTICE TIP:
        
        Retaliation is the most natural of human impulses.  Always keep this in mind when assessing disciplinary action.      

2. THE DECISION TO DISCIPLINE OR DISCHARGE

   1. Record Keeping

      • Is there a factual written record showing the steps taken by the company to correct the employee’s actions prior to taking serious disciplinary action?

      • Have similar written records been kept and similar steps taken by the company to correct the improper actions of all other employees in similar situations?

      • Is the record complete; does it show who, what, where, when, why, and how?

   2. Consistency

      • If other employees have violated this rule or order, did they receive the same disciplinary action as this employee?

      • Does this employee have a record equal to or worse than all employees who have violated this rule or order?

   3. Employee Knowledge

      • Was the rule or order communicated to the employee in clear, easy to understand language?

      • Has this employee been warned previously (oral or written) for violation of this rule or order?

      • Has this employee ever received a written or oral warning for violation of any other published rule or order?

   4. Objectivity

      • Did the supervisor have all the facts straight?

      • Did the supervisor consider all the facts?

      • Did the supervisor give the employee a fair chance to explain?

   5. Procedure

      • Did the supervisor get the employee out of earshot of others?

      • Did the supervisor lose his temper, raise his voice or use abusive language?

   6. Reasonableness Of Penalty

      • Was the degree of discipline imposed upon the employee appropriate to (a) the seriousness of the offense, (b) the employee’s past record, and (c) his length of service?

      • Is the company’s disciplinary action in this case consistent with “past practice” for similar conduct or violations?

   7. Review Of Decision

      • Before implementing a decision to terminate has it been reviewed?

   8. Documenting The Decision

      • Are there too many records?

        • Multiple documents explaining the reasons for termination are inevitably inconsistent and those inconsistencies can torpedo the defense of a termination decision.

        • A single document should record the stated reasons for termination.

        • If more than one person writes up the termination meeting, draft notes of that meeting must be reviewed and corrected immediately (before litigation).

        • Destroy all drafts (both electronic and hard copies) immediately--before litigation.

      • What goes in the personnel file?

3. CORRECTIVE ACTION:   MINIMIZING THE RISKS

   1. Counseling

      • Let employees know what is expected of them.

      • Use frequent, standardized reviews.
        
        Note:   These can be a valuable two-way communications tool.

      • When a problem arises address it and document it.
        
        (Do not let problems slip by without being addressed.)

   2. Job Improvement Plans

      • Make sure they do not become employment guarantees in perpetuity.

   3. Reprimands And Warnings

   4. Suspension And Discharge

      • Whenever feasible, suspend the employee pending investigation, then make an informed decision (with outside involvement, if necessary) as to whether discharge is warranted or appropriate.

   5. “Last Chance” Agreements

4. RELATED MATTERS

   1. Offering Resignation As An Option/Getting A Release

   2. The Unemployment Compensation Claim: To Challenge Or Not To Challenge

      • Consider the Big Picture.

      • May depend on potential for future litigation.

      • Tactical burden of proof questions of voluntary quit versus discharge for misconduct.

   3. Constructive Discharge

      • Wrongful termination litigation often arises in the context of an employee’s resignation after an adverse personnel action.  The employee argues that, because the employer’s conduct compelled him or her to resign, the “resignation” should be construed as a “termination” for purposes of law.

      • In order for the constructive discharge doctrine to apply, the employee’s working conditions must be so intolerable that a reasonable person in the plaintiff’s shoes would have felt compelled to resign.

      • To determine whether the working conditions are sufficiently intolerable, the courts focus on a reasonable employee perspective, not on the employee’s subjective view.