All employers—large and small—are governed by a myriad of state and Federal laws with complex legal requirements. Navigating the complicated and ever-changing maze of employment laws can be confusing, and employers may find themselves caught in an employee lawsuit if they aren’t careful to avoid making these common mistakes.
Many employers do not understand the true meaning of “at will” employment. At will employment is defined as the right of the employer or the employee to terminate the employee’s employment at their will for any reason. In California, Labor Code §2922 provides that all employees are employed at will and specifically states, “An employment having no specified term, may be terminated at the will of either party on notice to the other.” It seems pretty clear but employers often fail to take other laws into consideration that affect at will employment.
Employers have two basic misunderstandings about at will employment:
- They can terminate an employee’s employment at any time for any reason (given the definition this is a valid assumption); and
- They can do nothing to change the at will status of an employee.
First, employees always have the right to terminate their employment at will unless they have a contract which provides otherwise in which case they may be giving up benefits under the agreement. Employers cannot force employees to work – slavery was abolished long ago. Employers on the other hand are restricted by both federal and state law. These laws include: discrimination under the California Fair Employment and Housing Act and Title VII, worker’s compensation, Americans with Disabilities Act, Family Medical Leave/California Family Rights Act, whistleblower laws, and other California and federal statutes that provide rights to employees. Employers cannot terminate employees for a discriminatory or retaliatory reason or because employees have exercised their rights or complained because they were not allowed to exercise their rights under these laws. Employers also cannot terminate an employee for complaining to an outside government agency about the employer’s practices. There are many nuances to each of these laws and employers need to be aware of them before they decide to take action to terminate an employee.
Second, while employees begin their employment as at will employees (unless there is a contract), employers can change the employee’s at will status by its words and actions. Employers may refer to the company as a family operation where everyone “grows old together,” or tell employees they have a “job for life.” These words can change the at will relationship and in the 1980s court decisions confirmed this fact. Also, similar statements in employee handbooks can change the at will relationship. While the owner or management team may be aware of this fact, they often forget to train their supervisors and managers. In California supervisors and managers are the eyes and ears of the employer and can create liability for the employer. Therefore, it is necessary for employers to recognize that fact and train their supervisors and managers not to make such statements.
In order to protect its interests, employers should:
- Review terminations of employees carefully and ask themselves:
- Is the employee in a protected class?
- Has the employee complained?
- Did the employee file a workers’ compensation claim?
A careful review may reveal underlying issues. The best practice is to contact your employment attorney and discuss each termination to undercover any potential issues. Upper management also should not blindly accept recommendations from lower management without asking questions. This review, even if it uncovers some potential issues, does not mean that the termination does not occur but it allows consideration of potential claims and may lead to offering severance to avoid future litigation.
- Make sure that employee handbooks contain at will provisions which specifically state that the at will relationship cannot be changed except in writing by the owner, president or other high level officer of the employer. Take out progressive discipline from your handbook. You should use it in making decisions but do not commit to using it. There will always be a situation where warnings will not be given before termination and plaintiff’s attorneys will use that provision to show you did not follow your own policies.
- Evaluate and terminate employees as soon as performance, attendance or other issues arise. Many employers fail to use the orientation period to evaluate employees. The message is evaluate early and do not keep a problem employee. They rarely get better.
Hope you found the above discussion helpful. In my upcoming posts, I plan to share with the readers practical knowledge and tips on a variety of labor and employment law topics applicable to employers. Stay tuned for another conversation on ClarkTalk!!
Thank you for joining us on ClarkTalk! We look forward to seeing you again on this forum. Please note that the views expressed in the above blog post do not constitute legal advice and are not intended to substitute the need for an attorney to represent your interests relating to the subject matter covered by the blog. If you wish to consult with the author of this post or another attorney at Clark & Trevithick, please contact Deborah Petito by email at dpetito@ClarkTrev.com or telephonically by calling the author at (213)629-5700.