👔Employment Law Unit 10 – Termination, Layoffs & Wrongful Discharge

Key Concepts and Definitions

• At-will employment allows either party to terminate the employment relationship at any time, for any reason, with or without notice (unless an employment contract states otherwise)
• Constructive discharge occurs when an employee resigns due to intolerable working conditions created by the employer
  • Includes situations such as harassment, discrimination, or retaliation
• Severance pay is compensation provided to an employee upon termination of employment
  • Often based on length of service and position held
• WARN Act (Worker Adjustment and Retraining Notification Act) requires employers with 100 or more employees to provide 60 days' notice before mass layoffs or plant closings
• Wrongful termination is a discharge that violates the law, public policy, or the terms of an employment contract
• Protected classes are groups of individuals protected from discrimination by federal and state laws (race, color, religion, sex, national origin, age, disability)
• Retaliation is an adverse action taken against an employee for engaging in protected activities (filing a complaint, participating in an investigation)

Legal Framework for Termination

• Employment at-will doctrine is the default rule in most states, allowing termination without cause or notice (unless an employment contract or collective bargaining agreement states otherwise)
• Exceptions to at-will employment include:
  • Discrimination based on protected classes
  • Retaliation for engaging in protected activities
  • Breach of an implied contract (based on employee handbooks, policies, or oral promises)
  • Violation of public policy (termination for refusing to engage in illegal activities or exercising legal rights)
• Federal laws prohibiting discrimination and retaliation:
  • Title VII of the Civil Rights Act of 1964
  • Age Discrimination in Employment Act (ADEA)
  • Americans with Disabilities Act (ADA)
  • Family and Medical Leave Act (FMLA)
• State laws may provide additional protections for employees beyond federal requirements
• Employers must follow proper procedures and documentation when terminating employees to minimize legal risks

Types of Employment Termination

• Voluntary termination occurs when an employee resigns or retires from their position
  • Employees are generally expected to provide advance notice (two weeks is common)
• Involuntary termination is initiated by the employer, with or without cause
  • Includes layoffs, downsizing, and firings for performance or misconduct
• Mutual agreement is a termination where both the employer and employee agree to end the employment relationship
  • Often involves a severance package and a release of claims
• Constructive discharge is a form of involuntary termination where the employee resigns due to intolerable working conditions
• Termination for cause is a dismissal based on the employee's misconduct or poor performance
  • Examples include insubordination, theft, violence, or chronic absenteeism
• Reduction in force (RIF) is a type of involuntary termination due to economic reasons, such as downsizing or restructuring

Layoffs: Process and Legal Considerations

• Layoffs are a form of involuntary termination due to economic reasons, such as financial difficulties, restructuring, or technological changes
• Employers must follow the WARN Act if the layoff affects 50 or more employees at a single site
  • Requires 60 days' written notice to affected employees, unions, and local government officials
• Employers should establish objective criteria for selecting employees for layoffs to avoid discrimination claims
  • Criteria may include seniority, job performance, or skills
• Employers should document the reasons for the layoff and the selection process
• Employers may offer severance packages to laid-off employees in exchange for a release of claims
• Employers should provide laid-off employees with information about unemployment benefits and job search assistance
• Employers must continue health insurance coverage under COBRA for eligible employees who lose coverage due to a layoff

Wrongful Discharge: Grounds and Examples

• Wrongful discharge is a termination that violates the law, public policy, or the terms of an employment contract
• Discrimination based on protected classes (race, color, religion, sex, national origin, age, disability)
  • Example: Terminating an employee because of their race or sexual orientation
• Retaliation for engaging in protected activities (filing a complaint, participating in an investigation)
  • Example: Firing an employee for reporting sexual harassment or filing a workers' compensation claim
• Breach of an implied contract based on employee handbooks, policies, or oral promises
  • Example: Terminating an employee without following progressive discipline outlined in the employee handbook
• Violation of public policy (termination for refusing to engage in illegal activities or exercising legal rights)
  • Example: Firing an employee for refusing to falsify financial records or for taking time off to vote
• Breach of an express contract, such as an employment agreement or collective bargaining agreement
  • Example: Terminating an employee before the end of their contract term without cause
• Defamation, where an employer makes false and damaging statements about a terminated employee
  • Example: Telling other employees or prospective employers that the terminated employee was fired for stealing

Employee Rights During Termination

• Employees have the right to receive their final paycheck, including any accrued but unused vacation time, within the time frame required by state law
• Employees have the right to continue health insurance coverage under COBRA if they lose coverage due to termination (except for gross misconduct)
  • Employers must provide notice of COBRA rights and procedures
• Employees have the right to receive information about unemployment benefits and job search assistance
• Employees have the right to receive a truthful reference from their employer
  • Employers should provide only basic information (dates of employment, position held) to avoid defamation claims
• Employees have the right to be free from discrimination and retaliation during the termination process
• Employees have the right to receive notice under the WARN Act if they are affected by a mass layoff or plant closing
• Employees may have the right to severance pay or benefits if provided by an employment contract or company policy

Employer Best Practices

• Establish and follow clear policies and procedures for discipline and termination
  • Communicate policies to employees through handbooks and training
• Document performance issues, warnings, and disciplinary actions
  • Use progressive discipline when appropriate (verbal warning, written warning, suspension, termination)
• Conduct thorough investigations before making termination decisions
  • Interview witnesses, review documents, and gather evidence
• Make termination decisions based on legitimate, non-discriminatory reasons
  • Avoid any appearance of discrimination or retaliation
• Provide honest and accurate reasons for termination to the employee
  • Avoid making false or misleading statements that could lead to defamation claims
• Treat the employee with respect and professionalism during the termination meeting
  • Have a witness present, such as a human resources representative
• Provide the employee with information about final pay, benefits, and unemployment assistance
• Consider offering a severance package in exchange for a release of claims
  • Tailor the package to the individual employee and situation

Recent Cases and Legal Trends

• Supreme Court decision in Bostock v. Clayton County (2020) held that Title VII prohibits discrimination based on sexual orientation and gender identity
  • Employers must ensure that termination decisions are not based on these protected characteristics
• EEOC guidance on the use of artificial intelligence and algorithmic decision-making in employment decisions, including termination
  • Employers must ensure that AI tools do not have a disparate impact on protected classes
• Increased focus on pay equity and transparency
  • Some states require employers to provide pay scales to employees and prohibit inquiries into salary history
• Expansion of state and local laws protecting employee privacy and personal information
  • Employers must ensure that they have proper consent and safeguards when collecting and using employee data
• Growth of remote work and its impact on employment laws
  • Employers must navigate issues such as out-of-state employment, tax implications, and data security
• Continued attention to workplace harassment and discrimination in the wake of the #MeToo movement
  • Employers must take prompt and effective action to address complaints and prevent retaliation
• Increased scrutiny of non-compete agreements and other restrictive covenants
  • Some states have banned or limited the use of non-competes, particularly for low-wage workers