Ask Rita: Is Terminating an At-Will Employee Risk-Free?
Reliance on at-will employment to support a termination without proper preparation and risk assessment can lead to serious consequences.
Can we terminate an employee without the risk of a lawsuit?
Dear Rita:
We are considering terminating an employee who has been with us for two years, but we’re concerned we may be at risk if we do. She’s 50 years old and has a hearing disability. She is a nice person but while her performance is okay, she has never developed into the kind of an employee we like to have at our nonprofit.
There have been a few noteworthy performance issues in the past year that we didn’t document, but she seemed to improve. Yet overall, she just doesn’t seem to be a good fit.
She is an at-will employee according to our State law and our own policies, which she has acknowledged in writing. We’ve always understood that we can fire an at-will employee because they are at-will and there is no risk of any claims coming back against us. Is that true?
Also, there’s a complicating factor in her case: she recently filed a well-justified sexual harassment complaint that resulted in the termination of a long-term, popular employee.
Can we terminate her without the risk of a lawsuit?
Signed,
Strong Willed
Dear Strong Willed:
While the employment relationship in most states is defined as “at-will”—meaning an employee, in the absence of a contract to the contrary, can quit or can be fired for any or no reason at any time—there are a number of exceptions. For example, many states will not enforce an at-will policy if the termination violates public policy or results in breaking the law—such as terminating an employee because they didn’t vote for the candidate management supports. In this case, the at-will relationship would not protect the employer from a wrongful termination lawsuit.
Another exception that is almost universally recognized comes from the concept that an employee cannot be fired for engaging in protected activity under the law, such as filing a workers compensation claim, pursuing a medical leave under FMLA or, as in this case, making a complaint of sexual harassment. The same exception applies when termination occurs because of a protected class, such as race, age, religion, disability, and a number of others that are set out by Federal and State anti-discrimination laws.
While it should be fairly clear that this kind of termination would be illegal and not protected by the at-will doctrine, the fact that an employee is in one or more protected classes or has engaged in protected activity must always be considered in a risk analysis when making termination decisions. This is because, in this day and age, the mere fact the employee is in those classes or engaged in that activity could form the basis of a claim of wrongful termination, discrimination, or retaliation.
In your situation, there is a risk that the employee could file a lawsuit and allege that she was terminated because she has a disability, is over the age of 40, or is being retaliated against because she filed the sexual harassment complaint. Your burden then becomes one of proving the motivation for the termination was not her disability, age, or sexual harassment complaint.
At that point, you would have to explain the legitimate justification for terminating her. This is why it is essential to have clear and well-defined business reasons—supported by documentation—to back up the decision to terminate. In the situation you describe, it sounds like there would not be much to offer in defense of your situation since there was little or no documentation of her legitimate shortcomings.
If your only response to why the decision to terminate was made is “she was not a good fit,” you can expect her lawyer to ask you: “Was she not a good fit because she was disabled, older, and/or made a sexual harassment claim?” As an aside, this is why I always suggest you never use the phrase, “not a good fit” when terminating someone. Instead, be prepared to explain the tangible performance issues and reasons why you drew that conclusion.
The best way to contain risk arising from any termination, and regardless of the at-will doctrine, is to:
- Make sure there are clear and supportable reasons for a decision to end an employee’s relationship with your nonprofit after documented efforts to raise and remedy any performance or conduct problems that might arise, and
- Carefully evaluate whether the employees are in any protected classes or participated in any protected activities and evaluate whether the reasons chosen to support termination are sufficiently documented to overcome the potential of the employee claiming it was the protected classes or activities that led to your decision.
Finally, always remember, being at-will only defines the relationship — it is not a reason to terminate. As should be clear, unqualified reliance on at-will employment to support a termination without proper preparation and risk assessment can lead to serious, and at times, expensive, consequences.
I hope this helps and please feel free to share comments below if you have any more questions on this matter!
About the Author
Mike Bishop is a member of the State Bar of California and has been admitted to practice in a number of federal district courts in both California and Ohio. During his legal career, Mike worked for 32 years with a Sacramento law firm, where he focused on employment litigation in both state and federal courts. During that time, he defended employers in litigation.
In 2016, he began his work as an Employment Risk Manager for the Nonprofits Insurance Alliance, assisting nonprofits in evaluating employment risks. Mike lives in Lakewood, Ohio, and is a graduate of the University of California, Davis, with a bachelor’s degree in political science, and a 1982 graduate of the University of the Pacific, McGeorge School of Law.
Articles on Blue Avocado do not provide legal representation or legal advice and should not be used as a substitute for advice or legal counsel. Blue Avocado provides space for the nonprofit sector to express new ideas. Views represented in Blue Avocado do not necessarily express the opinion of the publication or its publisher.
11 thoughts on “Ask Rita: Is Terminating an At-Will Employee Risk-Free?”
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Even if the organization would prevail if a complaint were brought, the process would be distracting at best and, if public, could have negative public relations and in-house fall-out. All of that needs to be considered as part of the risk assessment.
Can you also address the use of severance agreements to reduce the risk of negative consequences for the organization in a case like this? And another question: What do you communicate to other staff in a small organization about termination of an employee for performance issues?
Even if the organization would prevail if a complaint were brought, the process would be distracting at best and, if public, could have negative public relations and in-house fall-out. All of that needs to be considered as part of the risk assessment.
Can you also address the use of severance agreements to reduce the risk of negative consequences for the organization in a case like this? And another question: What do you communicate to other staff in a small organization about termination of an employee for performance issues?
Good quiestions!
Thanks for your questions.
A severance agreement is always a valuable resource to use in situations where a number of risk factors could result in claims being made post-termination. This is accomplished by having the severance agreement include a complete release of all claims against the employer. The consideration paid for the severance agreement, is often a good investment to avoid the distractions, and the other consequences, and risks a termination can bring, as you note.
As to the communication of the termination for performance issues, generally speaking and in most circumstances, the less said the better in order to maintain the privacy and confidentiality interests the terminated employee has. This also helps to avoid the risk of defamation claims.
Maybe you should put her on a PIP (performance improvement plan) and make sure to reference dates from before the complaint was filed. This will help to establish a pattern AND help to show these issues accrued for some time now, if her performance doesn’t improve.
Maybe the PIP will help her improve so you won’t have to terminate her
Maybe you should put her on a PIP (performance improvement plan) and make sure to reference dates from before the complaint was filed. This will help to establish a pattern AND help to show these issues accrued for some time now, if her performance doesn’t improve.
Maybe the PIP will help her improve so you won’t have to terminate her
This is always a viable and constructive alternative to termination.
I would strongly advocate for a PIP, with a severance if it doesn’t work out.
It is extremely demoralizing as an employee to be fired without warning, without knowing your performance wasn’t up to par, and without having an opportunity to improve. Especially for someone who “isn’t the type of employee we like to have at our nonprofit.” Putting her on a PIP will let her know she is underperforming, and also force you to be clear about what it is about her performance that is inadequate.
This letter cannot be real. No one can be this oblivious.
An employee brings a “well-justified” sexual harassment complaint against a “long-term, popular employee” resulting in that person being fired and suddenly she’s “not a good fit.”
Is she “not a good fit” because the other employees resent her for getting someone they liked fired? Why does the rest of the staff like a sexual harasser so much? And what does that say about the culture of the organization?
As for her performance issues: She’s had to deal with being sexually harassed; then with filing a complaint and going through the investigation process; and now the fallout from her harasser being justifiably fired. That’s a tremendous amount of stress; it’s not surprising her performance has suffered.
HR seems to have failed in creating a workplace free of harassment and in supporting a victim of workplace harassment and yet they want to fire this employee because she is “not a good fit.” Unbelievable.
This letter cannot be real. No one can be this oblivious.
An employee brings a “well-justified” sexual harassment complaint against a “long-term, popular employee” resulting in that person being fired and suddenly she’s “not a good fit.”
Is she “not a good fit” because the other employees resent her for getting someone they liked fired? Why does the rest of the staff like a sexual harasser so much? And what does that say about the culture of the organization?
As for her performance issues: She’s had to deal with being sexually harassed; then with filing a complaint and going through the investigation process; and now the fallout from her harasser being justifiably fired. That’s a tremendous amount of stress; it’s not surprising her performance has suffered.
HR seems to have failed in creating a workplace free of harassment and in supporting a victim of workplace harassment and yet they want to fire this employee because she is “not a good fit.” Unbelievable.
Helen,
Thank you for your observations. They are quite accurate.
While this scenario is fictional, the facts related are based on actual situations.