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Published: 2008-03-26

Preventing Lawsuits for Wrongful Termination



Introduction:

Persons whose employment status is "at-will" and who: are not covered by an anti-discrimination statute; do not have an oral, written, expressed or implied contract; have not been terminated in violation of public policy; or were not terminated in violation of a whistle-blower statute, do not implicate a wrongful discharge problem. However, it is obvious by the description few if any employees will meet this criteria.

A.Wrongful Discharge:

Wrongful discharge can arise under three circumstances: violation of a statute (i.e. discrimination), breach of contract, or a tort action involving bad faith or tortuous discharge. Wrongful discharge cases based on statutory violation are limited to those remedies provided for by the statute. Cases based on a breach of contract can result in awards for lost wages, less mitigation which is based on what the person could have earned had due diligence been used to obtain new employment, future wages and foreseeable consequential damages.
A tort action can be brought for bad faith discharge, when a contractual relationship exists or for tortuous discharge, in the absents of a contractual relationship. Bad faith discharge tort cases are very rare in Nevada and are limited to those cases were the employer in bad faith discharges an employee, who has an employment contract and were a special relationship exists between the employer and employee. In contrast, tortuous discharge cases are based on non-contractual employer-employee relationships were the employee's discharge violates public policy. As with any tort action the remedies include not only actual damages but the possibility of punitive damages.

B.Employment-At-Will Is Still The Rule.

Nevada presumes the application of the at-will employment doctrine absent a written contract. At-will employment is defined as employment for an indefinite duration that can be terminated by either party for whatever reason or no reason.

However, over twenty different federal and state statutes alter the at-will employment doctrine. Additionally, the at-will employment doctrine can be altered by virtue of an express employment contract, oral assurances, or by meeting the handbook exception. Therefore, realistically the statutory, contractual and public policy exceptions leave few instances where at-will employment applies.

C.Exceptions And Restrictions To The At-WillEmployment Rule.

1.Public policy exceptions.

Exceptions to the at-will employment doctrine based on public policy specifically exclude statutory violations which contain a remedy within the statutory language. The public policy exceptions for at-will employment in Nevada are limited to heavily regulated areas were the applicable statute provides no remedy. To qualify under the public policy exception an employee must establish their termination was based on either their refusal to participate in conduct that violates the public policy or the employee participation in conduct encouraged by the public policy. Only few public policy exceptions, for example: workman's compensation, work place safety, and jury duty, have been recognized in Nevada.

2.Implied contracts and covenants exceptions.

To establish an implied contract or covenant between the employer and employee evidence must be present to support the assertion that the employee can only be fired for cause otherwise the at-will presumption will apply. Contracts for employment are not created by subjective expectations of an employee. Further, general expressions of long-term employment or advancement, and established disciplinary procedures are not, as a matter of law, sufficient to rebut the at-will presumption. Evidence of a definitive promise being made to an employee is needed to rebut the at-will employment presumption.

Handbook modifications to the at-will employment doctrine require specific provisions which spell out revocation of the at-will doctrine or guarantee for cause termination. While a progressive disciplinary policy within a company handbook alone will not establish a contractual relationship, when it is combined with language describing "for cause" discipline a contractual relationship can be established.

D.Other Potential Claims.

1.Slander and Libel.

Claims for slander and libel require the same proof whether within the employment context or not. Defamation claims require the plaintiff to establish: 1)false and defaming statement was made by the defendant; 2)publication to a third party; 3)fault amounting to at least negligence; and 4)actual or presumed damages.

In the employment context a qualified immunity applies to communication made in good faith on a subject matter related to an employment interest or duty. However, in an employment setting is the business that has to establish the affirmative defense that the third party disclosure was related to a business concern and published to an agent or employee of the business. Additionally, the conditional privilege applies to statements by a former employer about the character or conduct of former employees to present or prospective employers. However, the privilege can be waived if it is abused through publishing statements, believed to be false, in bad faith, with ill will, or with wrongful motivation.

2.Invasion of privacy.

While some states have constitutional provisions or statutes directed at protecting employee privacy via limitations on work place monitoring by private employers, Nevada does not. However, Nevada's common law does recognize a civil action for invasion of privacy. To establish the tort of invasion of privacy an employee must be able to establish a reasonable expectation of privacy existed. Such an expectation of privacy is easily negated by full disclosure of a company's monitoring policy at the time of hire.

Additionally, there is a key federal statute affecting employee privacy issues based on monitoring, the Electronic Communications Privacy Act of 1986 ("ECPA"). ECPA directly affects the monitoring of telephone calls because ECPA bans the interception or disclosure of wire and electronic communication and imposes both criminal and civil penalties. There are two exceptions to the ECPA's application. First, ECPA allows for interception when a party receives consent to intercept from any party to the communication. The second exception is the business extension exception. To qualify for this exception employers must meet two requirements: 1) the equipment used for the interception of wire or electronic communications must be furnished by the telephone company or other communications provider; and 2) calls must be monitored in the ordinary course of business.

Finally, there are various federal and state laws which require employers to keep certain aspects of an employee's personnel file confidential and/or separate from other portions of the personnel file. Employers who place personnel information on a company wide computer system risk violating an employee's right to privacy and the applicable federal and state laws. An employer can be held liable for failing to protect an employee's confidential information.

3.Assault, battery and fraud.

In order for an employer to be liable for the intentional tort (assault or battery) of an employee, that tort must occur within the scope of employment. However, if the employee's tort is an independent venture, not committed in the course of employment the employer is not liable. Because few employee's action can be considered within the scope of employment complaints of assault or battery will be rarely be sustained.

Under Nevada law, to establish a fraudulent misrepresentation claim the plaintiff has the burden of proving each and every element by clear and convincing evidence: (1) A false representation made by the defendant; (2) defendant's knowledge or belief that its representation was false or that defendant has an insufficient basis of information for making the representation; (3) defendant intended to induce plaintiff to act or refrain from acting upon the misrepresentation; and (4) damage to the plaintiff as a result of relying on the misrepresentation. No fraudulent misrepresentation case, brought by a former employee, has been reported in Nevada to date.

4.Intentional inflection of emotional distress.

While many plaintiff's attorneys file claims for intentional infliction of emotional distress very few can be established such a cause of action. Admittedly, Nevada has recognized a claim for intentional infliction of emotional distress can be brought in an employment discharge action. However, the same elements for the tort of intentional infliction of emotional distress are required in the employment context: (1) extreme and outrageous conduct with the intent to or the reckless disregard for, causing emotional distress; (2) plaintiff suffering extreme or sever emotional distress; and (3) actual or proximate causation. Conduct is extreme and outrageous if it goes beyond all possible bounds of decency, and is utterly intolerable or atrocious. Because the standard for establishing outrageous conduct for a claim of emotional distress is so high very few cases are successful.

E.Reducing The Risk Of A Lawsuit Prior To Termination.

In order to avoid wrongful termination law suits it is essential that the employer-employee relationship not be altered by statements or handbooks that establish an expressed or implied contract. Additionally, because the conduct of managers and supervisors are attributed to the employer, as a matter of law, it is necessary to provide mid and upper level management with the ability to detect indicators that may give rise to claims of wrong doing or favoritism. By properly training and supervising managers unlawful termination suits can be avoided.
Establishing a written company policy and a performance evaluation system is also helpful. Written policies and evaluations allow an employee to understand how his/her performance compares to the companies expectations thus preventing a surprise termination. Further, the written policies and the evaluations can be used to establish the companies non-bias in the termination. However, care must be used to insure promises of continued employment which alter the at-will employment status are not made in the policy manual or the evaluations. In comparison, companies that have employment contracts must focus attention on making sure the outlined disciplinary procedures are fully complied with to avoid wrongful termination claims.

Finally, treat employees fairly and with respect. Answer their questions. Investigate their complaints quickly, fairly and thoroughly. Many law suits are filed out of anger and misunderstanding many can be avoided by utilizing common decency.

F.How To Fire An Employee

1.Documentation.

Personnel files should contain hiring, promotional, disciplinary, transfer, training and termination paper work. All paper work should also be acknowledged by the employee prior to being placed in the personnel file. The paperwork of employees who refuse to sign such acknowledgments should be witnessed by at least two managers. These files should be kept for at least six years in the event a breach of contract claim is filed against the employer.

2.Outplacement.
Another useful tool in avoiding law suits is too provide training and/or referrals to other positions for workers who are being laid-off. By providing an employee with the means in which to gain alternative employment the anger and fear associated with a lay-off can be greatly decreased. However, a review of the Older Workers Benefit Protection Act of 1990 should be conducted to insure compliance.

APPENDIX A

*Major Federal and State Statutes Which Effect Employment:

ADEA: 29 U.S.C. §621 et. seq.
Rehabilitation Act of 1973: 29 U.S.C. §701 et. seq.
ADA: 42 U.S.C. §12101 et. seq.
Civil Rights Act: 42 U.S.C. §1981
Title VII: 42 U.S.C. §2000e et. seq.
ERISA: 29 U.S.C. §1144
NLRA: 29 U.S.C. §141 et. seq.
LMRA: 29 U.S.C. 29 U.S.C. §185
Drug-Free Federal Workplace Act: 41 U.S.C. §701 et. seq.
Anti-Kickback Act: 41 U.S.C. §53 et. seq.
FLSA: 29 U.S.C. §201 et. seq.
Employee Polygraph Protection Act: 29 U.S.C. §2001 et. seq.
Reprisal for Disclosing Improper Governmental Action:
Nev. Rev. Stat. §218.641
Discrimination Against Member of the National Guard: Nev. Rev. Stat. §412.606
Unlawful Inducement to Refrain Employee Testimony:
Nev. Rev. Stat. §608.015
Wage Discrimination Based on Sex: Nev. Rev. Stat. §608.017
Employment Practices: Nev. Rev. Stat. §613 et. seq.

* This is not intended to be an exclusive list, other statutes exist which effect various aspects of employment law and therefore, an employees status.