What is the Right Way to Fire?

 

Employers should pay careful attention to the way they fire employees, so as not to have to defend their actions later in a court of law. Many states, including Ohio, are “at-will” employment states meaning at any time the employer or the employee can terminate the employment relationship. There are, of course, exceptions to the “at-will” employment doctrine and employers should be mindful of those exceptions. Furthermore, employees hired to work under an employment contract can only be terminated for reasons specified in the contract, or “for cause.” Additionally, the surge of electronic databases and files may require employers to create new document retention policies including retaining documents related to employee performance and reasons for termination. This article describes how employers should appropriately and legally terminate employees.

In Ohio, “unless otherwise agreed, either party to an oral employment-at-will agreement may terminate the employment relationship for any reason which is not contrary to law.” There are generally three exceptions to the at-will doctrine: (1) public policy exceptions, (2) implied-contract exceptions, and (3) covenant-of-good-faith exceptions.

Under the public policy exception, an employee is wrongfully terminated when the termination is against an explicit, well-established public policy of the State. Examples of terminations in violation of public policy would include terminations that violated statutory provisions of the state, such as discrimination based on age, gender or ethnicity.

An implied-contract may be created via oral or written representations to an employee regarding job security or procedures that will be followed when adverse employment actions are taken. An example of this implied-contract has been seen in employee handbooks where language indicates an employee can only be terminated for “just cause.” This language indicates to an employee that the employer will follow specific procedures before terminating an employee.

Only 12 states, including Ohio, recognize the covenant-of-good-faith exception which reads a covenant of good faith and fair dealings into every employment relationship. This exception calls for “just cause” for all employer personnel decisions and provides that terminations made in bad faith or motivated by malice are prohibited regardless of whether employment was at will.

If an employer/employee contract requires “for cause” termination, an employer must follow specific steps to appropriately and legally fire an employee. The employer should document all infractions committed by the employee up until the decision to terminate. In some cases the employee is allowed to appeal the termination decision in a quasi-judicial fashion and have access to the documented evidence prior to the “hearing.” If the employer fails to follow the “for cause” termination procedures provided in the employment contract, the employee will have a much better cause of action against the employer, which may result in employee reinstatement.

 

 

Employers should also be aware of the new e-discovery provisions contained in the Federal Rules of Civil Procedure, which require a party to provide an appropriate backup and retrieval system if they choose to use electronic data/file storage. It is reasonably foreseeable that if a business is involved in litigation evidence will be requested that is only available electronically. Businesses now need new document retention and backup policies to ensure that in the case of litigation, or termination appeal, evidence requested will be located and produced to the requesting party.

This information provides an overview for what employers need to consider when it comes to employee termination. Each employer should strongly consider implementing a best practices policy in order to help shield them from litigation. A best practices policy would include excellent documentation to substantiate and corroborate an employer’s decision to terminate, even if the employee is at-will.

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