When a Firing May Be Illegal

There are a few important exceptions to the employment at will doctrine—and some additional legal theories about unfair treatment on the job—that may make it possible for employees to hang onto their jobs or to sue their former employer for wrongful termination. And, as anxieties deepen over job security, more employees are taking the time and effort to contradict their employers’ assertions that it is time for them to go—and more workers seem willing to do battle in court over unfair treatment.

1. Written Promises

If you have a written employment contract setting out the terms of your work, pay, and benefits, you may be able to get it enforced against an employer who ignores any one of its provisions.

A legal contract—covering employment or anything else—is created when three things occur:

• An offer is made by one person to another.

• That offer is accepted.

• Something of value is exchanged based on the agreement.

You have the best chance of arguing that you are not an employee at will (and, therefore, that you are entitled to keep your job) if there is a strong written statement signifying that you are excepted from the employment at will doctrine.

For example, most collective bargaining agreements (contracts that set out union members’ rights) state that union members can be fired only “for good cause.” So, while union members are still technically employees at will, their agreements often make them exceptions to the general rule, requiring employers to have a specific, legally valid reason before firing them.

And some employees negotiate and sign detailed contracts with their employers—contracts which set out the specific terms of their employment, including salary, relocation rights, and beginning and ending dates of work. Employment contracts have become more rare since the rise and fall of the dotcom companies—and are now usually reserved for the uppermost company executives and other notables such as professional athletes. Those holding employment contracts are usually not subject to the employment at will doctrine; their contracts spell out the length of their employment and specifically note when and how the employment relationship can end.

2. Implied Promises

Claiming that you and your employer have an implied contract is one more way employees can chip away at the doctrine of employment at will. But the chipping won’t be easy. An implied contract assumes that words and things of value exchanged between a former employer and employee created a legal contract governing their relationship.

Until legal challenges to employee dismissals began to be filed with fervor in the early 1980s, many employers used terms such as “permanent employment” in their employee manuals, on job application forms, or orally when offering a position to a prospective employee. Today, employees who challenge their firings sometimes argue that, when an employer referred to permanent employment in the hiring process, that created an implied contract between them. They claim that this implied contract means that the company can only fire them for just cause, such as bad behavior on the job. An employer who fires for less than that, the theory goes, has breached the implied contract.

In addition to making the foolhardy promise of permanent employment, employee handbooks may also offer other fertile grounds for exceptions to employment at will.

A few courts have held, for example, that where company manuals state that employees must be given specific forms of progressive discipline before being fired, employers must deliver on those promises. However, most savvy businesses these days are well acquainted with this legal loophole, so few of them now include such promises in their employee manuals.

And courts have become more circumspect about when they will find an implied employment contract in an employee manual, most opining that the manuals must be very specific and detailed—more than general statements of policy—to constitute a contract.

Outside of employee manuals, courts have also found implied contract exceptions to employment at will where employers overtly agree to continue employment for a specific time period. And, less commonly, such implied contracts have also been found where employers offer persuasive job negotiations along with letters of reassurance or job offers promising stability.

In determining whether you have a binding implied employment contract with a former employer, courts will look at a number of factors that might have led you to believe your employment was rooted in solid ground, including:

• the duration of your employment

• whether you have received regular promotions

• whether you have consistently received positive performance reviews

• whether you were assured that you would have continuing employment

• whether your employer violated a usual employment practice in firing you—such as neglecting to give a required warning, or

• whether promises of permanence were made when you were hired.

3. Breaches of Good Faith and Fair Dealing

While it is an uphill battle to prove that a written or implied promise tantamount to a contract ever existed, it’s even tougher to prove that one has been violated. And, barring discrimination or some other egregious wrongdoing in the process, your best hope of fighting a firing may be to claim that your former employer breached what is referred to as a duty of good faith and fair dealing.

Courts have held that employers have committed breaches of good faith and fair dealing by:

• firing or transferring employees to prevent them from collecting sales commissions

• misleading employees about their chances for future promotions and wage increases

• fabricating reasons for firing an employee on the basis of on-the-job performance when the real motivation is to replace that employee with someone who will work for lower pay

• soft-pedaling the bad aspects of a particular job, such as the need to travel through dangerous neighborhoods late at night, and

• repeatedly transferring an employee to remote, dangerous, or otherwise undesirable assignments to coerce him or her into quitting without collecting the severance pay and other benefits that would otherwise be due.

While their rulings may be subject to change, some courts do not appear to recognize this exception to at-will employment at all. And some states allow employees to sue for breach of good faith and fair dealing only if they have a valid employment contract.

4. Violations of Public Policy

The employment at will doctrine won’t protect an employer from a wrongful discharge claim if a worker is fired for complaining about illegal conduct or a wrong an employer committed, such as failing to pay workers a minimum wage or overtime pay when it is required. Indeed, it is illegal to violate public policy when firing a worker—that is, to fire for a reason that harms not only the fired worker, but also the interests of the public in general.

Figuring out whether a court would decide that a particular firing fits into this category can, of course, be an exasperating exercise. Before allowing an action for a violation of public policy, most courts strictly require that there be some specific law setting out the policy. Many state and federal laws oblige and take some of the guesswork out of this issue by specifying employment-related actions that clearly violate public policy, such as firing an employee for:

• disclosing a company practice of refusing to pay employees their earned commissions and accrued vacation pay
  

• taking time off work to serve on a jury
  

• taking time off work to vote
  

• serving in the military or National Guard , or

• notifying authorities about some wrongdoing harmful to the public—generally known as whistleblowing

In addition, a number of state laws protect employees from being fired for asserting a number of more arcane rights—including serving as an election officer, serving as a volunteer firefighter, having certain political opinions, appearing as a witness in a criminal case, or even being elected to the general assembly. Many of these laws, passed as knee-jerk reactions to assuage particular workplace disputes, have become all but dead letters. Few people know they exist. And very few workers attempt to claim their protections. Still, if you feel that your firing may have violated one of these prohibitions, double check the laws in your state.

Courts have also held that it violates public policy for an employer to fire you because you took advantage of some legal remedies or exercised a legal right. And some states will not recognize this exception unless there is a specific statute conferring a particular right. For example, it is illegal for your employer to fire you because you:

• file a workers’ compensation claim
  

• file a complaint under the Fair Labor Standards Act

• report a violation of the Occupational Safety and Health Act or state safety law
  

• claim your rights under Title VII of the Civil Rights Act
  

• exercise your right to belong or not to belong to a union
  

• exercise your right to take a leave from work that was available under state or federal law
  

• refuse to take a lie detector test

• refuse to take a drug test given without good reason or

• have your pay subject to an order for child support or a wage garnishment order
  

In a few states—such as Arizona—this exception is nearly sacrosanct. Whenever a terminated employee’s wrongful termination claim raises an important public policy interest, the employer may well have violated that policy by firing the worker. For example, an Arizona appellate court recently found that a former employee might have been fired as a scapegoat after complaining about possible violations of his employer’s internal antitrust policy. (Murcott v. Best Western International, 9 P.3d 1088 (2000).)

5. Retaliation

Various types of laws—notably, those protecting whistleblowing and prohibiting discrimination —specifically forbid employers from retaliating against employees who avail themselves of legal protections. But a lawsuit alleging retaliation need not always be pegged to a specific statute. An increasing number of cases are now based on the time-tested ban against getting even, legally known as retaliation.

The broad claim of retaliation is a little more complicated, but somewhat easier to prove, than a charge of workplace discrimination. The reason is that evidence supporting retaliation claims is usually less subjective, more obvious than for cases of discrimination. To make out a case of retaliation, you must prove all of the following:

• You were engaged in a legally protected activity—such as filing a complaint with the Equal Employment Opportunity Commission or formally complaining to your own company officials about harassment or discrimination.

• Your employer then took adverse action against you—by firing you, denying you a promotion, giving an unwarranted bad work performance review, increasing job duties or responsibilities, scrutinizing your work very closely or giving an inaccurate poor reference.

• Your actions were the cause of your employer’s actions—for example, you were demoted just after your employer found out that you filed a charge of sexual harassment.

The employer or former employer is then free to show that there was some legitimate reason—other than retaliation—for its actions. If such evidence is presented, you get one more shot at winning by showing that the employer would not have acted—that is, fired or demoted you—if you had not acted first. This last is a tad tricky. In seeing whether this link exists, courts are most likely to look at:

• who made the job decision against you—he or she must have known about the action you took

• your prior work record—especially important if you were fired, demoted, or given poor job performance evaluations following your action, and

• the timing of the employment decision—the shorter the time between them, the more likely a court is to find that they are related.

6. Fraud

In extreme cases, an employer’s actions are so devious and wrong-hearted that they constitute fraud. Fraud can be found at various stages of an employment relationship—most commonly in the recruiting process, where promises are made and broken, or in the final stages, such as when an employee is induced to resign.

By dint of its devious nature, fraud is tough to track and expose—and harder still to prove in court. To win, you must show all of the following:

• The employer made a false representation.

• Someone in charge knew of the false representation.

• Your employer intended to deceive you or induce you to rely on the representation.

• You relied on the representation as the truth.

• You were harmed in some way by your reliance.

The hardest part of proving fraud is connecting the dots to show that the employer acted badly on purpose, in an intentional effort to trick you. That requires good documentation of how, when, to whom, and by what means the false representations were made. If your employer is a large corporation, the task of collecting and proving this information is all the more difficult, since you must usually work through layers of bureaucracy and many individuals. You must be able to name the people who made the fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and why you relied on it.

If you are sufficiently lucky and resourceful to present this cogent puzzle after your employer defrauds you, you may be entitled to reimbursement for a surprising array of costs, including the costs of uprooting your family to take the job and the loss of income and security that resulted from leaving your former employer.