An employer may generally fire an employee at any time, for any nondiscriminatory reason, without violating the law. Thus, employment is often referred to as "at will." An employer may be liable for wrongful termination of an employee, however, where:
- The employer has entered into a private contract with the employee which limits the reasons for which the employee may be fired;
- The termination is based on the employee's status (including race, sex, ethnicity, religion, age, and disability); or
- The reason for firing the employee violates public policy.
A private contract limiting the right to fire an employee may exist where the employer entered into a formal written agreement with the employee, which specifically lists reasons for which the employee can be fired or states that an employee may only be fired with specific notice. A verbal agreement between the employer and the employee may create an employment contract. Such a contract may also be found where the employer has distributed written policies or a handbook which states, or even merely suggests, that an employee may be fired only for certain reasons, or provides an elaborate disciplinary procedure with which an employer must comply before an employee may be fired. An employer who fails to comply with such a "contract" may be sued for breach of contract or, in many states, wrongful termination.
Employer are prohibited from terminating an employee who is a member of a protected class, if the basis for the termination is the employee's race, sex, national origin, religion, age, or disability.
In most states, an employer violates public policy if it fires an employee for engaging in a protected activity, such as "whistle blowing," or reporting to a law enforcement or regulatory agency that the employer has violated the law, or for refusing to violate the law. Termination of this sort is often referred to as retaliatory discharge. Similarly, an employer who fires an employee for filing a valid workers' compensation claim or for testifying for another employee in his or her lawsuit against the employer might violate public policy. Cases involving whistle blowing are termed qui tam cases.
Finally, in a few states, an employer who fires an employee in a manner, which unduly injures the employee, violates the "implied covenant of good faith and fair dealing," another form of wrongful termination. This covenant is an implied part of most contracts and requires each party to a contract to act with good faith towards the other party. A party may violate the covenant if it takes action, which does not necessarily breach the contract, but is done in a way that unduly injures the other party. Generally, employment is assumed to be "at will," and therefore, covenants of this type are generally not implied in the employment relationship. Where an employer and an employee have some sort of enforceable employment agreement or contract, however, and the employer then fires the employee in a way that unduly damages the employee or the employee's reputation, the employee may be able to state a claim of wrongful termination based on the breach of this implied covenant.
Remember that federal and state anti-discrimination laws also prohibit firing employees based on protected characteristics like race, sex, religion, and national origin. Lawsuits for wrongful termination are often combined with actions alleging prohibited discrimination and harassment. If you have questions regarding legal grounds for terminating employment, contact an experienced employment attorney in your area.
Quiz: Firing Employees
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