TERMINATIONS/ LAYOFFS Under the law in most states, if there’s no employment contract a worker is employed on an “at-will” basis. That means the worker has the right to leave the company at any time, and, conversely, the employer has the right to terminate the employee at its discretion. If a worker is under contract, however, the terms of the contract apply. A written contract may specify the reasons the employee can be terminated, while an oral contract usually implies that termination can occur only for cause. Usually, that means the employer can terminate the worker only for poor performance, dereliction of duty, an act of dishonesty or insubordination, or because the company needs to eliminate the position the employee holds. A contract may be a formal, signed agreement, a collective bargaining pact or an implied contract. Not all states recognize implied contracts. If your state does honor such agreements, a court might conclude that an implied contract exists if an employee handbook, policy manual or verbal statement alludes to job security. Other courts have held that the totality of the parties’ relationship must be reviewed to determine whether the employer’s conduct constitutes an implied promise that it would not arbitrarily terminate an employee. Besides implied contracts, federal laws, state statutes and court decisions are chiseling away at the at-will doctrine sending the number of wrongful-discharge suits spiraling higher. Here’s why: ■ Federal laws. Employers subject to certain federal laws may not terminate employees for prohibited reasons, such as racial discrimination, or for exercising their rights under the laws. The laws include the Equal Employment Opportunity Act, Title VII, the Occupational Safety and Health Act, the ADA, the GINA, the FMLA, the ADEA and the Pregnancy Discrimination Act. ■ State laws. Likewise, state legislatures have passed wage/hour laws, workers’ compensation and other statutes that restrict employment decisions. ■ Implied covenant of good faith and fair dealing. Some states also hold that every agreement contains an implied cove-nant of good faith and fair dealing, which basically means that the parties will treat each other fairly. When an employer fires someone in a manner that a jury considers patently unfair, the former employee may be able to recover damages. ■ Public policy. In some states, courts will hold an employer liable for wrongful discharge if an employee is terminated for a reason that violates public policy. That means, for instance, you cannot fire one of your engineers for informing the EPA that your company has been dumping toxic waste in the river or another employee for refusing to lie to a tax examiner. Likewise, it’s against public policy to fire someone for filing a workers’ compensation claim or reporting for jury duty. ■ Torts. Some employees have won judgments against their companies by suing over a civil wrong, such as “intentional infliction of emotional distress.” In many court cases, an employee handbook is a prime piece of evidence showing the employer’s policies and promises. You must pay careful attention to your handbook to help protect your status as an at-will employer, to the extent allowed by law, and to reduce your chances of losing in court. ■ USERRA. Under a little-known provision in the Uniformed Services Employment and Reemployment Rights Act, it’s illegal to fire returning soldiers and reservists without a valid, business-based reason. In other words, soldiers are temporarily no longer at-will employees even if they were before they deployed or signed up for the Reserves. You can’t terminate employees returning from active duty or reservist leave unless: • You can point to “just cause” for doing so. This special protection continues for one year if the person served on military duty for more than 180 days or for six months for those on military leave between 30 and 180 days. • You can prove the soldier/employee knew or was notified his or her actions could constitute just cause for discharge. • You can prove that the termination was “reasonable.” Presumably, that means the workplace rules that the organization accused the employee of violating were reasonable. MINIMIZE YOUR RISK When you dismiss an employee, be sure to minimize your exposure to charges that you broke a contract, violated public policy, acted vindictively or engaged in discriminatory practices. These steps will help you avoid litigation or support your case in court: ✔ Publicize your policies. Policies that are effectively drafted, communicated and enforced uniformly can help you justify a dismissal. Communicate your policies and any associated penalties for noncompliance clearly. If an employee was never informed of your company’s policies, or if those standards were communicated poorly, you may be forced to overturn his or her termination or pay a large settlement. ➤ Observation: Review your policies for relevance to your business. Policies on attendance and misconduct, for example, are always relevant, but a dress code may not be. ✔ Conduct employee performance reviews regularly. Ensure that you or anyone acting on your company’s behalf adheres to your company’s strict anti-discrimination policy. State-ments from managers and supervisors must be free of any overtones of discrimination. Even just-cause terminations can be jeopardized by discriminatory remarks. ➤ Recommendation: To head off charges of discrimination, periodically review whether your firing policies have a disproportionate impact on certain employees. If an audit of termination practices reveals, for example, that black employees are being discharged at a significantly greater rate than whites, it’s time to make a thorough and immediate examination of your termination criteria. You may want to ask an employment lawyer to conduct the audit to help prevent the audit from being subject to disclosure in subsequent lawsuits. ✔ Use consensus decision-making: One of the best ways to make sure a discharge decision sticks is to adopt a consensus approach to the decision-making. It’s best to include someone from the HR department as well as someone outside the employee’s immediate chain of command. PROGRESSIVE DISCIPLINE The most reliable way to protect yourself from charges of wrongful dismissal is to establish a system of progressive discipline. Having such a structure in place, and making it clear to all supervisors that they are expected to abide by it, is your best defense against a wrongful-dismissal suit. You can ensure that any employee fired because of inferior performance was treated fairly and in accordance with your company’s policies. If you do use progressive discipline, leave yourself an out in case you need to dismiss an employee immediately. Retain the right to dismiss an employee for serious offenses without going through progressive discipline. In addition, make sure your handbook doesn’t give any guarantees that employees will have an opportunity to improve their performance. Case in point: An employee handbook contained language a court interpreted to mean entitled employees to progressive-discipline. The handbook stated the company’s progressive discipline counseling “will provide [the employee] with a reasonable opportunity to make the necessary improvements in order to succeed.” A federal appeals court read that to mean the employee must always have an opportunity to improve. Messinger v. U.S. Bancorp, No. 04-35548 (9th Cir.) CONSTRUCTIVE DISCHARGE Some supervisors try to get around the whole issue of firing by resorting to constructive discharge. Their logic: If we make an employee’s time at work so intolerable, he or she will choose to resign. This is not a wise strategy. For starters, your company becomes vulnerable to charges of discrimination by the targeted employee. After all, he or she was specifically singled out for special treatment—the essence of -discrimination. In such cases, a former employee will allege that the working conditions were so intolerable that a reasonable person would have been forced to resign. In fact, some disgruntled employees may even be advised by plain-tiff’s lawyers to “set up” their bosses so it looks as though conditions were intolerable. The worker then quits in disgust and files a lawsuit that adds a hostile work environment count to the complaint. And the court system is increasingly accepting constructive discharges as the equivalent of a firing, especially if it’s a super-visor who appears to be making life a nightmare for the worker. Take, for example, the sexual harassment case won by a woman who claimed her boss regularly made lewd gestures, suggesting she perform a sexual act. The U.S. Supreme Court concluded the harassment was severe enough to compel her to quit without first going through the company’s internal complaint process. Courts view different kinds of personnel practices with varying degrees of disapproval. Practices that can get you into trouble include the following: improper demotion, improper transfer or failure to transfer, coercion into early retirement, discriminatory pay, and sexual or racial harassment or harassment based on age or disability. To increase your company’s odds of prevailing in a constructive-discharge suit: • You need to educate supervisors about the concept of constructive discharge. Often, supervisors will try to sidestep the unpleasant task of firing an employee outright by forcing him or her to quit. • If an employee is demoted, he should be encouraged to accept the demotion. If you want him out, your best bet is to document his shoddy performance and fire him. If the employee files a complaint, investigate it. Encourage him not to resign until the investigation is completed. • When an employee resigns, have him provide a signed state-ment specifying why he is leaving. Unless he accuses you in the statement of unfair treatment, a court would be unlikely to side with him if he later charges you with constructive discharge.