I’m writing a book on why you must take control of your own work life and how to do so. I’m still coming up with a title, something like “If You’re Not the Lead Sled Dog the View Never Changes”, (hence the title of this blog), or perhaps something more direct like, “Fired! Now What Do I Do?”.
Whatever the eventual title, here is a draft of the first chapter of the book. Hopefully readers will take it to heart and see why working for someone else is not a good strategy. Also, I get many callers who want to sue for wrongful termination, who decry at-will employment as a terrible idea, even offering to pay me to help them fight for legislation that will do away with at-will employment. Herein you will see why I believe that at-will employment is essential to a free marketplace, with examples of what happens when you try to make all employment permanent.
You are NEVER Safe If You Work For Someone Else
Repeat the title of this chapter to yourself over and over like a mantra. Write it down and tape it to your bathroom mirror. Have a subliminal CD made and listen to it while you sleep. Turn it into a screen saver for your computer. If all of that doesn’t work, have it tattooed on your arm (perhaps encircling a nice skull and crossbones).
There are few absolutes in life – this is one of them. If you think you know of an exception, you are wrong. This reality was the raison d’etre for this book. Every week I receive calls from terminated employees who thought they were safe. Thirty-year employees, union workers, family members of the boss, government employees, tenured professors, even people who had started the company – they all thought they were safe. They all found out they were wrong.
You Can be Fired on a Whim
To understand why you can never be safe working for someone else, a short course in employment law is required. Of all the legal concepts that impact the lives of average people, the concept of at-will employment is without a doubt the most misunderstood. Focus on this, because it could be the single most important fact you derive from this book.
A contract is formed when there has been an offer by one party, and an acceptance of the terms of that offer by another party. When you are employed by someone else, you are subject to an employment contract. This is the first concept most people don’t understand. If you ask someone if they have an employment contract, they will invariably say no. Every employee has an employment contract. The contract may not be in writing, but it exists nonetheless. The employer offers to pay a set amount for a given service, and the employee accepts. That is a contract. So, if you are working, first understand that you have a contract.
As with any contract, there are terms to your employment agreement, both express and implied. The employer said you would work eight to five, get an hour off for lunch, have a great dental plan, and would be paid $4,500 per month. Those are “express” terms – those terms that are actually stated in the written or oral contract. The “implied” terms are those that are a natural part of the contract, even if you never discussed them. No contract can cover every possible contingency, so many of the terms must be implied under a reasonableness standard. When you buy a car, there may be no discussion about whether the purchase price includes the tires. Still, you would properly expect that the car will be delivered with tires. In the context of your employment agreement, even though you never discussed them when you were hired, it would be safe to say that the implied terms of the contract include such items as you will not be required to do anything illegal, that you will show up to work wearing clothes, and your employer will not pay you with old Confederate dollars from the Civil War. Like any contract, you and your employer are bound by the terms of the contract, both express and implied.
So, one day you show up at work wearing a fish tie, and your boss fires you for dressing inappropriately. You are of course outraged, because you have received nothing but complements regarding your fish tie, so you run to an attorney screaming “wrongful termination.” But what makes the termination “wrongful?” There is no State or Federal law guaranteeing the right to wear aquatic ties. Assuming the wearing of such ties is not required by your religious beliefs, your only possible cause of action is for breach of the employment contract. Therefore, you and your attorney must first determine what are the terms of your contract regarding termination. So, right now, pull out a piece of paper and write down all the express and implied terms of your employment contract regarding termination.
Your paper is blank, isn’t it? Of all the people that call my office, 95% cannot list any terms of the contract that would prevent the employer from terminating them on a whim. Oh, they will tell me what the contract should say, or what they assumed it said, but rewriting contracts after the fact doesn’t get you very far. They will say, “aren’t they required to at least write me up or warn me or suspend me or something before they can fire me?” Well of course, what was I thinking? It’s the “Duty To Warn Employees” law, located right after the statute requiring police officers to give you at least three warnings before they write you a speeding ticket. No, there is no statute requiring employers to warn employees prior to terminating them. Indeed, the law is exactly the opposite.
Here is the simple rule, and it may challenge your fundamental understanding of employment. If there is no agreement to the contrary, an employer does not need any reason to fire you. You can be fired on the complete whim of your employer. This is called “at-will” employment. Just as you are free to leave a job whenever you please, the employer can fire you whenever he, she or it pleases.
When I explain this to people, I often get stunned silence. It is so contrary to what they believe, they are certain I must be mistaken. For the person’s entire working life, they had proceeded under the assumption that so long as they showed up at work and did a good job, they could not be fired. Having been fired for what they consider a trivial reason, they assumed there would be recourse through the courts. And there I am, taking away that cherished belief.
They will try to argue the point. “How can that be,” they say, “that would mean no one has any job security!” A World War II veteran once said to me, “Unless I went to sleep and woke up in fascist Germany, that can’t be the law — the people wouldn’t stand for it!” He acknowledged that two other attorneys had already told him the same thing, but he was sure we were all just confused. He thanked me and went in search of lawyer number four.
“At-will” employment is the law, and there is sound policy behind it. Imagine if tomorrow a law called the “Employment Security Act” was passed, mandating that employees could only be terminated for good cause. From that point on, virtually every terminated employee would sue, contending that good cause did not exist for the termination. Every termination that was for anything less than murder and/or mayhem would be challenged, with the employee claiming that whatever the basis for the firing, it did not rise to the level of “good cause.”
And what constitutes “good cause”? For example, assume that a company terminated the marketing director because it decided for cost cutting purposes that her duties would now be performed by the office manager. Also assume that the marketing director was the best marketing director in the history of directing marketing. Is the company barred from terminating her, even if it makes economic sense to do so? Must the “good cause” come from the poor performance of the employee, or is the company free to make decisions based on profit considerations? If decisions can be based on profit motives, then our new Employment Security Act is really just an illusion, because employees would still have no control over their own fate. No matter how well an employee performed, he or she would be subject to any new restructuring schemes that came down from above. Conversely, if companies were not free to eliminate positions for restructuring purposes, that would create state-mandated inefficiency.
Change the hypothetical a little. Start with the premise that our Employment Security Act (“ESA”) is unabashedly designed to create a workers’ utopia, where once an employee is hired by a company, he can never be fired unless his own performance mandates termination. In our new utopia, will every possible transgression be defined? Is that even possible?
Let’s use the simple example of employee tardiness. How many times does an employee have to be late before it constitutes sufficient good cause for termination? Three times? Ten Times? If the ESA states that being late ten times justifies termination, does the rule change if some instances of the employee’s tardiness were necessitated by their sick child? If a sick child creates an exception to the ten times tardy rule, will there be some other rule when another spouse is available to deal with the sick child? Does that mean that a single parent has greater rights than a married parent, since the single parent can always be late for a sick child, but the married parent must show that the other parent was not available?
As you can see, there are innumerable scenarios, and what constitutes “good cause” is entirely a matter of opinion. The day that we start protecting employees by requiring good cause for termination is the day that every possible factual scenario will have to be decided by the courts, with every court reaching its own determination, which may or may not be consistent with other courts. Ultimately, businesses would be run by the courts, with every employment decision subject to review. In each case, the court would substitute its judgment for the business owner’s, and make its own determination about the needs of the business. Soon, the costs of terminating people would be so prohibitive that businesses would simply allow poor employees to stay on the payroll. Efficiency would decline, along with the availability of jobs. After all, companies would be loathe to hire new employees and run the risk of adding more deadwood to the payroll.
It’s a simple fact of life – people tend to do the minimum of what is required of them. I call it the “Escalator Principle.” People walk up stairs, but they stand on escalators. Why is that? If you walk up an escalator, you get the best of both worlds. You only have to take a few steps to go up an entire flight, and you get there quicker. But people just stand there, because they know they will still get to the top without expending any further effort.
So it is with “guaranteed employment.” If employees know that there is a substantial barrier standing between them and termination, their performance reflects this knowledge. Pursuant to the Escalator Principle, many will do the minimum that is necessary. The most telling example of this is the former Soviet Union. Under communist dogma, every citizen of the Soviet Union was guaranteed employment. Even to say that the employees did the least of what was expected of them is an overstatement. The system degenerated to farcical levels. It was not uncommon for employees to miss work 100 days out of every year. When they did report for work, they were often intoxicated. One dramatic example involved the airlines. Before the collapse of the Soviet Union, scheduled airline flights sometimes never occurred, and when they did they might take off as much as three days late. After making the passengers wait three days for a flight, the pilots would sometimes make unscheduled landings just to take a nap (although that alternative is better than napping during the flight).
Sweden has also learned this lesson of basic human nature. Governments love affording more and more benefits to employees so long as the cost of those benefits are borne by the employers. In the United States, most employers offer a certain number of paid sick days as an employee benefit. In Sweden, the government decided to mandate that all sick days be paid, with no limitation. Once Swedish workers realized that there was little or no downside for taking sick days, they began taking them for every conceivable reason. At last count, on any given day at least 20 percent of Sweden’s workforce is out “sick”.
The government would have been fine with affording all these sick days to employees so long as the employers were bearing the costs, but it soon realized that the impact to productivity was so great that less money was flowing into the tax coffers, creating a serious deficit. As a result, Sweden recently instituted a campaign to educate workers that “sick means sick” and that sick leave should be used only when the worker is ill. Sweden is trying, through education, to instill the sort of stigma that exists in the United States against abusing sick leave. For now, the Swedes see extensive sick leave as an employee benefit, with little or no stigma attached to taking sick leave for every imaginable reason.
For an example of the Escalator Principal closer to home, spend a little time at any major university of your choosing. Go sit in on a course taught by a tenured professor. Of course, you won’t actually see the tenured professor, because most of their classes are taught by students. After gaining tenure, professors often elect to skip the actual teaching part of their jobs because it interferes far too much with their other scholarly pursuits.
Or if there are no convenient universities around you, go stand in line at the Department of Motor Vehicles. Are you happy with the way you are treated by the government employees? As civil service workers, they are afforded some protection against termination. Do they offer the same prompt, smiling service that you would expect from, say, a clerk at a top department store?
Now, lest I raise the ire of every tenured professor and government employee, there are of course people that are naturally motivated and will do a great job even without the fear of termination. Also, fear of termination is not the only force that motivates employees; rewards for performance can also be a strong motivator. But public policy must reflect the average, not the exception. For that reason, unless your goal is the sort of inefficiency that caused the fall of the Soviet Union and mires most of Europe, you should agree that guaranteed employment is not a wise course.
If you are still not convinced that our fictional Employment Security Act is not a good idea, consider the following. When you decide to quit a job, do you have to ask permission? Sure, as a good employee you probably provide two weeks notice, but are you required to explain why you are quitting, and can the employer force you to stay if the stated reasons for quitting do not constitute good cause? Imagine a world where the employer could say, “No, I don’t think quitting this job to go back to school is a good plan. You can keep working here and go to school at night, so I’m not going to grant you permission to quit.” Of course this sounds absurd, but why do so many employees assume that they are entitled to a protection that is not afforded to the employer? It would be a very one-sided contract if the employee is free to leave on a whim, but the employer cannot terminate the employee.
But even having explained the law and the reasons behind it, I know some readers will refuse to accept what I have stated. They are certain that they have heard something to the contrary, or that their State must be different. Even worse are those that understand the reality of at-will employment, but delude themselves into believing that their employment situation is somehow so unique, that they are exempt.
In fact, since 1991 there has been an ongoing effort to take away some of the sting of the common law concept of at-will employment. A self-proclaimed commission that promotes uniform state laws drafted the Model Employment Termination Act (“META”), which has won some conceptual acceptance in a number of states. Basically, META provides that a full time employee that has been employed by the employer for more than a year can only be terminated for cause.
This sounds good, but in practice META does little to impact the concept of at-will employment. By its terms, “good cause” is defined as any conduct by the employee that does not live up to the company’s standards. Thus, if the company’s handbook states that tardiness will not be tolerated, showing up late even once would be sufficient good cause for termination. Further, the needs of the business also constitute good cause. No matter how good your performance, if the company decides to restructure and in the process eliminates your position, you have no recourse.
Finally, even if the company has no good cause to fire you, under META the company is still free to terminate you without cause, with the only penalty being that it must pay you some severance pay, calculated by the length of time you have been employed there. In other words, META affords no employment protection, but rather provides only a little money to help cover expenses while you look for another job. Further, that limited protection only kicks in if the employer concedes that you are being terminated without cause. More likely, the employer will take a few weeks to document your poor performance before terminating you so that you can be terminated with cause with no severance pay.
Aside from affording no real protection, META is a bad idea from a free market standpoint. No law can exist completely independent of market forces, so any attempt to create “guaranteed employment” will be frustrated by the inefficiencies such a system creates. Spain has been trying to swim against the tide of market realities since 1978, with disastrous results.
When Spain moved to democracy in 1978, it tried to maintain some of the worker protections instituted under Franco. Just as with META, Spanish law provided that an employee could be terminated only for the worker’s own incompetence or for the company’s own economic needs. In all cases a dismissed employee would receive a severance payment, but the amount of that payment was determined by whether the termination was “fair” or “unfair”. That determination was made by special labor courts, and the burden was on the employer to prove the reason for the termination.
If the court decided that an employee was terminated for a “fair” reason, or for an approved company need, the employee would receive 20 days of pay for each year of seniority, up to 12 months. However, the courts far more frequently found that the employee had been fired for “unfair” reasons, and awarded the higher set rate of 45 days of pay for every year of work, up to 42 months. Thus, as a practical matter, to fire an employee that had worked for eight years, the company had to pay that employee a year’s wages.
The results were predictable. The system afforded a nice safety net to working employees, but companies were reluctant to hire any new employees when the costs of dismissal were so high. As a result, unemployment soared and within six years Spain was looking for a way to reverse the trend. In 1984 it instituted a temporary worker system, whereby employers could hire employees on a temporary basis and only face 12 days per year of severance if that employee was terminated. Soon, 95% of all employees were being hired as “temps” in order to minimize the high cost of dismissal. But that created its own problem. An employee could only be hired on a temporary basis for three consecutive years. Thus, the artificially imposed high cost of termination had effectively destroyed long term employment. Only ten percent of the temporary employees were offered permanent employment. Worse, the scheme did nothing to stem the unemployment rate, because so many temporary employees were being dumped back into the market.
Back to the drawing board. Incredibly, major trade unions in Spain lobbied for reductions in these worker protections because they recognized they were only serving to hurt workers. In 1994, the government slashed the severance rates and payroll taxes and offered other incentives to encourage employers to hire employees on a permanent basis. However, Spain could not resist the urge to engage in some additional social engineering, so different incentives were afforded for different classes of worker. Employers received greater benefits if they hired women or members of certain age groups.
Spain has continued to tweak its employment laws, but the limited protections are still taking a high toll. The dismissal costs along with the many benefits heaped on Spanish workers by the government have forced employers and employees to find ways to circumvent the law. They call it the economia sumergida – the underground economy. It is estimated that one-fifth of the Spanish workforce is working “off the books” and that one-third of those listed as unemployed and receiving benefits are employed in this underground economy. The efforts to give employees more has resulted in them receiving far less.
Workers in France are also suffering the same fate. France is perhaps the quintessential example of the heavy price that must be paid when market realities are ignored. Like some other European countries, France long ago passed laws that it thought would protect its workers. These laws included provisions requiring good cause to terminate any employee. As is always the case, these laws have created rampant unemployment. The cost of hiring new employees is just too high, given the risk that they will become unremovable deadweight.
France responded with a new law designed to force employers to hire more people. With the sweep of a pen, it was declared that the maximum work week would be reduced from 39 hours to 35. French legislators reasoned that if companies needed 39 hours worth of work performed by an employee, but were limited to only 35, they would be forced to hire new employees to work those hours; eight workers would be required to do the work formerly performed by seven.
The law was based on a false premise, assuming that work dictates a fixed number of hours. The plan met with some limited success at large companies, but small businesses, the backbone of every economy, compensated by limiting their hours, making the employees work harder, and/or cutting their production. The unemployment numbers remained overwhelming, especially among younger workers who were just entering the workforce. You can easily imagine the reluctance of an employer to take a chance on a young person with no work history, knowing that once hired, the company could well be stuck with that person forever.
In March 2006, France was forced to reverse its position on guaranteed employment. It began with a modest change, hoping to eliminate the policy step by step without crating a revolution. Under the new law, employers could dismiss workers under the age of 26 without cause during their first two years on the job. The provision made infinite sense – it would allow employers to hire young, unproven workers and give them two years to prove themselves – but the Socialist Party would not agree and led the call for nationwide strikes in protest. The idea of guaranteed employment has become so entrenched in the French psyche, that those with jobs are willing to sacrifice those without jobs in order to maintain the status quo. France will likely limp along with a crippled economy for generations to come, all in the name of what is perceived to be workers’ rights.
So give it up. Any effort to create a worker’s utopia will run afoul of market forces. You cannot rely on the government to protect your job. Even if your state adopts META or some other law designed to minimize the impact of at-will employment, the realities of the marketplace and the need for at-will employment will control your destiny.
Still, I know some of you will not be able to let go. The idea that an employer must have a reason to terminate an employee is too ingrained, or you think your situation is somehow unique. For those of you who still refuse to believe the reality of at-will employment, let me give some real life examples.
The Case of the Smoking Employee
Maria wanted to stop smoking, but smoking seemed to provide the only release from her hectic life. To anyone that gave her grief about her smoking, she would simply say, “I can smoke or use drugs, and as vices go, I guess I’d rather smoke.”
Maria worked in an office building where smoking was not permitted, so she could only smoke on her breaks and had to leave the building to do so. Most of her fellow smokers would congregate around the back door to smoke their cigarettes, but Maria preferred to sit in her car and listen to music on the car radio during her 15 minute breaks. One day, as she had done dozens of times before, Maria was sitting in her car smoking a cigarette during a proper break. This time, however, the owner of the business happened to look out the window and saw Maria smoking in her car. For some crazy reason, and with no basis for jumping to such an absurd conclusion, the employer decided that Maria was smoking marijuana, and fired her the moment she returned from her break.
A clear case of “wrongful termination,” correct? After all, Maria did absolutely nothing wrong, and there was no reason for the employer to fire her. That was what Maria and her attorneys thought, and at the subsequent trial, Maria proved beyond dispute that she had not been smoking marijuana, and therefore should not have been fired. The jury agreed and awarded her almost a year’s worth of wages as damages.
But that was not the final word. Although the jury found in her favor, the California Court of Appeal reversed the verdict, and she ended up with nothing. Why? Again, you must think in terms of the at-will rule. If an employer can fire you for no reason, then what difference does it make if the employer makes a mistake, or for that matter, simply makes up a reason? People have a real problem with this concept, because their logic is clouded by a concept of fairness. It seems horribly unfair that Maria was terminated for something she didn’t do, but even if that is proven to be the case, the employer can just say, “so sorry we were wrong about that marijuana thing, but now you’re fired because we don’t like the way you comb your hair.” The appeal court held that whether Maria was using marijuana or not was of no importance. Maria could be fired at the will of the employer, even if the reasons were based on a misunderstanding.
Nobody Likes a Snitch
Ron loved music, and could not believe his good fortune when he landed a job at a record company. It was an entry level job, but the “benefits” included meeting some of his favorite musicians, and even occasionally having lunch with them when they would take a break during a recording session.
To promote the company’s music and artists, company employees in charge of promotion could simply sign out a hundred CDs or so and give them away to radio stations and record stores in order to promote new albums. Ron happened to notice that his supervisor was always helping himself to large quantities of CDs, but never seemed to use them for promotions. He soon found out why. It turned out that Ron’s supervisor was making extra money by selling the promotional copies to record stores.
Ron didn’t know what to do. He did not want to report his supervisor, and for all he knew, this might be an unofficial perk. He eventually decided, however, that if this was illegal activity and he failed to report it, he would be viewed as an accomplice. So, without making a big deal of it, he mentioned to his supervisor’s boss what was occurring.
It turned out that this practice was highly improper, and Ron’s supervisor was immediately fired. And after thanking Ron for bringing this matter to the attention of the company, Ron was also fired. It was explained to Ron that while he had done the right thing, he had rendered himself unemployable. With his demonstrated lack of loyalty to his supervisor, no other supervisor would want to work with him. He was told that “nobody likes a snitch.”
Ron cried “wrongful termination,” and went in search of an attorney. Under the at-will rule, an employer can fire an employee for no reason, but not for a reason that violates public policy. For example, an employer cannot fire someone on the basis of race, because that would violate the public policy against discrimination. Similarly, there is a “whistle-blower” exception that holds that it is against public policy to fire an employee for reporting wrongdoing to a regulatory agency. If employees could be fired, for example, for reporting a safety violation, then employees would be far less likely to report such violations.
So, Ron found an attorney that was willing to pursue his case under the whistle-blower exception to the at-will rule. Years later and after spending a large amount of money on court costs, Ron’s case against the music company failed. Do you need to hear it again? Absent a contract to the contrary, the employer can fire you for any reason whatsoever, or for no reason at all. If the employer wants to fire you for ratting on your boss, that is perfectly legal. The court held that Ron’s case did not fall within the whistle-blower exception. The whistle-blower exception is designed to keep employers from retaliating against employees that report illegal conduct. For example, if an aircraft mechanic knows that the company is lying to the FAA about repairs, we as a society want him to feel free to report that fact without fear that he will be terminated as a result.
At one time the courts required that the employee be an actual whistle-blower. In other words, the case would be dismissed unless the employee could show that he was terminated only after he had reported the wrongful conduct to some regulatory agency. That rule has been modified somewhat, and now a case will survive if the employee can show that he was terminated because the company believed the employee was about to report the wrongful conduct. But in Ron’s case, neither rule would provide him relief. The company was not doing anything illegal; the company was the victim. There is no public policy designed to encourage employees to report internal squabbles, so the termination was not a violation of public policy. The court held that Ron was not entitled to any protection for report a theft within the company.
The Freedom to Speak Your Mind
“It’s a hobby. Some people like to play instruments, I like to write.” That is how Sharon explained her passion for publishing her blog on the Internet. In the olden days (about five years ago) people were content to write their daily musings in a personal journal, seen by no one except close friends and trespassers. With the advent of the Internet, there has inexplicably come the desire to publish even the most mundane thoughts for all the world to see.
In Sharon’s case, her weblog, commonly known as a “blog”, was a daily report of her life, which included what was going on at work. It was not at all mean spirited, but if she felt someone had acted unfairly at work, she might elect to report that fact in her blog. Even then, however, in order to avoid embarrassing the people she discussed, she never mentioned anyone by name.
It didn’t take too long until word of her blog spread through her workplace, and it took even less time for one of her supervisors to take offense at something Sharon had written. When Sharon showed up for work the next day, she was fired on the spot.
“Now wait a second,” you say, “that is a violation of her First Amendment right to free speech.” An employer does not need a reason to fire an employee, but the reason cannot violate public policy. Surely this violates her right to free speech, the most fundamental and sacrosanct of all public policies in America. Not only that, but Sharon was fired for something she was doing on her own time. That can’t possibly be legal, right?
We’ll take them in turn. Since Sharon was just speaking her mind, was her termination a violation of her right to free speech? The First Amendment states that “Congress shall make no law . . . abridging the freedom of speech.” Contrary to another popularly held misconception, the right to free speech only protects you from intrusion by the government, not by individuals or companies. The First Amendment does not prevent a private employer from limiting what you can say. Sorry Sharon, you do not have the right to say what you want about your employer.
How about the fact that Sharon did this on her own time? Can an employer seek to control what an employee does on his or her own time? Most employees will scream, “what I do on my own time is my own business”, but that is not true. To use an extreme example to illustrate the point, assume that an employer found out that one of its employees was burglarizing homes on the weekend. Few would argue that the employer is somehow required to keep a burglar on the payroll. (Some will cry “innocent until proven guilty”, but again, only the government must treat you as innocent until proven guilty.) It is not in and of itself a violation of public policy to fire someone for what they do on their own time.
The issue of whether an employer can dictate what an employee does on his own time recently made big news when a large company announced that it would terminate any employees that tested positive for tobacco use. In other words, smoke at work, smoke at home, smoke anywhere and you lose your job. The vast majority of water cooler lawyers opined that the courts would shoot this down as a complete infringement of personal privacy and freedom, but they were wrong. Since an employer can fire you for any reason that does not violate public policy, that includes things you do off duty, including smoking, eating fatty foods or listening to Kenny G (which most people would consider just cause in any event).
The only time an employer cannot fire an employee for what he does on his own time is when such a limitation would itself create a violation of public policy. For example, terminating an employee because he voted on his own time is a violation of public policy because that would be an interference with the right to vote. There are also specific statutory protections for what you do on your own time. For instance, if you decide to contact other employees about forming a labor union, that is a protected activity and cannot result in your termination even though the employer may be opposed to formation of a union. However, absent a statute or a public policy, your employer can absolutely fire you for things you do on your own time. If your employer finds it strange that you collect salt and pepper shakers, the axe can fall.
In Sharon’s case, there was no protection for the musings in her blog. Posting negative comments about her employer was not deemed to be such a fundamental right that the termination violated public policy.
The Unwitting Thief
David was a dream employee. A salesman for a manufacturer, his sales always far exceeded projections. His loyalty to the company was manifest – he had worked there for 30 years – even though the company did little to earn such loyalty. For example, the company continually reduced his sales area, knowing that David would somehow find a way to wring more sales out of whatever area was left to him.
One sales technique David had used very successfully was to conduct motivational presentations at the retailers that sold his company’s product. He would work the salespeople at the stores into a selling frenzy, resulting in more sales by them and more orders for him.
One day he gave one of his presentations to the sales force of his major client — a client that represented 80% of his sales. The presentation was a big success, and while the sales people were still applauding, he scooped up all his notes and materials and put them in his briefcase. What he did not know was that he had inadvertently picked up some paperwork belonging to the customer. The documents regarded about $30 in repairs that the retailer had made to some of the products, and for which the retailer was entitled to reimbursement by David’s company.
This “theft” was witnessed by some fresh out of high school, “Third-Assistant-Night-Manager” who decided that the salesman had intentionally taken the documents in order to save his company the $30. No doubt he was sure that if he reported the foul deed, he would get a raise, and thereby be able to afford more pimple cream.
Later that day the salesman discovered the documents in his briefcase, and immediately called the customer to say he was sorry, and that he would bring them right over. It was then he got the shock of his life. He was informed that the customer had already called David’s manager and asked that he be replaced. The customer didn’t feel David could be trusted anymore. More shocking, without any hearing, or even discussing the matter with David, the boss had agreed. The customer was such a major account, that the boss did not dare say no. He had already assigned the account to another salesperson, who coincidentally worked under a much lower commission schedule than David. So, for accidentally picking up some documents, David was stripped of nearly $100,000 per year in income, without any warning, hearing, or even a chance to tell his side of the story.
Obviously, David could sue, right? Well, let’s consider that for a moment. Who would he sue; his employer? Let’s all say it together. The employer did not need a reason to fire him, so it certainly did not need a reason to remove him from an account. And, indeed, even if David could show that due to his longevity with the company, there existed an implied agreement that he could only be “demoted” for cause, arguably the employer had cause. David had taken the customer’s documents, albeit inadvertently, resulting in a very angry customer. If the employer refused to replace him on the account, it ran the risk of losing the account. If you believe the law requires a company to forgo millions of dollars in orders out of loyalty to an employee, you really do have a skewed view.
How about suing the company that insisted he be replaced? Again, he did take the documents, and there is no law that says someone must work with a salesperson they no longer trust, no matter how groundless that distrust may be.
David went attorney shopping, and while several were willing to represent him on an hourly basis, the fact that none would handle the case for a percentage of the judgment properly indicated to David that they were not confident of the result. He eventually opted to go into early semi-retirement, working as a consultant for one-fifth of his prior income. He left the company he had worked thirty years for with nothing – not even a retirement party or gold watch.
The Entertaining Partner
Jeff was a lawyer and the quintessential shmoozer. He had a way to immediately ingratiate himself with people and soon learned that this was a useful attribute in the entertainment industry. He devoted his legal practice to entertainment law, drafting and negotiating contracts for actors and other entertainers. He had the good sense to start his own firm rather than working for others, and had little difficulty retaining support staff because they enjoyed rubbing elbows with celebrities.
Jeff soon found, however, that his legal practice had a problem. His clients would come to him with a number of matters that did not relate to entertainment law. A client might, for example, need an attorney to look over the contract for a boat purchase, or help to resolve a dispute over a property line. Jeff was tops in his field when it came to entertainment law, but he did not feel like he was the best choice for other areas of the law. He hated having to send his clients to other firms and wanted to be a full service firm.
To that end, Jeff decided to start a partnership. He recruited top attorneys from other firms to fill in the practice areas missing from his own practice. At first, he contributed the lion’s share to the partnership’s bottom line because the other partners did not bring as much business with them as had been hoped. He made much less than he had been making when he was on his own since his income went into the pot to be divided with the other partners, but he anticipated that he would make more as the other partners brought in more clients.
His prediction was correct. The business began to thrive and his income soon caught up to its prior level. In fact, forming the partnership seemed to be very fortuitous for Jeff, because his own client base decreased as it became chic for actors to hire bigger and bigger firms.
However, although his partners had been perfectly willing to share Jeff’s income when they were slow, they were not willing to do the reverse. Jeff was surprised when he was called into the conference room and found all his partners sitting around the table. It was announced that he was being removed from the partnership due to the decline in his contribution to the firm’s income. Sadly, Jeff had drafted the partnership agreement to make it easy to remove a partner since he was worried that he might end up with come dead weight. That partnership agreement was now being used against him. Jeff received a small amount for his interest in the firm, and found himself on the street, having to start all over again.
Although Jeff was not an employee in the classic sense, he lost his security when he began working for someone else, in this case, the partnership. Although he later worked himself back in, even Steve Jobs, who had created Apple, was kicked out of the company.
The Only Way to Control Your Own Fate is to Work For Yourself
All things being equal though, it is far better to control your own fate than to hold out the hope that if you are fired, you might be able to do something about it. The point of all this is that you must divest yourself of the notion that fairness will carry the day. For every successful wrongful termination suit you hear about, there are hundreds that never see the light of day. Forget about “fairness” – it does not enter the equation.
Despite my best efforts, some clients can never be made to understand this. A woman called me who had only been working for a short time at a very small company. One day, she was replacing the toner in the fax machine, when a supervisor approached her and asked her to come with her immediately to go do something. She was in a quandary, because another supervisor had told her to immediately replace the toner before another fax came in. She started to explain that she would be just a minute, but the supervisor cut her off and said, “Come with me now!” She quite reasonably believed that if the supervisor understood that the toner had to be replaced so that no more blank faxes were received, she would understand having to wait for a few seconds. So, she started to explain again. The supervisor, who was obviously suffering from a serious God complex, responded by firing her on the spot for insubordination.
She brought me the employee handbook, which as is normally the case these days, started with a statement explaining that the employee was an at-will employee, and could be fired without any cause whatsoever. Of course, the statement had been signed by the employee at the time she was hired. So, there was no basis for breach of contract.
How about a violation of public policy? Had she been fired because of her gender, age, race, etc.? No. In fact, she said she had never really thought about it before, but almost every one at the company was a woman, the same race and about the same age as her. So, there was no basis for discrimination or other violation of public policy and hence, no case.
She could not, would not believe it. Through her tears she said over and over, “But it’s just not fair – how can they do that? – it’s just not fair.” Of course it’s not fair! But to paraphrase a popular song, what’s fairness got to do with it? Fairness is only relevant to show that the termination was a pretext to conceal the real reason for the termination, for example, discrimination. This is another point that people have difficultly understanding. They will say to me, “Well, if it is true (they still don’t believe me) that an employer can fire you for no reason, or can even make up a reason, then how do you ever prove that they were discriminating? They can just say whatever they want!” Yes, they can say whatever they want, but we don’t have to believe them. Consider this sexual harassment case my firm handled.
Put Out or Get Out
Our client was a middle manager at a company, in a position that involved a great deal of contact with the company’s customers. She had worked there ten years and had a file folder full of thank you letters from satisfied customers. She had always enjoyed glowing performance reviews. When her immediate supervisor was replaced, she continued to receive praise from her new boss, until one day when he made a pass at her and was rebuffed. Things turned instantly cold. In stark contrast to the one formal review he had given her, now it was as though she was the most incompetent manager imaginable. He put her on a 30-day action plan, but her performance was so bad (according to him) that he did not let her finish out the 30 days. After ten years of exemplary performance, our client was fired just three weeks after she rejected her supervisor’s advances.
We are very selective about the discrimination claims we undertake, but this was one of the clearest cases of what is called quid pro quo sexual harassment we had ever seen.
At the supervisor’s deposition we asked if he had ever received any complaints from customers about our client. He answered that he had received “thousands” of complaints. Most attorneys would feel compelled to follow up on such an outrageous statement, but we quickly moved on, hoping to let this incredible answer remain unexplained.
At trial, we called the supervisor as our first witness, even before our own client. We wanted the jury to see immediately that the supervisor had absolutely no credibility, and could offer no plausible explanation for the termination. If he changed his “thousands” answer he would look like he was trying to sandbag the plaintiff at the deposition, and if he stuck to that answer he would look like a fool.
He stuck to his answer, and claimed that in the six months that our client had worked for him, he had received “thousands” of customer complaints. So, we took him through the math. “Thousands” plural has to mean more than one thousand, so we were talking about at least two thousand. Considering days off for weekends and holidays, our client only worked 132 days during that six months. Thus, receiving thousands of complaints for 132 days meant that the supervisor had received more than 15 customer complaints about our client per day. He was obviously a saint to keep her on as long as he did. But could he produce a single document, whether an internal memo or a letter from a customer that would tend to show this incredible number of complaints? No. Keeping in mind that every customer is given an evaluation form to complete, could he produce even one customer complaint? No.
The final nail in the coffin for the defendants was what should have been an innocent internal memo. A meeting had been held to discuss company business, and minutes were taken. Our client had kept a copy of the memo because it said, “Thanks to [our client] for the great job she did on the Smith project.” When we subpoenaed the defendants’ records they produced this document, but in their desire to make certain they did not produce a single document that said anything positive about our client, they had altered this document to eliminate this slight praise. We showed the altered document to the jury, and watched the blood drain from opposing counsel’s face. Between the “thousands” remark and this altered document, nothing the defendants said during this trial would be believed. Opposing counsel approached the bench and requested a recess “to revisit the possibility of settlement.” Our client was thrilled with the substantial settlement amount.
That is how you prove a wrongful termination case, and it illustrates the basis for a claim. I offer this example because so many people believe the at-will rule must not be controlling because they have heard about so many successful actions by employees. They surmise that there must be a way around the rule. In the above example, our client had a case not because she had been fired without cause; the company was permitted by law to fire her without cause. Our client had a case because she was fired for discriminatory reasons – because she was a woman that would not respond to her boss’ sexual advances.
Every boss has a God-given right to be a jerk.
Which leads to another source of misunderstanding. Much of the public’s confusion about wrongful termination suits comes from hearing the buzz words without the benefit of understanding the underlying policies and statutes. A good example of this is sexual harassment. I receive calls every week from employees that want to sue their employers for “harassment.” They assume there must be such a cause of action because they have heard about all the sexual harassment suits. In reality, there is no such thing as an harassment suit, if by that you mean only that the boss is “harassing” you.
For example, assume that boss goes to a management seminar next week entitled “Management through Intimidation.” He is all charged up from what he learns, and immediately upon his return he institutes a new policy whereby at the beginning of each day he calls you into his office and for five minutes screams epithets at you, explaining that you are dumber than a bag of hammers and should thank God every day that he is willing to employ your worthless butt. Would this horrible new policy create a cause of action for “harassment” against your employer? Absolutely not, because there is no such cause of action. Sexual harassment is only actionable because it is a form of gender discrimination. So long as he is not berating you on the basis of gender, race, religion, etc., there is no discrimination and hence no action.
Sexual harassment is a form of gender discrimination because the woman that is subject to the sexual advances is being treated differently than the male employees. In other words, if a male boss is making a female employee’s working environment intolerable because he is attracted to her, then that is a form of gender discrimination because, presumably, he would not act the same way toward a male employee. The same is true with any variation of genders and sexual preferences, and even if the harassment does not have a sexual component. If an employee is harassed because of his or her gender, that is a form of discrimination and is actionable on that basis.
One fun aspect of the law is that if you wait long enough, just about every conceivable fact patten will arise. If sexual harassment is actionable because it treats one gender differently than the other, what happens if a bisexual is dong the harassing? That precise situation arose in a California case. In a reported case, a court found that a supervisor’s constant come-ons to female employees did not constitute sexual harassment because he was bisexual and treated the male employees in the same obnoxious way.
Discrimination is Good.
Even when a caller to my office understands that a suit must be based on some sort of discrimination, there is often confusion about what constitutes actionable discrimination. Typically the caller believes that it is enough to show that he or she is being treated differently than other employees. People have been so conditioned to think that discrimination is bad that they are sure that just showing discrimination is enough to win a case.
Time to burst another cherished belief. Discrimination is good and necessary. We all practice discrimination from morning to night. You live where you live because you “discriminated” against other areas, you work where you work because you “discriminated” against other professions and employers, and if you are married, you (hopefully) “discriminated” against the rest of the world when you chose your spouse. You discriminate in choosing your friends, religion, beliefs, the car you drive and the television shows you watch.
In the employment context, the very act of being hired is an exercise in discrimination. You were hired to the exclusion of all of the other candidates that applied for your position. Can they all sue because they were treated differently than you? Of course not, so long as the discrimination was not contrary to law. But this seemingly obvious point is forgotten in the workplace.
Your boss does not need to treat all employees the same, and can promote a coworker to your exclusion even if you are far more qualified. Yes, an employer can promote someone for no other reason than they like that person more than the other employees. This is a fine distinction that most find difficult to understand.
I receive calls every week from people that are frustrated that a new “teacher’s pet” is moving up through the ranks, seemingly without justification. The caller will tell me that their boss immediately took a liking to the new employee, and frequently goes to lunch with him or her even though the boss never took the caller to lunch. Now, the employee has been promoted with just six months of experience, even though the caller has worked at the company for five years and has always received glowing reviews. Frequently the promoted person is related to the boss, and the caller feels that the promotion is the result of nepotism and is therefore illegal discrimination.
To be illegal, the discrimination must be against a protected class of people. If the boss promotes someone who is far less qualified than you out of friendship, that is completely permissible, but if the boss preferred that person because of their race, age, gender, etc., that is impermissible discrimination.
Why Can’t We be Friends?
Janet had been out of the workplace for some time, raising two children. When her kids entered high school, she decided being the stay at home mom was not as important. She thought she might have some problems reentering the workforce at age 45 and with somewhat stale skills, but her fears proved unfounded. She quickly found a job as an executive assistant.
For some reason, Janet never hit it off with her new boss. There was nothing wrong with their relationship – is was professional and cordial – but they certainly never socialized. Still, they worked well together and after working there three years Janet started assuming she was in line to get her boss’ job if she ever left or advanced.
Then along came Barbara. Barbara was hired as a secretary, and for some reason she and Janet’s supervisor soon became close friends. They went to lunch together more often than not, and their families would sometimes do things together on the weekends.
When Janet’s supervisor was promoted, she was permitted to choose her own successor. Janet and Barbara both applied for the position. Janet had far more experience, having performed most of the job duties, even filling in during vacations. But Barbara got the job for no other reason than she was a close friend.
A clear case of discrimination – choosing the less qualified candidate just because you like them more. Could Janet sue for discrimination? She could, but she would lose. Barbara and Janet were the same race and approximate age. There was simply no basis for claiming unlawful discrimination, and there was no agreement, express or implied, that said the company had to promote the most experienced person. The case was entirely unfair and completely discriminatory, but it was not unlawful.
An employer is not required to treat you fairly or impartially.
To keep your life and career on the right path, you must divest yourself of the belief that an employer is somehow required to treat you fairly. As Janet learned, your boss may simply decide that they don’t like you, and that is a perfectly legal basis for deciding whether to keep you or promote you.
Yes, that is discrimination and it is very unfair. Get over it. For discrimination to be actionable, it must be against what is referred to as a “protected class.” As a society, we have quite appropriately decided that it is a bad thing to discriminate against someone solely on the basis of certain attributes. Under federal law (Title 12), those attributes are defined as “race, creed, color, sex, sexual orientation, gender variance, genetic characteristics, marital status, religion, national origin, ancestry, age, or mental or physical disability.” These are the protected classes. An employer cannot discriminate against a member of a protected class absent some compelling reason. The last two categories – mental and physical disability – have a different standard. It is discriminatory not to hire a member of these protected classes if they can perform the job with “reasonable accommodation”. If the job cannot be performed even with reasonable accommodation, then discrimination on that basis is permitted.
Now you know all the protected classes. If you are going to claim discrimination, the discrimination must be because you were a member of a protected class, not simply because you were treated differently. I spend a good part of every day explaining to callers that if the only basis for their case is that they were treated unfairly, then they have no case. Further, just because you are a member of a protected class, that does not automatically mean you were discriminated against on that basis.
Admittedly, sometimes this is a fine distinction. While it is true that it is perfectly legal for your boss to promote someone else simply because that person is a friend, if the boss’ choice of friends is based on gender, for example, then that would be illegal because the result is that you are indirectly being excluded because of the boss’ own bias.
One of my favorite examples of non-actionable discrimination came from a caller to my office. Phil had shown up for a job interview as a locksmith dressed nicely in a long sleeve shirt and tie. He had great qualifications and was hired on the spot. Having landed the job, when he reported to work for his first day he fell back to his usual attire, consisting of a ratty t-shirt which permitted prominent display of his demonic tattoos from shoulder to wrist.
His employer explained that this simply would not do because they deal with residential customers that are entrusting their home security to this company, and might be put off by what appears to be someone straight from prison. The employer told Phil that he would need to wear long sleeve shirts if he wanted to work there. Phil saw this as an unacceptable affront to his right of expression, and refused to honor the company dress code. He was fired as quickly as he had been hired.
Phil called me, wanting to bring immediate legal action. Now, hopefully, you would be equipped at this point to explain to Phil his legal rights. If you look at the list of protected classes set forth above, you will see that there is no class entitled “persons who have demonic tattoos on their arms.” Phil was not a member of a protected class, and even if he was the discrimination was not on that basis. I explained this to Phil, and he responded with one of the greatest lines of all time. He said, “I happen to know that it is illegal to discriminate against someone based on the color of their skin.”
Being a Member of a Protected Class Does not Mean You Suffered Discrimination
My office was spending so much time explaining at-will employment to callers that I decided it would be far more efficient to create a website explaining at-will employment. Now, when someone calls wanting to talk to an attorney about being fired, my receptionist asks, “Were you an at-will employee?” Often as not, the caller will say something like, “what is that” or “no, I worked full time.” With that indication that the caller does not understand what at-will employment is, she sends them to the website, with instructions to see if they can spot any public policy that would make this termination wrongful.
Twenty minutes later the caller calls back and says, “I found the public policy violation. I’m black” (or whatever other protected class to which they belong).
“What was done that leads you to believe you were fired because you are black?”, I ask.
“Yes, but I assume you were black when they hired you, correct?”
“So what changed that they would suddenly not want the person they had previously hired?”
And so it goes.
The employee may well have been fired because he is black, but in order to proceed with a wrongful termination action based on discrimination, we need PROOF of that discrimination. He might explain, for example, that he had never experienced any discrimination until a new supervisor was brought in who was obviously racist based on his comments and the fact that he had already fired the only other African-American. That would start to form the basis of a potential claim.
The law is sometimes slow to catch up to reality, but eventually it gets there. For example, doesn’t it just make common sense that if you are fired a month after you were hired, that the termination was probably not based on your race or gender? Initially, the courts ignored this basic reality, but then it occurred to them that if you were a minority when you were hired, how can it be said that the employer discriminated against you on the basis of race? The courts now take that fact into account, and if the plaintiff is claiming discrimination, they had better be able to explain how this discrimination sprang from a company that just hired that person.
Similarly, there must be a pattern of discrimination. There is this feeling among some that any acknowledgment of race is an act of discrimination. In one case a caller was fired for wrecking a company vehicle, but said that his termination was based on discrimination due to the fact that he was Hispanic. I have over the years learned to cut to the chase of the available evidence, so I set up the following test.
“OK Mr. Munoz, I want you to picture that I have taken your case and that it has gone all the way to trial, and you are sitting in the witness stand. The judge and jury are hanging on your every word. Give me the STRONGEST evidence of discrimination you have; the example that is going to make the jury gasp and know that you were fired because you are Hispanic.”
“Well, I worked there for almost six years, and about two years after I had been hired, we were all taking a lunch break on the rear loading dock. I had picked up a Wendy’s burger for lunch, and when the supervisor saw me eating the burger he said, ‘A burger? I thought you only ate burritos.’”
Although a tacky, stereotyping remark, this is not evidence of discrimination. Under the law, it is called a “stray remark” and will not support a claim for discrimination, absent dozens of such remarks. The misconception is that any acknowledgment of race is somehow racist, when it is really just an observation of a trait.
If a worker had a wild hairstyle, and his coworkers were constantly making jokes about it, would that somehow be evidence of hair discrimination? If a worker was wild about horses, with pictures of horses and riding trophies displayed in her cubicle, it is probably a save bet that people will make comments to her about horses. Is that somehow horse discrimination? If someone was into bodybuilding and others made comments about how he must eat a lot of protein, is that a slam on this lifestyle? So if someone comments on a worker’s race or nationality, that should not automatically be taken as discriminatory.
Other Ways to Rationalize Working for Someone Else
I would venture to guess that even after all of these real-life examples, some readers are still dismissing the at-will employment rule, and still believing that fairness will carry the day. Others are already formulating other ways to justify leaving an employer in control of your destiny. Such as, “But I’m a super-star with my company; even if the company can legally fire me on a whim, it wouldn’t make sense to do so.” Are you forgetting the mantra already? You are NEVER safe if you work for someone else. Maybe it’s time for that tattoo.
It would seem to make perfect sense that if you are making your company a lot of money, the company has little motivation to fire you. The logic of this argument is sound, but the reality is otherwise. It fails to take into account the very simple fact that people and companies do not always act rationally.
Recently, a mortgage broker came to me after he was terminated. This company had 200 people who wrote mortgage loans, and out of all of them he was number three in terms of commissions. He was earning almost $300,000 per year, and was being groomed to take over as manager of the sales division some day. His stellar sales abilities were earning the company millions of dollars per year. Although he was number three, it was a close three-way race between him and numbers one and two, and number four was not even in the same league. Now here is a person that enjoyed strong job security, correct? After all, terminating him would mean a loss of millions of dollars to the company.
He made the mistake of picking a very bad day to run some errands before going into work. By the time he arrived, barricades had been placed around his desk as though it were a crime scene. As it turned out, there had been a palace coup. Numbers one and two had resigned that morning, and a number of the support staff members had left with them to start a competing business. When number three was also missing, it had been assumed he was a part of the cabal.
The company unceremoniously terminated him on the spot. The CEO of the company viewed the sales team as a cancer that needed to be cut from the staff. His protests that he had nothing to do with the departures were to no avail. The CEO explained that even if that was true, he had been too close to the “traitors.”
This is not an isolated case. I see cases like this every week. You see, a rational person might never terminate an employee that is earning him millions of dollars, but a corporation is different. There may be no one in the hierarchy that ever takes into account the economic ramifications of a termination. In this case, the CEO with a huge ego just wanted to slash and burn in order to send a message to all the remaining employees that lack of loyalty would not be tolerated. His emotions were more powerful than his concern for company profits. In other cases, it is a human resources person that decides to terminate an employee, with no clue whether that person is important to the company’s bottom line.