1.6 Wrongful Discharge and Related Tort Claims

In addition to the exceptions to the at-will doctrine discussed in the previous section, employees may claim wrongful termination through tort claims or constructive discharge.

Claims of Wrongful Discharge

Constructive discharge exists when an employer allows intolerable conditions of unfairness or mistreatment to exist at work to such a degree that any reasonable employee would feel he or she had no other option but to quit. These conditions could include, among other things, sexual or other harassment, failure to accommodate a disability, or excessive pressure to retire.

Another claim by an employee for wrongful discharge could be the tort of intentional interference with a contract. This claim, which is limited in its recognition, exists when a third party, perhaps a coworker or client, pressures the employer to terminate an employee without cause. The idea is that, while the employment relationship is not expressly contractual, the meddling of the third party in an otherwise healthy employer/employee relationship has the same effect as interference with a contract.

About half the states recognize that if an employer terminates an employee in an intentionally reckless or outrageous manner such that it causes serious emotional and psychological damage, the fired employee may have a claim for wrongful termination based on the theory of intentional infliction of emotional distress.

Additionally, employers must be careful that in the termination process an employee is not defamed. In the Noonan v. Staples, Inc. case, Noonan’s termination for padding his expense account was announced by way of company email to 1,500 Staples employees. A Massachusetts court found Staples guilty of defamation of character because the email was sent with malice. The court inferred malice because Staples had never previously disclosed a fired employee’s name to employees and had sent no memos about the reason other employees had been terminated. In addition, most employees of Staples did not travel and had no need to be reminded of the travel expenses policy. The opinion was strongly criticized because truth has been an absolute defense to defamation for many years. The best strategy is for employers to protect the privacy and dignity of any terminated employee as much as practicable.

As mentioned above, the state of Montana has opted out of the at-will doctrine by passing the Montana Wrongful Discharge from Employment Act of 1987 (WDEA). The WDEA prohibits termination for anything other than good cause once an employee has successfully passed a probationary period and allows for an employee to seek arbitration for a termination dispute. The positive for employers is that the WDEA limits employee damages for wrongful termination to four years of compensation.

Discharge Practices

There is no specific employment law governing when and how an employee may be terminated. In a strictly at-will doctrine state, an employee may be terminated at any time without cause. However, as noted earlier, that termination may not violate public policy or good faith and fair dealing.

The concept of progressive discipline leading to termination is a human resources concept, not a legal one. However, if an employer, either by a collective bargaining agreement with a union, in express promises in an employee handbook, or by conduct guarantees that certain remedial action—progressive discipline—will be offered, that agreement must be honored and the remedial steps followed, or the fired employee may have a claim of wrongful discharge. Moreover, if the termination violates a collective bargaining agreement, it will be considered by the NLRB to be an unfair labor practice.

If an employee has made a claim of unlawful discrimination, the employer must be very careful to avoid a claim that termination was motivated by retaliation. However, if an employee deserves termination, the employee’s failings have been adequately documented, and all progressive discipline steps been unsuccessful, then the employer is justified in terminating the employee. Many employers wait too long and are afraid to terminate nonperforming employees because of fear of retaliation claims. The case of whistleblowing employees is exactly the same. Treating a whistleblower or a complaining employee differently from others gives rise to additional claims of discrimination.

The employer must remember when terminating employees to treat all employees exactly the same. Disparate treatment of employees in the termination process is just as unlawful as in the onboarding process.