Termination Headaches

MARLIN KENNEDY (NOT HIS REAL NAME) met with his lawyer to discuss a proposed buy-out of a competing waste company. After they finished talking about the acquisition, Kennedy casually mentioned that he was planning on firing one of his senior sales people. He said to his lawyer, “I assume all my employees are at-will. I can let them go at any time unless I'm discriminating or something like that, right?”

“Maybe,” the lawyer replied. “As a general rule, you can, but sometimes there are circumstances, ones that date back to even before an employee joined the company, that can complicate your decision.”

What can happen during the hiring process that might compromise a company's freedom to terminate an employee?

For one thing, an employer can make a promise to a prospective employee that can have repercussions later on. To induce candidates to accept a job, employers often dangle attractive compensation with commissions and bonuses, guarantee generous benefits packages or promise responsibility for key projects.

Buoyed by these assurances, a candidate might be induced to quit his or her existing job and accept the offered position. If things don't turn out as expected, particularly in the compensation area, the employee is likely to be unhappy and consequently less productive. Perhaps the employer will grow tired of hearing complaints and simply fire the employee.

A terminated employee may try to get back his or her old job. Nice work if you can get it, as the old saying goes, but some companies maintain a strict no-rehire policy. Depending on one's skills, an individual might be able to find other work. Too often, however, the pay is far below what he or she earned at the old job.

More and more, courts are assessing damages against employers that ignore promises made to individuals who, relying on the assurances, resign from jobs where they have a reasonable expectation of continued employment. The courts reason that it is only fair to compensate employees for damages — not from having been fired from the new job, but from having been lured away from the prior job.

Laws vary from state to state. California permits claims based on pre-employment promises as well as outright fraud. Other states, New York for example, do not recognize the right of an employee to sue because he or she received promises, later unfulfilled, from a company recruiter.

To ward off those kinds of claims, employers have to position themselves so they can justifiably claim that the employee never actually relied on any promises or assurances made during the hiring process or that the reliance was not reasonable.

One way to do so is with an offer letter that, besides setting out the elements of the job, contains a statement that the position is employment at-will and an express acknowledgement, confirmed by the employee's written acceptance of the offer, that the contents of the letter represent the entire agreement between the parties. If an employer desires to be more specific, the letter should expressly state that no one on behalf of the company has any authority to make promises or assurances except for what is contained in the letter and that the employee has not relied on any such representations in deciding to accept an offer from the company.

By taking those steps, waste companies can provide themselves protection that may come in handy down the road.
— Barry Shanoff
Legal Editor
Rockville, Md.