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When Is Firing an At-Will Employee Illegal?

Goodbyes are always hard, especially when they’re immediately followed by a wrongful termination lawsuit. But what actually constitutes an illegal firing?

There’s a good chance you’ve heard that employees can be terminated for any reason whatsoever, without explanation. While that might be wishful thinking on the part of some employers, it’s not entirely true. In this article, we’ll poke holes through the so-called “at-will” myth and identify the situations where firing someone is illegal—regardless of what’s written in your employment contract.

Debunking the “At-Will” Myth

Since the nineteenth century, the majority of U.S. employee-employer relationships have been at-will. Under this model, an individual can be let go for nearly any reason, at any time, without warning. This is in contrast to contractual relationships, where an employer agrees to keep an individual on staff for a set period of time, or until a certain amount of wages are paid out.

Call it a case of American exceptionalism: at-will agreements are a rarity elsewhere in the world, where more employee-friendly contracts are common.

While many employers might interpret these arrangements as carte blanche to terminate employees, there are key exceptions. Regardless of the wording of your at-will agreement, it does not give you a license to break federal, state, and local laws. Terminating or even disciplining someone because they are of a specific demographic, for example, is still illegal.

In other words, if you view compliance as a multilayered affair, federal and state employment laws reign supreme at the top—and your humble at-will contract near the bottom. Read on to learn what laws in particular limit your right to terminate workers.

Discrimination and Harassment

The Civil Rights Act of 1964 protects workers on a number of fronts. The part of the law most relevant to this article is Title VII, which stipulates that:

“It shall be an unlawful employment practice for an employer…to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.”

In layman’s terms, you cannot hire, fire, or discipline someone simply because they belong to any of the above demographics, commonly referred to as “protected traits.” Workers who suspect that their termination was motivated by prejudice can file a claim with the Equal Employment Opportunity Commission (EEOC), the agency tasked with investigating and litigating workplace discrimination claims.

Decades after the signing of the Civil Rights Act, the Americans With Disabilities Act (ADA) added one other protected class: individuals who are pregnant or have a disability. Under the ADA, employers are required to reasonably accommodate disabled workers. If a front desk attendant has a condition that makes it impossible to stand for long periods, for example, it would be unlawful to terminate him or her without first offering a reasonable accommodation, like a chair or stool.

One last thing to note: Title VII also classifies sexual harassment as a form of discrimination. That means you cannot punish an individual for alleging harassment, or for acting as a witness in a workplace investigation.

Labor Conditions and Collective Bargaining

No one likes a whiner, but if those complaints are about working conditions, you can forget about ignoring them. Firing an employee for persistently taking issue with something as innocuous as the office temperature is illegal.

The discussion of working conditions is a highly sensitive subject and actually protected under federal law. These rules are enforced by the National Labor Relations Board (NLRB) and the Occupational Safety and Health Administration (OSHA). From the NLRB’s perspective, discussing working conditions is a natural precursor to unionization—a process that the agency was created to protect. Note that employees also cannot be punished for starting a union or for talking to union leadership.

While we’re on the topic of organized labor, keep this in mind: if an employee is part of a union, there’s a more than likely chance that at-will rules don’t apply to them. Collective bargaining agreements (CBAs), effectively the ground rules that are set between businesses and unions, often stipulate that terminations can only occur for “just cause.” In this case, you’ll need to thoroughly document why the business is parting ways with an employee, and communicate those reasons to the union.

Severance and Waivers

Hoping to minimize the odds that an former employee will sue post-termination, some companies turn to severance agreements. In short, these stipulate that a departing employee will receive a final, predetermined payment in return for promising not to file a wrongful termination claim. In some cases, employees may be asked to resign voluntarily—another strategy used by businesses to bolster their defense in case a lawsuit arises.

In most cases, these arrangements are legal. That said, a growing number of jurisdictions are moving to curb their use. For example, New York City recently made most sexual harassment non-disclosure agreements illegal. In this instance, an individual would be able to file a harassment claim post-termination regardless of whether they were paid severance.

The above represents just some of the more common cases of wrongful termination. There are other more obscure rules, including the Employee Polygraph Protection Act (EPPA)’s stipulation that workers can’t be disciplined for refusing a lie-detector test. It’s not uncommon for state and local lawmakers to enact their own rules as well. For example, in California, Colorado, New York, and North Dakota, it is unlawful to fire an employee for engaging in any legal activity off-hours, like voicing an unpopular opinion on social media.

Whether you’re hiring or firing, handling personnel decisions is hard. Before making the leap, wouldn’t you prefer having the right data in place to back up your decision?

There’s a way to make confident, data-backed HR decisions that doesn’t require a data science degree. In our free webinar, Making Smarter HR Decisions With Data, we dive into the key metrics you need to follow. Watch the webinar by clicking below.

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