August 22, 2012
Whether you are firing an employee for non-performance or for conduct-related issues, you need to be aware of the legal issues surrounding termination.
By Denise L. Rondini, Executive Editor
The good news for most truck dealers when it comes to terminating an employee is that absent a contract of employment for a defined period of time, or restricting the reasons they can be terminated and barring union affiliation, most employees working in truck dealers are employed at will.
“This means the employment relationship can be terminated by the employer or the employee with or without notice for any reason or for no reason,” says Chris Durham, attorney with Duane Morris.
However, there are a number of laws that govern employee termination that you need to keep in mind. The most important ones are: anti-discrimination laws, anti-retaliation laws and whistle-blower laws and national labor relations laws, Durham says.
Anti-discrimination laws can be found at the federal, state and sometimes even at the local level. These laws prohibit employers from discriminating against employees on the basis of the employee’s membership in a protected class.
“Protected classes at the federal level include race, gender, religion and national origin under Title 7,” Durham says. Age discrimination is prohibited under the Age Discrimination Employment Act, disability under the Americans With Disabilities Act, military status under the Uniform Service Employment & Re-Employment Rights Act and genetic information under the Genetic Information Non-Discrimination Act.
“Some states and localities provide even greater protection for employees, protecting them from discrimination, for example, on the basis of sexual orientation or gender identity,” Durham says.
“Dealers need to be aware of these restrictions on their ability to take action against employees to protect themselves against discrimination claims and ensure compliance with the law,” he adds.
Two things dealers can do to ensure they do not run afoul of these laws is to publish and enforce anti-discrimination, anti-harassment and equal employment opportunity policies and also to ensure that managers — and where appropriate employees — are periodically trained on these subjects.
“The second category is anti-retaliation and whistle-blower laws,” Durham says. “These laws prohibit terminating or taking adverse action against an employee because he has engaged in conduct opposing an employer’s less than lawful activity.”
Many of the anti-discrimination laws also have an anti-retaliation component to them. “For example, Title 7 prohibits an employer from terminating and employee because the employee filed a complaint of race discrimination or sexual harassment,” he says.
Whistle-blower laws have a similar concept. Most of these laws are at the state level and prohibit employers from taking action against employees because they have complained or alleged unlawful activity. For example, a technician complains to dealership management that his supervisor was signing off on repair jobs or allowing the sale of trucks that failed to pass certain inspections required by law, would be protected by whistle-blower laws, Durham explains.
“Similarly, an accounts receivable clerk who makes allegations to state authorities regarding accounting improprieties also would be protected under many state whistle-blower laws.”
Just as with anti-discrimination laws, it is important for dealers to ensure that company policy clearly prohibits retaliation against employees for making complaints or engaging in other activities protected by law.
“Dealers also should have a robust complaint procedure in place that encourages employees to come forward with concerns and ensures these complaints are promptly and thoroughly investigated,” Durham says.
“The third law, and this may surprise many people, is the National Labor Relations Act,” he says. “Unionized employers are all too familiar with this law, but many non-union employers, such as truck dealers, may not be aware of the NLRA or think it does not apply to them because they are not unionized. However, this can be a costly mistake.”
According to Durham, nearly all supervisory employees of truck dealerships actually are protected by the NLRA. “The latest hot area under the NLRA is the position the National Labor Relations Board — the federal agency that enforces the NLRA — has taken that social media and other employer policies that prohibit employees from discussing the terms and conditions of their employment violate the NLRA.”
He adds, “If you have a policy that says employees should not talk to others about their compensation that actually violates the NLRA.
“Let me take it a step further. A dealer who terminates an employee for making negative statements about the company on Facebook in violation of the company policy, or even if there is no company policy, but the employer terminates the employee for misconduct may have violated the NLRA depending on the nature of the statement made by the employee.”
There have been recent court cases where several employees went on Facebook and complained about their supervisor. They employer fired them saying they could not go online and disparage the company. ‘The NLRB took the approach of the employees were engaging in “protected, concerted activity regarding the terms and conditions of their employment’ and therefore firing for that reason was prohibited by the NLRA.”
Durham cautions this is a fast-moving area of law and something that dealers need to look out for “especially as social media becomes more prominent in our society, I think it is an issue that employers are going to see a lot more.”
The potential consequence for failing to terminate employees properly can be significant. “Violations of federal and state laws prohibiting discrimination and retaliation including the NLRA carry with them a number of remedies for employees, which include reinstatement to the employee’s job,” Durham says.
Back pay and benefits is another remedy. “In other words, if you fired an employee and a year later a court determines you did so unlawfully, you could be looking at a year of back pay and benefits at a minimum,” he says. “You could be ordered to give them front pay, which means after a determination has been made the court may say it does not make sense to reinstate this person because there is so much animosity between the parties. However the judge will order front pay, which is money the employee would have been making had they been employed going forward for a certain number of months or years.”
If an employer has been found to have acted in bad faith or with malice, punitive damages may be assessed. “That would be monetary damages above and beyond simply the losses the employee suffered,” Durham says. “These type of damages are geared more toward punishing employers and deterring them from engaging in this sort of conduct going forward.”
In addition, attorney’s fees are also recoverable under many of these statutes if the plaintive prevails.