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Wrongful Termination of Employees

Can I fire an employee who has a poor work history but has recently filed a claim for Worker’s Compensation?” “I recently lost my job after telling my supervisor that I was concerned about possible discrimination. The stated reason for the termination was tardiness. Can I sue the company for wrongful discharge?”

The employment area is virtually exploding with lawsuits, claims, and new court decisions and statutes. The consequences of a mistake in this area of law can be very costly in terms of both employee morale and cost. It is important for both employers and employees to be as informed as possible on recent developments in labor and employment law.

Historically, there has been a legal presumption in Colorado that an employee is an employee at-will. Under this doctrine, an employee can be terminated at any time, for any reason, or for no reason at all. However, in recent years, many exceptions to the at-will employment rule have been created and the courts are continually limiting the parameters in which an employee can be legally terminated “without cause.” This article will attempt to give a brief overview of these exceptions in an effort to increase both employers’ and employees’ understanding of the law in this area.

There are currently two exceptions to the common law at-will rule based upon the legal principles of “public policy” and “implied contract.” The public policy exception simply means that an employee cannot be fired for performing a legal duty or exercising a legal right. Some examples of what might constitute a firing in violation of public policy are:

  • discharging an employee for filing a worker’s compensation claim;
  • firing an employee who has requested medical attention for an on-the-job injury;
  • terminating an employee who has brought or threatened a lawsuit against the employer;
  • discharging an employee for absence from work for jury duty or for refusing to commit perjury as instructed by the employer; and
  • firing an employee for “blowing the whistle” on the employer.

For example, an employee who has filed a Worker’s Compensation claim cannot be terminated because of his or her inability to perform the required job tasks. However, if, because of the injury, that employee cannot adequately perform his job, the employer can discontinue paying wages until that employee is able to satisfy all of the job requirements. If the employee is physically able to do all that is required but refuses to do so, the employer has legitimate grounds to terminate the employee. An example of a case for wrongful discharge by an employee can also be seen in a situation where an employee has filed a discrimination case or submitted an OSHA claim and is then terminated. The employee will have a very strong case against the employer on the basis of wrongful discharge, regardless of overall job performance.

Secondly, a binding employment relationship may be found to have been created by an implied and/or an express contract. Courts, on a case by case basis, may determine that a specific procedure followed by the employer forms an employment contract or may constitute a general promise to terminate only for just cause. The contract theory frequently arises in situations in which procedures outlined in personnel handbooks are construed as a contract between the employer and employee. In a 1987 Colorado Supreme Court case, the Court held that a discharged employee can sustain a breach of contract claim against an employer who fails to follow termination procedures set forth in a policy manual distributed to employees, if the surrounding circumstances indicate that all of the elements of contract formation and breach have been satisfied. The Supreme Court similarly held that an employee who relies, to his detriment, on termination procedures in an employee handbook, which are later disregarded by the employer, can obtain recovery pursuant to the theory of promissory estoppel without establishing the elements necessary for the legal formation of a contract.

In addition, guidelines expressed in handbooks which explain how an employee can be disciplined are contractually enforceable. The Colorado Court of Appeals followed this approach in a case where two former employees of the defendant employer alleged that they had been released without just cause in violation of their employee handbook. Interestingly, the employee handbook contained no procedure for the termination of employees. The employees’ claims were based on handbook language concerning a grievance procedure, the classification of probationary and regular employees, and specified causes for termination. The Court of Appeals reversed the District Court’s decision, holding that a breach of contract claim could be supported based on any one of the terms outlined in a personnel manual. This suggests that the courts can and may infer that where an employee is led to believe that she will be terminated only on the basis of specified causes, the employer cannot terminate that employee “without cause.” Furthermore, if an employer fails to follow discipline or grievance procedures outlined in a handbook, the employee may be able to assert a breach of contract claim against the employer.

In the majority of circumstances, an employee is considered an employee at-will and may be terminated at any time with or without cause. However, the Courts have begun to closely scrutinize the actions of employers to determine whether employees have reasonable bases for expecting that certain procedures will be followed before termination. If a disgruntled ex-employee convinces a court that he or she was wrongfully discharged, the damages may include attorneys’ fees, back pay, reinstatement, emotional distress, and punitive damages. Clearly, the stakes are high.

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