Wrongful Termination Basics – Part 1
From time to time at Suits by Suits, we like to take a step back from the day’s goings on and review the basics. “Wrongful termination” is a common accusation in the cases we review on Suits by Suits, but what does it mean?
As you might imagine, just because you were fired and it wasn’t fair does not mean that your termination was “wrongful” in the eyes of the law. Bear in mind that, for now, I am setting aside claims that an employee was terminated in violation of state or federal anti-discrimination laws, or in violation of laws, such as the Sarbanes-Oxley Act protecting specific kinds of whistle-blowers. (Stay tuned for future “Basics” posts.) Also bear in mind that many of the company executives whose stories are featured here have contracts with their employers. These contracts may entitle them to certain benefits if they are fired without cause, but whether an executive or any employee has wrongful termination claim is not a question of contract.
Whether an executive or any employee has a wrongful termination claim against a former employer turns on whether the termination was in violation of state “public policy.” The idea is that states have an interest in its citizens doing the right thing – reporting unlawful conduct (such as tax fraud) by their employers, and refusing to engage in unlawful conduct (such as perjury) even when directed to do so by their employers – and that the states’ interest would be undermined if employees could be fired for doing the right thing.
Cases vary on the meaning of “public policy” in this context. Some states have narrowly limited the meaning to policies that are clearly expressed in the state constitution or statute. Others look more broadly to policies expressed in administrative regulations or even beyond that. Where and how, precisely, courts draw the line can lead to surprising outcomes. Stay tuned for a few examples.