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Employers are well aware that discharging an employee for engaging in protected activity (such a requesting FMLA or filing a discrimination claim) can result in lawsuits. However, other forms of litigation may be less familiar to employers, but can still form the basis of a wrongful termination lawsuit and are therefore important to understand.
Breach of contract (commonly involving fraud) - An employer should never put anything into an agreement that it does not fully intend to carry out. Depending on state laws, this applies to both oral and written promises. Even an "illusory" promise can become enforceable. In Vanegas v. American Energy Services (2009), the Texas Supreme Court considered a promise made by a company that it would pay five percent of the proceeds of a sale or merger to any employees who remained with the company until the time of a sale or merger. Several employees sued after the company refused to fulfill that promise. The company argued that the promise was illusory because the employees were "at will" and could be terminated at any time. However, the court held that the employees' decision to remain with the company constituted specific performance that made the unilateral contract binding on the company.
Constructive discharge - An employee who resigns may satisfy the adverse employment element of a discrimination claim by proving that he or she was constructively discharged. To prove constructive discharge, a plaintiff must prove that working conditions were so intolerable that a reasonable employee would feel compelled to resign. In establishing whether the resignation was reasonable, the following factors can be relevant: (1) demotion; (2) reduction in salary; (3) reduction in job responsibilities; (4) reassignment to menial or degrading work; (5) badgering, harassment, or humiliation by the employer calculated to encourage the employee's resignation; or (6) offers of early retirement on terms that would make the employee worse off, whether accepted or not. Aggravating factors used to support constructive discharge include hostile working conditions or the employer's intent to create or perpetuate the intolerable conditions compelling the resignation.
Defamation - This involves verbal or written publication of false information about a person with intent to harm the person's reputation, or with reckless disregard for the consequences of the falsehood. A company can be liable to an employee about whom false information is released if it makes the information known or negligently allows the false information to be released. For that reason, employers must be extremely careful with the information given to third parties, such as information provided during a reference to a prospective employer.
This includes the so-called "doctrine of compelled self-publication," where an ex-employee is given what amounts to a defamatory reason for discharge, and is later forced (by virtue of needing to tell the truth) to repeat the defamation to prospective new employers.
Employers must be very sure of the facts before telling an employee that he or she is being discharged for a particular reason. Even if the employee is given a frank explanation, it should be as matter-of-fact and non-inflammatory as possible. Managers should be trained to never say or write anything about an employee that cannot be proven with reliable documentation or firsthand testimony from eyewitnesses.
Estoppel - Estoppel is a doctrine invoked to avoid injustice. There are two types, each with different elements:
Equitable estoppel involves conduct or language amounting to a misrepresentation of material fact by a party that must have been aware of the true facts. That party must have had an intention that the representation be acted on, or the other party must have reasonably believed that the former's conduct was so intended. The party asserting estoppel must have been unaware of the true facts, and the party asserting estoppel must have justifiably relied on the representation to its detriment.
Promissory estoppel involves a promise or offer of some kind, and detrimental reliance on that promise. The reliance must have been reasonable under the circumstances, the employer should have known the recipient would rely on the promise, and must involve some measure of damages other than mere disappointment.
For example, in Minard v. ITC Deltacom Communications, Inc., (5th Cir. 2006), the court found that equitable estoppel applies to the 50-employee numerical threshold under FMLA. If a company leads an employee to believe he will be covered under the FMLA, and the conditions for equitable estoppel are satisfied, then it will not matter that an employer has fewer than 50 employees. In this case, the employer had 50 or more employees, but not within a 75-mile radius of the claimant's work location. Still, the promise of FMLA leave was sufficient to invoke an obligation to provide those benefits.
Be careful what the company promises, because the rules of estoppel may require the company to deliver exactly what it promised.
Intentional infliction of emotional distress - This involves several elements: (1) the employer acted intentionally or recklessly; (2) the conduct was extreme and outrageous; (3) the employer's actions caused the plaintiff emotional distress; and (4) the emotional distress that the plaintiff suffered was severe. For example, severe cases involving a bullying supervisor could result in such claims, if the employee suffered a sufficient degree of distress.
Successful suits are rare, since the employer's action must be seen as offensive to a reasonable person and viewed as outrageous by a reasonable society. There is generally no valid reason for any company official to shout at an employee, use slurs or other demeaning language, or cast the employee in a humiliating light - actions which have been the basis for successful lawsuits in this area of the law.
Some states even recognize "negligent infliction of emotional distress" which requires proof of some type of extreme and outrageous conduct on the employer's part. Nonetheless, employers must be careful to keep tense situations from escalating out of hand, since fine legal distinctions between "negligent" and "intentional" may be lost on juries in a close case.
Interference with an employment relationship - This typically occurs when an outside party puts pressure on an employer to take some kind of adverse action against an employee, such as a client asking that a particular individual not be permitted to work on a project. An employer in such a situation should never act without the counsel of an attorney. Legal action can be brought against both third parties and individual employees of an employer, depending upon the state's laws.
Invasion of privacy - This is a risk for companies that try to implement monitoring and surveillance procedures without first seeking the advice of an employment law attorney. Invasions of privacy are often a balancing act, weighing the employer's legitimate business interests against the employee's reasonable expectation of privacy.
Invasion of privacy consists of the disclosure of private facts about a person. There are two main elements:
- The information contains highly intimate or embarrassing facts about a person's private affairs such that its release would be highly objectionable to a reasonable person; and
- The information is of no legitimate concern to the third parties to whom the information was released.
For example, investigations of sexual harassment often reveal highly intimate or embarrassing facts about people, so the information must be kept completely confidential by the employer and all who are involved in the investigation.
Malicious prosecution - Employers sometimes find themselves the subject of a malicious prosecution lawsuit if they pursue criminal prosecution of an employee. If an employee is reported to the police, described as some sort of criminal, and the employer prods the authorities into arresting and prosecuting the employee, but for some reason there turns out to be no basis for criminal charges, the employee may turn around and sue the employer for malicious prosecution.
If an employee is suspected of wrongdoing, and under the circumstances it would be appropriate to get law enforcement involved, it would be best to simply report the problem to law enforcement and make information available to them. If such information happens to include the names of employees who may have material knowledge of a crime, those employees cannot file a valid complaint that they were maliciously prosecuted - it is not malicious prosecution to simply furnish factual information to the police and let the chips fall where they may.