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Discussion Topic #1 — FMLA

Joe has had a difficult life. His parents separated when he was an infant. His mother began drinking heavily to deal with her depression and became alcoholic. Social Services intervened to remove Joe from his mother’s care. Joe’s grandmother took Joe in and raised him from infancy.

Joe is now employed for your company which is situated in California.

His grandmother needs a serious operation on her eyes and will require constant monitoring and help 24 hours a day 7 days a week. Joe asks for 6 weeks unpaid leave from his important job to provide care for his grandmother.

Your boss comes to you – “Are we legally obligated to grant Joe unpaid leave and guarantee him his job?”

Draft a one-page memo to your boss:

1.What are the Federal FMLA eligibility requirements relative to Joe being able to take unpaid leave and have a guaranteed job, to take care of his grandmother?

2.What are the Calif FMLA eligibility requirements relative to Joe being able to take unpaid leave and have a guaranteed job, to take care of his grandmother? Only address differences between Calif FMLA and Fed FMLA, if any, as to the question of Joe being able to leave to take care of his grandmother?

Use a minimum of two HR/legal references to support your conclusions.

Here are two links for your reference.

1.

http://www.nolo.com/legal-encyclopedia/leave-policies-workplace-faq-29088.html

2.

http://www.ncsl.org/research/labor-and-employment/state-family-and-medical-leave-laws.aspx


Discussion Topic #2 — Employee Termination


Situation

– As the HR Director, you have been asked by a supervisor Tommy to provide guidance on an employee that they want to terminate.

Write a memo to the supervisor Tommy to address the following:

1.As the HR professional, discuss the concepts that employees serve “at will,” and can be fired at any time, for any reason that isn’t illegal.

2.The supervisor has indicated there is a situation of poor performance, some attendance problems, and that the employee is just “not working out.” However, the supervisor is concerned that the employee might retaliate by claiming discrimination, since the employee is part of a protected class.

3.What documentation should the supervisor have?

4.What else would you advise the supervisor to be aware of?

Use a minimum of two HR/legal references to support your conclusions. You must substantively respond to two colleagues.

Here are two references for you to consider:

1.

Progressive Discipline: Steps to Take Before Termination


http://www.employmentlawfirms.com/termination-layoffs/when-termination-is-wrongful.htm

CHAPTER 8
Copyright 2017. Society For Human Resource Management.
All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law.
Leave Policies
• Vacation and Sick Leave
• Paid Time Off
• Mandatory Paid Leave
• Family and Medical Leave
• Americans with Disabilities Act Leave
• Military Leave
• Other Leave
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144 The SHRM Essential Guide to Employment Law
With a few exceptions discussed later in this chapter, there is no
obligation for an employer to offer any leave at all. Of course, most
employers do so because it is customary, it is humane, and not doing
so could place the employer at a competitive disadvantage.
VACATION AND SICK LEAVE
A typical vacation formula for regular, full-time employees might
give 10 days (two weeks) per year for the first two or three years
of employment and 15 days (three weeks) per year after the third
or fourth year. Limitations are commonly placed on the amount
of vacation that can be carried forward—a use-it-or-lose-it policy.
This encourages employees to take regular vacations, which in turn
improves morale. It also avoids the disruption of extra-long absences.
Sick leave may be 5 or 10 days per year. Employers need to specify
in their employee handbooks what is covered by sick leave and what
is not. For example, must the actual employee be sick, or does a
sick child or spouse also qualify? How about routine, nonemergency medical and dental visits for the employee or for the employee’s
child? And believe it or not, the policy should address sick pets as
well.
QUICK TIP
For employers covered by Title VII of the federal Civil Rights Act or equivalent state law,
a temporary disability caused by pregnancy or childbirth must be treated the same under
the employer’s sick leave policy as a temporary disability caused by other medical conditions. (See Chapter 15 for more details.)
When time off for an injury or illness extends more than a few
days, employers may want to require written verification from the
employee’s health care practitioner. After a serious illness or injury,
the employer may require a certification of fitness for duty on the
employee’s return. These policies, too, should be spelled out in the
employee handbook and applied uniformly to avoid claims of favoritism or discrimination.
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Leave Policies 145
ALERT!
A diagnosis of the condition that gave rise to the absence might reveal an underlying
disability or genetic disorder. Therefore, an employer requirement that certification of fitness for duty include a diagnosis may violate the Americans with Disabilities Act (ADA),
discussed in Chapter 17, or the Genetic Information Nondiscrimination Act, covered in
Chapter 14.
QUICK TIP
To eliminate any implication that employees are hired for a year period, it is good practice
to express vacation and sick leave as the number of hours accrued per pay period or
per hours worked, rather than the number of days accrued per year. For example, for an
employer that pays semimonthly (24 times a year), 10 days of vacation per year translates to 3.33 hours per pay period. For the same reason, the terms vacation or paid leave
are preferred over annual leave.
ALERT!
Vacation and sick leave benefits that an employer provides out of its general assets are
exempt from Employee Retirement Income Security Act (ERISA) requirements. However, if the employer establishes a dedicated fund to cover those benefits, ERISA may
apply. (ERISA is discussed in Chapter 9.)
PAID TIME OFF
Some employers have abandoned the various forms of voluntary
leave—such as vacation, sick leave, emergency leave, bereavement
leave, hazard leave, and personal leave—and replaced them with a
paid-time-off (PTO) plan.
Suppose, for example, that a company’s policy grants 10 days of
paid vacation per year, 5 days of paid sick leave per year, 3 days of
leave without pay for a death in the immediate family, 3 days of personal leave without pay, and up to 3 days of hazard leave with pay
for weather-related absences. Keeping track of all these categories is
an administrative nightmare for the company. Worse, determining in
which category a particular day off falls imposes a substantial burden
on supervisors and may engender hard feelings among employees.
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And having to justify sick leave by providing personal medical information may feel like an invasion of the employee’s privacy.
After switching to a PTO plan, the company now grants 20 paid
days off per year (6.67 hours each semimonthly pay period) that
employees can use for any purpose. In addition to reducing administrative burdens and morale problems, the PTO plan discourages
employees from taking sick leave, because doing so uses up vacation time. Instead, employees now schedule most of their leave in
advance, giving the employer an opportunity to arrange for coverage or an opportunity to require that the leave be taken at a time
more convenient for the employer.
PTO plans can be fine-tuned, depending on a particular employer’s experience and needs. For example, a day of scheduled leave
might cost the employee only six hours out of his or her PTO bank,
but unscheduled leave might cost the full eight hours. The employer
might also impose a cap on the amount of PTO that can be accumulated in the PTO bank. Allowing employees to draw prescribed
amounts of PTO in cash in lieu of leave time tends to limit overall
absences. PTO time can also be cashed out with pretax dollars in
the form of employer contributions to a 401(k) retirement plan or
cafeteria plan.
And under carefully prescribed conditions, an employee may
be permitted to give a portion of his or her accumulated PTO to
another employee who faces a serious illness or family emergency
but whose PTO is exhausted.
Other details need to be considered in implementing a PTO plan.
For example, what happens to accumulated PTO at termination of
employment—is it forfeited or cashed out? How is PTO coordinated with leave under the Family and Medical Leave Act (FMLA)—is
the employee required to exhaust PTO before taking FMLA leave,
or may he or she take FMLA leave first? Of course, these same questions arise with any leave policy the employer may have.
PTO plans seem to have many advantages over traditional leave
arrangements: they are simpler to administer; they are more flexible;
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they can be fine-tuned to meet the employer’s specific needs; they
eliminate, or at least reduce, the need to examine personal medical
information; and they discourage unscheduled sick leave. PTO plans
deserve consideration.
But there are disadvantages of PTO plans as well. In those
states that require accrued vacation to be cashed out at termination, converting sick leave to PTO effectively means that accrued
sick leave as well as vacation will now have to be cashed out. And
in those jurisdictions that have adopted mandatory leave laws
(discussed below), integrating a PTO plan and mandatory leave
may result in paid vacation time for employees who would not
otherwise earn vacation.
MANDATORY PAID LEAVE
A growing number of states and local governments have adopted
or are considering imposing paid leave requirements on employers within their jurisdictions. (See Chapter 22 for paid leave
requirements applicable to U.S. government contractors.) These
mandatory paid leave laws may require employers to grant, say,
one hour of paid leave for every 30 or 40 hours worked. The
rate of accrual sometimes varies, depending on the size of the
employer, with larger employers required to grant more paid
leave than their smaller counterparts. Very small employers may
be entirely exempt.
Typically, the leave is available for the employee’s own illness,
for illness of a family member, and for the birth of a child or the
placement of a child for adoption or foster care. Leave may also
be available for a variety of other purposes, such as to obtain
preventive medical care and for victims of domestic abuse to seek
legal services or to temporarily relocate. So far, the laws prescribing mandatory paid leave have not included vacation as one of
the authorized leave purposes, but that may be changing as well.
The laws also address other issues of which employers must be
aware: whether part-time employees qualify for leave, when leave
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148 The SHRM Essential Guide to Employment Law
begins to accrue, whether there is a waiting period before taking
accrued leave, the amount of leave that may be taken in a given
period, the amount that may be carried over, and how accrued
but unused leave is treated on termination of employment.
For multistate employers, this mix of requirements and refinements poses a substantial record-keeping and compliance burden.
One solution would be to enact a uniform federal law, but unless
that law expressly supersedes any state or local laws (not likely
in the present political climate), there would be no guaranty of
uniformity. Another, somewhat less effective, solution would be
for each state to adopt a uniform state law for employers within
its jurisdiction and, at the same time, bar cities and counties in
the state from legislating on the topic. That would ensure at least
statewide uniformity.
Without any uniformity on the horizon, employers must
decide how best to integrate mandatory leave laws with existing
leave policies. One approach might be to adopt a PTO plan that
is at least as generous as the most generous applicable leave law
and that allows employees to use leave essentially for any purpose,
including the purposes specified in the mandatory leave laws.
This approach allows easier tracking of leave, since each employee has only one PTO “bank account” instead of multiple bank
accounts for each of the various mandatory and voluntary leave
purposes. Other advantages and disadvantages of PTO plans are
discussed above.
FAMILY AND MEDICAL LEAVE
Some employers consider the FMLA, the ADA, and workers’
compensation laws to be a three-legged stool upon which employees rest while milking their employer. It is true that before those
laws, an employer could fire an employee for taking extended
leave, no matter how good the reason, and had no obligation to
offer a returning employee his or her old job, or any job at all. It
is also true that under certain circumstances, an employee could
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Leave Policies 149
now be entitled to the protections of all three laws at the same
time. The real problem for employers, however, is not so much
that these laws give employees too many rights, but that the laws
are complex and compliance can be tricky.
When leave qualifies under FMLA, a covered employer must
do the following:
• grant an eligible employee up to 12 weeks of unpaid leave (26
weeks to care for a service member), including intermittent
leave when medically necessary, within a 12-month period
• restore the employee to his or her former job upon return to
work, or to an equivalent job
• maintain group health insurance coverage for the employee,
including family coverage, on the same basis as if the employee
had continued to work
ALERT!
Every employer covered by the FMLA is required to post a notice explaining the
act’s provisions and providing information concerning the procedures for filing complaints of violations with the Wage and Hour Division of the U.S. Department of
Labor (DOL). If the employer has any eligible employees and has an employee handbook, it must also include the notice in its employee handbook. See The Employer’s
Guide to the Family and Medical Leave Act, available on the DOL’s website.
Coverage and Eligibility
Employers are covered under the FMLA if they have 50 or more
employees (including part-time employees and employees who
are on leave) for at least 20 weeks during the current or preceding calendar year. An employee is potentially eligible for FMLA
leave if each one of the following conditions is met:
• The employee works for a covered employer.
• The employee has been employed for at least 12 months (which
need not be consecutive).
• The employee has worked at least 1,250 hours during the previous year.
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150 The SHRM Essential Guide to Employment Law
• At least 50 employees work at the location where the employee
works or within 75 miles of that location (as measured by the
shortest route using service transportation).
Use of Leave
An eligible employee is entitled to FMLA leave in the following
circumstances:
• The employee has a serious health condition (including incapacity due to pregnancy and for prenatal medical care).
• The employee needs to care for a spouse, child, or parent with
a serious health condition.
• The employee is caring for a newborn child within one year of
birth.
• The employee adopts a son or daughter or has a child placed
with the employee for adoption or foster care within one year
of placement.
• A qualifying exigency arises involving a family member who is
called to active military duty.
• The employee needs to care for a spouse, parent, child, or next
of kin who is a service member or recent veteran undergoing
medical treatment, recuperation, or therapy in an outpatient
status, or who is on the temporary disability retired list for a
serious injury or illness that is service-related or that was aggravated in the line of duty.
Serious health condition is defined as an illness, injury, impairment, or physical or mental condition that involves any of the
following:
• treatment as an in-patient in a hospital, hospice, or residential
medical care facility
• a period of incapacity requiring absence of more than three days
from work, school, or other regular activity and that involves
continuing treatment by a health care provider
• any period of incapacity due to pregnancy or prenatal care
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• any period of incapacity due to a chronic, serious health
condition
• a period of incapacity that is permanent or long term, even if
there is no effective treatment
• absences to receive multiple treatment in which the underlying
condition, if left untreated, would likely result in incapacity of
more than three consecutive days
DOL regulations expand on the statutory definition of serious
health condition. DOL regulations say that a condition qualifies as
serious if the employee is incapacitated for more than three consecutive calendar days and the condition requires treatment two or more
times by a health care practitioner.
A qualifying exigency is one of the following events arising from
the employee’s spouse, child, or parent being called to active military duty:
• short-notice deployment in which a member of the military is
called to active duty on less than seven days’ notice
• military events and related activities, such as attending family support or assistance programs related to the active duty status of the
service member
• child care and school activities, including arranging for alternative
child care when a call to active duty necessitates a change in child
care arrangements or providing child care on an urgent, immediate need basis
• financial and legal arrangements to address the member’s absence
for active duty
• counseling by someone other than a health care provider for oneself, for the service member, or for a child of the service member
• rest and recuperation, including spending time with a service
member who is on short-term, temporary rest and recuperation—limited to 15 days
• post-deployment activities during the 90-day period following
termination of the member’s active duty status, including attendEBSCOhost – printed on 4/14/2022 6:13 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use
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ing arrival ceremonies and events sponsored by the military or
addressing issues arising from the death of the member while on
active duty
• parental care to care for the parent of a service member who is
incapable of self-care
• additional activities to address other events that arise out of the
service member’s call to active duty as the employer and employee
agree
QUICK TIP
For employers covered by the FMLA, unexplained or undocumented leave should never
result in automatic discipline. The employer should first make an effort to determine
whether the leave qualifies as FMLA leave and, if so, whether the employee wishes to
take FMLA leave.
Medical Certification
The FMLA requires employers to respond promptly to employee
requests for FMLA leave. Employers may require a medical certification from a health care provider if the leave is based on a serious
health condition. The employer must allow the employee 15 days
to obtain the certification. The employer may, at its own expense,
obtain a second opinion from another health care provider of the
employer’s own choosing, so long as the health care provider is not
under contract with, or regularly used by, the employer. If the two
opinions differ, the employer and employee together choose a third
health care provider, whose opinion is final and binding. Optional
Form WH-380 (available on the DOL’s website) may be used for
these medical certifications.
An employer may also develop its own medical form, but it may
not request information beyond what is allowed by the FMLA and
implementing regulations.
The list of health care providers whose medical certifications can
trigger FMLA leave is long and somewhat surprising. As might be
expected, it includes doctors of medicine and osteopathy, but they
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Leave Policies 153
need to be licensed only in the state in which they practice, not necessarily in the state where the employer or employee is located. The
list also includes podiatrists, dentists, clinical psychologists, optometrists, chiropractors, nurse practitioners, nurse midwives, clinical
social workers (as long as they are practicing within the scope of
their licenses), Christian Science practitioners, and any health care
provider recognized by the employer’s health care benefits manager.
Foreign as well as U.S.-licensed health care providers are included.
Employers must maintain the confidentiality of all medical information received in support of an FMLA leave request. Failure to do
so could be deemed interference with the employee’s FMLA rights
or retaliation against the employee for requesting FMLA leave.
ALERT!
For disabilities covered by the ADA (or its state counterpart), the employer may be
required to offer leave as a reasonable accommodation, provided doing so does not
cause an undue hardship. A requirement to offer ADA leave is separate from FMLA
leave requirements and may even extend beyond the 12-week FMLA obligation.
Benefits
An employee on FMLA leave is entitled to no more than 12 weeks’
leave within a 12-month period (26 weeks in the case of certain
service members). The employer has some options in determining
when the 12-month period begins and ends:
• the calendar year
• the employer’s fiscal year
• an employment year based on the employee’s start date
• a rolling 12-month period that looks back from when the leave is
to begin
• a rolling 12-month period that looks forward from when the
leave is to begin
Using a fixed year, such as a calendar year, has the disadvantage
that an employee could take 12 weeks’ leave at the end of year
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154 The SHRM Essential Guide to Employment Law
1 and another 12 weeks’ leave at the beginning of year 2, for a
total of 26 consecutive weeks. Therefore, some employers prefer
the backward-looking, rolling 12-month period method. Under
that method, the employer may deny a new FMLA leave request if,
during the immediately preceding 12-months, the employee took
the full 12-week entitlement.
Whatever option the employer chooses must be applied consistently to all employees.
ALERT!
When the leave is taken to care for a service member, only a 12-month period measured
forward from the date the employee’s FMLA leave is to begin may be used.
The employer must continue group health insurance coverage during FMLA leave on the same basis as if the employee had
continued to work. This means that if the plan is noncontributory (meaning the employer pays 100 percent of the premium),
the employer must continue to do so for employees under FMLA
leave. On the other hand, if the plan is contributory (that is, if the
employees pay some portion of their premiums), the employer may
require an employee on FMLA leave to continue contributing on
the same basis. The employer has a right to recover the employer’s
portion of the premiums if the employee does not return to work
when FMLA leave ends, unless the employee’s failure to return
results from circumstances reasonably beyond the employee’s control. If the employer has no group health plan, the employer does
not have to provide health insurance during FMLA leave. The
employer may, but is not required to, continue other benefits for
employees on FMLA leave.
QUICK TIP
When a husband and wife are employed by the same employer, they are entitled only to
a combined total of 12 weeks’ FMLA leave if the leave is based on the birth of a child or
the placement with them of a child for adoption or foster care.
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Leave Policies 155
Among the most difficult FMLA issues facing employers are
intermittent leave and reduced work schedules because of the possibility of abuse. DOL regulations make clear that intermittent leave
(leave taken in separate blocks due to a single qualifying reason) and
a reduced schedule (such as temporarily switching from full time to
part time) are both available under the FMLA. When the qualifying
reason is a serious health condition, there must be a medical need
for the leave that can best be accommodated through intermittent
leave or a reduced schedule. When the leave is to care for a healthy
newborn, the employer need not agree to such a leave arrangement.
In charging intermittent leave against an employee, the employer
must use the smallest time increment the employer uses in charging
other forms of leave, but in no event more than one hour.
Although FMLA leave is generally unpaid, the employee may
choose to substitute any accrued paid leave he or she might have. If
the employee does not choose to do so, the employer may require
the employee to substitute paid leave. When either the employee or
the employer makes the choice to substitute paid leave, the leave is
still charged against both the employee’s FMLA entitlement and the
employee’s accrued leave. In other words, in this situation FMLA
leave and paid leave run concurrently.
QUICK TIP
Under the Fair Labor Standards Act, an employee who is exempt under one of the
white-collar exemptions must generally be paid a full week’s salary for any workweek in which he or she does any work. (See Chapter 5.) However, when an exempt
employee takes unpaid FMLA leave for part of a week, the employer may reduce
the employee’s salary to reflect his or her absence without affecting the employee’s
exempt status.
When FMLA leave ends, the employer is required to restore
the returning employee to the same or an equivalent position.
DOL regulations define equivalent position as one that is virtually
identical to the employee’s former position in terms of pay, benEBSCOhost – printed on 4/14/2022 6:13 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use
156 The SHRM Essential Guide to Employment Law
efits, and working conditions, including privileges, perquisites,
and status. Assignment of an employee to a different shift on
return from FMLA leave could violate the equivalent position
requirement.
Compliance
Employers that are covered by the FMLA should follow these
guidelines:
• Post the FMLA notice (WH Publication 1420) required by the
DOL.
• Adopt an FMLA policy and publicize it to employees (see Fact
Sheet No. 28 of DOL’s Employment Standards Administration,
available on the DOL’s website).
• If the employer has an employee handbook or a collective bargaining agreement, set out the FMLA policy in those documents.
• Be alert to leave that may qualify under the FMLA and make
inquiry to determine whether the FMLA might apply whenever an employee requests any type of leave—whether or not the
employee even mentions the FMLA.
• Never discipline an employee for unauthorized absence without
first determining whether the FMLA might apply.
• When an employee requests FMLA leave, notify the employee
within five business days whether the leave will qualify under the
FMLA, whether a medical certification or other documentation
in support of the leave is required, and what the employee’s
rights and responsibilities are while on FMLA leave (DOL Form
WH-381 satisfies the employer’s notice requirements).
• Maintain group health insurance for the employee during FMLA
leave on the same basis as if the employee had continued to work.
• Upon termination of FMLA leave, restore the employee to the
same or an equivalent position.
The only exception to the duty to restore the employee to the
same or equivalent position is for key employees whose absence
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Leave Policies 157
would cause substantial and grievous economic injury to the
operations of the employer—a tough standard to say the least.
If the employer intends to deny restoration on this basis, the
employer must first notify the affected employee and give the
employee an opportunity to change his or her mind about taking
FMLA leave.
FMLA leave may be terminated for an employee who states,
unequivocally, that he or she does not intend to return to work
or who fails to comply with the employer’s requirement to furnish periodic reports justifying continued leave.
The question whether an employer may discipline an employee
while on FMLA leave does not arise frequently. But it can arise
when, for example, the employee’s misconduct occurs before he
or she takes FMLA leave. It is clear that an employer cannot
discipline an employee because he or she is on FMLA leave, but
nothing in the law prevents an employer from pursuing disciplinary action unrelated to the FMLA while an employee is on
leave.
CASE STUDY:
MISCONDUCT WHILE ON FMLA LEAVE
In a 6th Circuit Court of Appeals case (the 6th Circuit is
headquartered in Cincinnati), the employer had a policy prohibiting
employees from performing outside work without the employer’s
permission. The employee in that case requested and was granted
four weeks’ FMLA leave in connection with his wife’s childbirth, but
while on leave he managed a restaurant that his wife had recently
purchased. The employer fired the employee when he returned from
leave, and the court upheld the firing. The court pointed out that
the right to reinstatement under FMLA is not absolute, since an
employer need not reinstate an employee who would have lost his
job even if he had not taken FMLA leave. That was exactly the case
here—the employee was fired for violating the company’s outside
work rule, not because he took FMLA leave.
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The 6th Circuit decision relied on the DOL’s FMLA regulations
that list a number of principles governing the requirement that the
employee be reinstated to the same or equivalent position on
return to work:
• If an employee fails to provide a requested fitness-for-duty certification to return to work, an employer may delay restoration
until the employee submits the certificate.
• An employee has no greater right to reinstatement or to other
benefits and conditions of employment than if the employee had
been continuously employed during the FMLA leave period.
• An employer may require an employee on FMLA leave to
report periodically on the employee’s status and intention to
return to work.
• An employee who fraudulently obtains FMLA leave from an
employer is not protected by the FMLA’s job restoration or
health benefits provisions.
• If the employer has a uniformly applied policy governing outside or supplemental employment, such a policy may continue
to apply to an employee while on FMLA leave.
DOL regulations prohibit employers from discriminating or
retaliating against employees and applicants who have taken
FMLA leave. So an employer may not base a job decision on
the fact that an existing employee, or a former employee who is
reapplying, exercised rights under the FMLA. Similarly, if a job
applicant took FMLA leave while with a different employer, the
new employer cannot use that fact in deciding whether to hire.
Nor can an employer interfere with an employee’s exercise of
his or her FMLA rights. One way an employer might interfere
is asking an employee on FMLA leave to do work. Continually
pestering an employee about work issues could amount to interference. On the other hand, occasional, brief inquiries as to the
location of a file or the status of a pending matter probably does
not amount to interference.
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Leave Policies 159
CASE STUDY:
NO INTERFERENCE OR RETALIATION UNDER THE FMLA
In a case decided by the U.S. Court of Appeals for the 3rd Circuit
(headquartered in Philadelphia), an employee took FMLA leave,
claiming an inability to work because of leg pain. While on leave he went
drinking with friends and on his way home was arrested and charged
with DUI. The DUI was reported in the local paper, and when the
employer saw the report, it realized that the drinking incident occurred
while the employee was on leave. The employer fired its employee under
the company’s dishonesty policy. The court decided for the company,
saying that the company acted on the honest belief that the employee
violated company policy and misused FMLA leave.
An employer does not interfere with an employee’s FMLA rights
by requiring him or her to comply with a reasonable call-in policy
in the event of an emergency or other unforeseeable need for leave.
But a violation of the policy should not result in automatic discipline; instead, the employer should inquire whether unusual circumstances prevented the employee from complying with the policy.
AMERICANS WITH DISABILITIES ACT LEAVE
Granting leave may be a reasonable accommodation under the
ADA. (The ADA is covered in depth in Chapter 17.) The Equal
Employment Opportunity Commission (EEOC) offers the following examples of when ADA leave may be appropriate:
• obtaining medical treatment (for example, surgery, psychotherapy,
substance abuse treatment, or dialysis), rehabilitation services, or
physical or occupational therapy
• recuperating from an illness or an episodic manifestation of the
disability
• obtaining repairs on a wheelchair, accessible van, or prosthetic
device
• avoiding temporary adverse conditions in the work environment
(for example, an air-conditioning breakdown causing unusually
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160 The SHRM Essential Guide to Employment Law
warm temperatures that could seriously harm an employee with
multiple sclerosis)
• training a service animal
• receiving training in the use of braille or to learn sign language
The courts have ruled, however, that an employer generally need
not grant indefinite leave under the ADA, since an employee on
indefinite leave is not able to perform the essential functions of his or
her job. However, the employer should not deny leave just because
the return date is uncertain; instead, the employer should consider
the likely duration of the leave given the nature of the disability and
whether accommodating such leave would be an undue hardship.
It should be noted that a disability under the ADA is not the same
as a serious health condition under the FMLA. An employee may
qualify for temporary leave under the ADA because he or she is disabled, but at the same time not qualify for FMLA leave because the
disability does not amount to a serious health condition. The reverse
is also true. For example:
• noncomplicated pregnancy, routine broken bone, appendectomy,
chicken pox, mild hernia, flu—covered only by the FMLA
• vision or hearing impairment, physical abnormalities that do not
require inpatient care or a continuing course of treatment—covered only by the ADA
MILITARY LEAVE
The Uniformed Services Employment and Redeployment Rights Act
(USERRA) requires employers to carry service members on leave
status for benefit and seniority purposes while on active duty and to
re-employ them when they return. USERRA also prohibits employers
from discriminating against veterans and persons in the uniformed
services. USERRA applies to all service members except those who
receive dishonorable or bad conduct discharges, or who are discharged under less than honorable conditions. It protects employees
who volunteer for service as well as those ordered to active duty.
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Leave Policies 161
To be eligible for USERRA protection, the service member must
notify the employer that he or she has been called to active duty,
unless he or she is precluded from doing so by military necessity, or
unless it is otherwise impossible or unreasonable to do so.
Employees on active duty are considered to be on furlough or
leave of absence. As such, they are entitled to whatever benefits
other similarly situated employees receive. In addition, the following
conditions apply for employees on active duty:
• They may (but cannot be required to) use any accrued vacation
or other paid leave.
• They may elect to continue any employer-sponsored health
insurance coverage for up to 18 months. (For employees on
active duty for less than 31 days, the employee can only be
required to pay the portion of the premium normally charged
to employees. For employees on active duty for more than 30
days, the employee can be charged up to 102 percent of the full
premium.)
• They may continue to contribute to any retirement plan to which
they were contributing before active duty.
• They must be treated as continuing to work for the employer
for purposes of computing the employer’s pension plan funding
obligation and benefits under any pension plan in which they
participated. (This would be significant for defined benefit plans
using a formula that includes a years-of-service component.)
A returning service member is entitled to be re-employed unless
the employer can show that the employer’s circumstances have so
changed as to make re-employment impossible or unreasonable or
that re-employment would impose an undue hardship. This right
applies to service members who have been on active duty for as long
as five years, and, in some cases, even longer.
The returning service member is entitled to be placed in the position in which he or she would have been employed but for the call
to active duty (or in a position with equivalent seniority, status, and
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162 The SHRM Essential Guide to Employment Law
pay). Under this escalator provision, the employer must take into
consideration any promotions or advancements the member would
have received if he or she had continued to work.
If a member who has been on active duty for more than 90 days
is not qualified for an escalated position, the employer must make
reasonable efforts to help the member become qualified. For returning service members who became disabled while on active duty,
the employer must make reasonable efforts to accommodate the
disability.
To be eligible for re-employment, the returning service member
must, after release from active duty, notify the employer of his or
her intent to return to work. Strict time limits apply to this notice
requirement:
• If the period of active duty was less than 31 days, the returning
member must report to work on the first regular workday after
release from duty (after allowing for an eight-hour rest period and
safe transportation home).
• If the period of active duty was between 31 and 181 days, the
returning member must apply for re-employment within 14 days
after release from duty.
• If the period of active duty was more than 180 days, the returning member must apply for re-employment within 90 days after
release from duty.
These time limits can be extended for up to two years or more
in the case of a returning service member who is hospitalized or
convalescing from an illness or injury suffered while on active
duty.
Once the employer has re-employed a returning service
member, the employer is restricted in its ability to discharge the
member. Except for discharges for cause, members who have been
on active duty for 180 days or less cannot be fired for a period
of 180 days after re-employment. Members who have been on
active duty for more than 180 days cannot be fired for one year.
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Leave Policies 163
ALERT!
Docking the salary of exempt employees who are on temporary military leave of less
than a full workweek will cause loss of the exemption for FLSA purposes. However,
an employer may offset any compensation received by the employee for military
service. (See Chapter 5 for more details.)
OTHER LEAVE
State laws frequently have their own provisions regarding required
leave. Be alert to the following possibilities in your state.
Extended Leave
State FMLA laws are becoming increasingly popular, although eligibility and leave periods do not necessarily coincide with federal
law.
Jury Duty
Federal law protects the jobs of employees who are serving as jurors
in federal courts, and most states provide similar protection for
employees serving at the state level. Some states even require salary
continuation during periods of jury service. Even when salary continuation is not required, it is common for employers to pay full
salary or at least make up the difference between juror fees and
regular salary. Docking the salary of exempt employees who are on
jury service of less than five days will cause loss of the exemption
for FLSA purposes, although an employer may offset any juror fees
received by the employee.
Figure 8.1 contains a provision recommended for inclusion in
employee handbooks regarding jury duty.
FIGURE 8.1: JURY DUTY
The company encourages employees to fulfill their civic obligation to serve as jurors
when summoned. The company will not discharge, threaten to discharge, intimidate,
or coerce any employee by reason of such employee’s jury service, or the attendance
or scheduled attendance in connection with such service.
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164 The SHRM Essential Guide to Employment Law
ALERT!
Asking an employee to lie about his or her availability for jury duty is a criminal offense.
Maternity and Paternity Leave
See Chapter 15.
Testimony
Some states protect the jobs of employees who are subpoenaed to
appear in court as witnesses or who are attending court under a victim’s right law. Docking the salary of exempt employees in these
circumstances will cause loss of the exemption for FLSA purposes,
although an employer may offset any witness fees received by the
employee.
Election Day Leave
Some states require employers to grant time off for employees to
vote on election day.
School Activities
Some states require that time off be granted for a parent to attend
his or her child’s school activities.
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CHAPTER 4
Copyright 2017. Society For Human Resource Management.
All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law.
Terminating the
Relationship
• Decision to Terminate
• Termination Procedures
• Final Pay and Accrued Leave
• Termination for Cause
• Severance Payments and Releases
• Constructive Discharge
• Retaliation
• Whistle-Blower Regulations
• Abusive Discharge
• Defamation Liability
• Intentional Infliction of Emotional Distress
• Employee Due Process
• Downsizing and Mass Layoffs
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60 The SHRM Essential Guide to Employment Law
DECISION TO TERMINATE
Under the employment-at-will doctrine, recognized in almost all
states, employers can fire employees for any reason or for no reason
at all (just not an illegal reason). But it rarely makes sense to do
so. Instead, the decision to fire should be for a well-documented
reason tied directly to the employer’s business needs.
When an employer exercises its business judgment in terminating an at-will employee, courts have no right to substitute their
own judgment and second-guess the employer’s decision. But if
the employer cannot explain and support a business-related reason
for the termination, such as poor performance or repeated misconduct, the fired employee, and the Equal Employment Opportunity
Commission (EEOC), may assume the decision was improperly
motivated, such as by discriminatory animus.
Even with a good business reason, it still may not be in the
employer’s interest to fire. An involuntary termination will likely
disrupt the workplace, possibly having a negative impact on morale.
And if the departing employee is not bound by a noncompete agreement (discussed in Chapter 19), he or she may take valued customers or clients. Worse, disgruntled former employees with time on
their hands may decide to sue or complain to the EEOC. (If you
have never had to answer written interrogatories propounded by
your former employee’s attorney, produce box loads of personnel
records, or suffer through depositions of half your workforce, you
are in for an unpleasant surprise.) There is also the risk that a fired
employee will become a whistle-blower or even resort to sabotage
or violence. Consider, finally, the effect of a termination on your
unemployment insurance rate. In short, getting rid of a troublesome
employee may cause more harm than good.
Finally, such decisions should rarely be made on the spot. Even
in the face of egregious misconduct, a temporary suspension usually works best, allowing tempers to cool and providing time for a
thoughtful, rather than a heat-of-the-moment, decision and time
to consult with HR or outside counsel.
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Terminating the Relationship 61
Answering the following questions will help guide the decision
to fire:
• Does the company have a good, business-related, well-documented reason to terminate that it can clearly articulate if
challenged?
• Is the employee at will, or is he or she protected by an employment contract or a collective bargaining agreement?
• If there is a contract, is the firing permitted by the contract, and
have all required preliminary steps been taken?
• Is the employee in a protected status, such as on Family and
Medical Leave Act (FMLA) leave?
• Has the employee recently complained about working conditions,
discrimination, or other matters, such that firing him or her could
be considered retaliatory?
TERMINATION PROCEDURES
When the decision has been made to terminate an employee, the
actual process should be carefully planned. A face-to-face termination meeting is generally recommended as more respectful
than a phone call or an email. A face-to-face meeting also allows
the employee to vent and allows management an opportunity to
observe and assess the employee’s reaction.
The meeting should take place behind closed doors and away
from other employees. Scheduling the meeting for before or after
normal working hours means fewer fellow employees will be present and may spare the employee some embarrassment.
Normally, two representatives of management will be present—one to conduct the meeting and the other to observe. This
arrangement also conveys to the employee that the decision to
terminate is firm. The speaker should prepare in advance what he
or she is going to say. Ideally, a lengthy explanation of the reasons
for the decision should be unnecessary, since there will be a history
of previous counseling or discipline. However, the speaker should
be truthful and specific about the performance or behavioral issues
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62 The SHRM Essential Guide to Employment Law
that warrant termination. A vague reference to the employee’s not
being a “good fit” or that “things are just not working out” will
leave the employee uncertain and suspicious of the real reason.
The employee may argue that the company is mistaken on its facts
or that the reason given does not justify termination. Presumably,
the company has already considered these matters in reaching its
decision. In any event, this is not the time to engage in a debate with
the employee. The response to the employee’s objections should be
brief and clear: “I’m sorry, Bob, but the decision is final.”
Management also needs to consider the following:
• whether a severance payment should be offered in exchange for
a release of claims
• if security personnel should be available to escort the employee
from the worksite and provide ongoing security
• whether state law requires immediate delivery of a final paycheck
• whether to inform the employee that he or she is prohibited
from returning to the employer’s premises and will be considered a trespasser if he or she returns
ALERT!
Giving a false or ambiguous reason for termination may seem less painful, but it can
make defending an unemployment insurance claim or a suit for abusive discharge or
discrimination more difficult.
When an employee voluntarily quits, the employee should normally be interviewed by a senior member of management just
before departure. The employee should be asked about the reasons
for quitting. Often the employer can gain valuable insight at this
juncture into morale or other problems such as a hostile sexual or
racial environment.
The following matters, as applicable, should be accomplished
during the termination meeting or exit interview:
• Collect keys, security passcards, ID badges, cellphones, laptops,
and other property belonging to the employer.
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Terminating the Relationship 63
• Confirm the employee’s current address and phone number.
• Instruct the employee to remove all personal belongings.
• Inform the employee as to when a final paycheck will be available and determine the employee’s wishes as to whether the
check should be mailed or held for pickup.
• Provide any notices required by state law, such as a notice regarding the availability of unemployment insurance benefits.
• Remind the employee of any continuing confidentiality, noncompete, and nonsolicitation obligations.
• Remind the employee of the employer’s policy on references.
Immediately after the termination meeting or exit interview, the
interviewers should prepare a file memo summarizing the interview, including any reasons given by the employee for a voluntary
quit. If not previously accomplished, the employee’s access to the
company’s computer network should be terminated. This is also a
good time to change other employees’ passwords, since employees
often know each other’s passwords.
Promptly after the interview, the employer should (as applicable) do the following:
• Notify human resources and payroll of the employee’s status
change and request a final paycheck.
• Give a COBRA notice to the employee.
• Provide the employee with notice of any conversion privileges
available under health, life, disability, or other insurance plans
maintained by the employer.
• Provide notice of any rights or obligations regarding retirement
plan participation and benefits.
• Terminate any signature authority the employee has over
employer bank accounts or other financial accounts.
• Notify insurers and retirement plan managers of the employee’s
status change.
• Notify affected employees of the termination (without discussing the reason).
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64 The SHRM Essential Guide to Employment Law
• Notify others of the termination, such as security personnel,
customers, vendors, and financial institutions, with whom the
employee had contact (again, without discussing the reason).
• Notify persons receiving garnishment or withholding order
payments from the employee’s wages of the employee’s status
change.
• Arrange for issuance of a final Form W-2 at year’s end (or within
30 days if the employee requests it sooner).
FINAL PAY AND ACCRUED LEAVE
A departing employee is entitled to be paid at the agreed rate
for all work actually performed up to the time of termination.
The employer cannot withhold wages on the ground that the
employee failed to give two weeks’ or some other specified notice
before quitting. Nor can the employer dock the wages of a fired
employee on the theory that the employee’s work quality was
unacceptable (but see the discussion of the faithless servant doctrine in Chapter 19).
State law also specifies when a departing employee must be paid.
In some states, the final paycheck does not need to be issued until
the next regular payday. In others, the departing employee must
be paid immediately or within a few days of termination, depending on the circumstances of termination.
The employer may deduct from the employee’s paycheck any
claims the employer has against the employee, so long as the
employee has agreed in writing to the deduction. Suppose, for
example, that the employee borrowed money from the company,
to be repaid out of future paychecks. Or suppose the employer
advanced unearned leave on the understanding that, in the event
of an early termination, the employee would make reimbursement
out of final wages. In these examples, an appropriate setoff against
the employee’s paycheck is permitted. However, the employer
should not deduct the amount of a disputed claim or any other
amount not agreed to by the employee, since doing so may vioEBSCOhost – printed on 4/14/2022 6:15 PM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS. All use subject to https://www.ebsco.com/terms-of-use
Terminating the Relationship 65
late wage and hour laws. Nor should any deductions reduce the
employee’s pay below the minimum wage.
Is a terminating employee entitled to have his or her accrued
but unused leave cashed out on termination? In many states the
employer may adopt a policy of not cashing out accrued leave, or
cashing it out only under certain circumstances. For example, the
employee handbook might say that accrued leave is not cashed out
if the employee quits without giving specified advance notice, or if
the employee is fired for cause. Absent such a policy, however, state
law may treat accrued leave as part of the employee’s compensation and require that it be cashed out.
The question of cashing out accrued leave is limited to vacation or paid-time-off accruals. Other forms of paid leave—such as
sick leave and bereavement leave—are normally not cashed out on
termination.
Garden Leave
Many companies have a policy requiring employees to give at least
two weeks’ advance notice of quitting. Of course, if an employee
quits without giving the notice, he or she cannot be forced to
work for the two-week period. (A policy of forfeiting accrued leave
for failure to give the requisite notice, if permitted by state law,
may well reduce instances of abrupt termination.) But what if the
employee does give two weeks’ notice? Must the employer keep
the employee on for the entire notice period?
At-will employees may be fired at any time without cause. So in
theory, on receipt of two weeks’ notice, the employer could in turn
fire the employee immediately. Doing so, however, will undermine
the employer’s notice requirement by discouraging other employees from complying. A better policy is to place the employee on
so-called garden leave—keeping the employee on the payroll for the
full two weeks, but relieving him or her of all duties and telling him
or her not to report to work. Figure 4.1 contains a suggested handbook provision for garden leave.
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66 The SHRM Essential Guide to Employment Law
FIGURE 4.1: GARDEN LEAVE PROVISION
Upon giving or receiving notice of termination, the company reserves the right to relieve the
employee of all duties and place him or her on garden leave during the notice period.
TERMINATION FOR CAUSE
Sometimes an employer is willing to give up the right to terminate an employee at will and offer job security in the form of an
employment contract. For example, the labor market may be tight,
and the employer may be having trouble attracting qualified candidates, a particular position may just be difficult to fill, or a desirable
candidate may be of interest to the competition.
One way to promise job security is to offer employment for a
specified period of time as long as the employee’s performance
remains satisfactory or to agree that employment can be terminated only for cause or good cause. When an employer makes
such an offer to a prospective employee, and the employee
accepts the offer and begins work, the employer is bound by
the arrangement. The employee is no longer at will, and he or
she cannot be dismissed except as stated in the contract.
ALERT!
An employer may unintentionally be limited to terminating only for cause as a
result of statements inadvertently made in the employee handbook. (See Chapter
3 for tips on drafting employee handbooks to reduce this risk.)
What does cause or good cause mean in this context? The parties to a contractual arrangement are free to spell out in their
contract exactly what they mean by the term. For example, if the
employee needs a particular license to work (such as a plumbing license), suspension or revocation of the license might be
listed as a cause for termination. Convictions for certain types of
crimes, insubordination, drunkenness, and physical assaults on
customers or fellow employees might also be on the list. There
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Terminating the Relationship 67
may also be explicit do’s and don’ts set out in an employee
handbook or job description.
The employment relationship itself implies certain duties on
the part of the employee, including a duty to show up for work
in reasonably fit condition, a duty to have and exercise reasonable skill in performing the job, a duty of loyalty and honesty,
and a duty to refrain from insubordinate and threatening behavior. A substantial breach of any of these implied duties is cause
for termination.
In the absence of a definition or clear indication of the meaning of cause in a contract of employment or an employee handbook, the courts have defined the term along the following
lines: “Fair and honest reasons, regulated by good faith on the
part of the employer, that are not trivial, arbitrary, or capricious, unrelated to business needs, goals, or pretextual. A reasoned conclusion, in short, supported by substantial evidence
gathered through an adequate investigation that includes notice
of the claimed misconduct and a chance for the employee to
respond.”
In a Wyoming case, the court adopted a definition similar
to the above. The court went on to say that, in determining
whether an employer had cause for termination, the question
is not, “Did the employee in fact commit the act leading to
termination?” Rather, the question is, “Was the factual basis
on which the employer concluded a dischargeable act had been
committed reached honestly, after an appropriate investigation
and for reasons that are not arbitrary or pretextual?” In other
words, the courts are not going to second-guess an employer’s business judgment so long as the decision to terminate is
reached honestly and fairly.
ALERT!
If the employer is unionized, the definition of cause is in the collective bargaining agreement and termination procedures may be different.
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68 The SHRM Essential Guide to Employment Law
SEVERANCE PAYMENTS AND RELEASES
Some employment contracts, particularly those with higher-paid
executives, provide for severance payments on termination. The
payment may be conditioned on the employee’s being terminated without cause or quitting with good reason, or it may be
triggered by a change in ownership or control of the company.
The payment should also be conditioned on the employee’s signing a general release of claims. (Severance payments to high-level
executives are sometimes called golden parachutes.) Absent such
a contractual obligation, employers are not required to pay severance, even to long-time, faithful employees.
In a reduction-in-force termination, the employer might nevertheless pay severance voluntarily as a reward for many years of
service or to maintain morale among remaining employees. In an
effort to reduce labor costs, an employer might also use an offer
of severance as an incentive for employees to voluntarily quit or
retire.
An employer’s offer of severance is typically accompanied by
a request that the employee release any claims he or she might
have against the employer. A release in these circumstances would
be unenforceable if the employee derives no additional benefit
beyond what he or she is already entitled to, so the severance
serves as consideration in exchange for the release.
A release is typically broadly worded to cover any possible
claims that might arise out of the employment relationship and
its termination, including claims under federal and state discrimination laws, possible violations of mandatory leave laws, defamation, and invasion of privacy. To be effective under the Age
Discrimination in Employment Act (ADEA), the release must
comply with detailed statutory requirements, including giving
the employee 21 days to consider the release and an additional
seven days after signing to change his or her mind. When the
release is part of an exit incentive package offered to a number
of employees, the 21 days extends to 45, and the employer must
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Terminating the Relationship 69
provide additional information about the ages and job categories
of employees who are and who are not being offered the exit
incentive. (See Chapter 16 for more on age discrimination and
the ADEA.)
Certain provisions should not be included in releases, would be
unenforceable if included, and might even be considered retaliatory. For example, the employee should not be asked to waive
his or her right to file a charge with the EEOC, state or local
human rights agencies, or the National Labor Relations Board.
Nor should a release prohibit the employee of a public company
from filing a whistle-blower complaint with the Securities and
Exchange Commission (SEC). Employees of U.S. government
contractors and federal grant recipients have a right to report
waste, fraud, and abuse. A nondisparagement provision (by which
the employee agrees not to make negative statements about his
or her employer) or a confidentiality provision may be so broadly
worded as to interfere with these statutory rights.
A release should specify how the severance payment is to be
treated and reported for tax purposes. Since the payment is normally in consideration of the employee’s previous work, it will
be treated as wages subject to withholding and payroll taxes and
reported as W-2 income. But in limited circumstances, when a
claim of discrimination or other law violation has actually been
made, the parties may agree that a portion of the severance is
in settlement of an emotional distress claim—a taxable payment
reported on Form 1099, but not subject to withholding or payroll taxes.
ALERT!
Depending on how they are structured, severance payments could be deemed nonqualified deferred compensation under Internal Revenue Code §409A, triggering unintended
tax consequences for the departing employee and a claim of misrepresentation or breach
of contract against the employer. (Nonqualified deferred compensation plans are discussed in Chapter 9.)
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70 The SHRM Essential Guide to Employment Law
CONSTRUCTIVE DISCHARGE
When the law looks behind the form of a transaction to discover its true substance, it uses the strange term constructive. In a
constructive discharge, it may appear that the employee quit, but
because of the underlying circumstances, the law concludes that
he or she was fired.
Take, for example, employees who are told that unless they
quit, they will be fired. It is easy to see why the law would view
that as an involuntary termination. An employer’s request for a
resignation will be treated the same way.
But the concept of constructive discharge goes beyond the
quit-or-be-fired scenario. When an employer permits working
conditions to become so intolerable that a reasonable person
would quit, an employee who actually does quit rather than suffer
the conditions will be deemed to have been fired. To illustrate,
suppose serious safety hazards exist at the workplace that the
employer knows about but refuses to fix. Or suppose a minority
employee is subjected to severe and pervasive racial harassment
by supervisors and fellow employees.
Under certain circumstances, a change in title or duties could
amount to a constructive discharge. For example, the president
of a company, whose contract specifies that he or she is the chief
executive officer, might be able to claim constructive discharge
on being required to report to the newly appointed chair or being
stripped of some of his or her executive authority, even though
the president’s salary remains the same.
The point of a constructive discharge is that an employer will
be held liable to the same extent as if it had directly fired the
employee. If there was a contract of employment and insufficient grounds for termination, the employer will be answerable
for breach of contract. And in the racial harassment example
given above, the employer can be charged with illegal racial
discrimination.
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Terminating the Relationship 71
ALERT!
Employer liability for harassment is not dependent on the employee actually quitting.
Merely subjecting an employee to severe and pervasive harassment can constitute illegal
discrimination. (See Chapter 15 for more on harassment.)
RETALIATION
Most federal and state laws that grant statutory rights to employees
go on to prohibit employers from retaliating against their employees
for exercising those rights. Examples of rights include the following:
• federal and state nondiscrimination laws
• federal and state wage and hour laws
• employee benefit plans governed by the Employee Retirement
Income Security Act
• federal labor laws
• federal and state workplace safety laws
• federal and state protected leave laws
• state workers’ compensation laws
• whistle-blower laws, such as the False Claims Act that encourages
employees to report government fraud
• federal corporate ethics laws, such as the Sarbanes-Oxley Act
These statutes effectively modify the at-will employment relationship by prohibiting an employer from terminating or otherwise retaliating against an employee, despite the employee’s at-will
status.
Retaliation claims sometimes become the tail wagging the dog.
In the discrimination arena, for example, an employee may have a
weak or improbable claim of race or sex discrimination, but when
the employee complains, the employer responds by firing the
employee. In effect, the employer has converted a weak discrimination claim that the employee would probably have lost into a
strong claim of retaliation that the employee will likely win.
While the acts constituting retaliation must be sufficiently
adverse to dissuade a reasonable employee from pursuing a claim
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72 The SHRM Essential Guide to Employment Law
of discrimination, they do not need to be employment-related.
That is, the retaliation need not involve firing, demotion, undesirable transfer, or similar job-related punishment, so long as it would
likely discourage the ordinary employee from exercising his or her
legal rights. As the Supreme Court said in Burlington Northern &
Santa Fe Railway Co. v. White, “An employer can effectively retaliate against an employee by taking actions not directly related to
his employment or by causing him harm outside the workplace.”
CASE STUDY:
RETALIATION
In a federal appeals court case, a father and son were both employed by
the same organization. When the father complained of discrimination,
the employer retaliated by firing the son. The court said that form
of retaliation is also illegal under federal nondiscrimination laws,
pointing out that to retaliate against a man by hurting a member of
his family is an ancient method of revenge and is not unknown in the
field of labor relations.
WHISTLE-BLOWER REGULATIONS
Persons who go public with violations of law by their employers,
particularly violations involving fraud against the government, are
known as whistle-blowers. In the absence of specific statutory protections, whistle-blowers may find themselves out of a job with little
right to complain. A number of jurisdictions have decided, however,
that whistle-blowers should receive some limited protection.
A Civil War-era federal statute known as the False Claims Act permits anyone who learns about fraud against the U.S. government to
file a lawsuit in the name of the government. For example, suppose
a computer company that has a contract to provide programming
services to the U.S. Department of Treasury overbills for time spent
in writing a software program. If a disgruntled company employee
learns of the overbilling and files suit against the company under
the False Claims Act, a provision of the act prohibits the company
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Terminating the Relationship 73
from firing or otherwise retaliating against the employee. The act
provides the employee with an incentive to sue by allowing him or
her to collect a percentage of any recovery from the suit.
Some states have enacted their own whistle-blower laws protecting employees who disclose fraud at the state level.
The Dodd-Frank Act authorizes the SEC to pay rewards to individuals who provide original information that leads to successful
SEC enforcement action. Employees of public companies who voluntarily provide information of securities violations and who are
not otherwise required by law to report such violations may recover
substantial whistle-blower rewards. (Press reports say that between
2011 and 2016, the SEC awarded approximately $149 million to
some 41 whistle-blowers under this program.) When an employee
makes such a report under the reasonable belief that the information
relates to a possible securities law violation, the employer is prohibited from retaliating against the employee or otherwise interfering
with communications between the employee and the SEC.
Employees of U.S. government contractors, subcontractors, and
grantees are also protected by federal law when reporting waste,
fraud, and abuse both to government officials and internally to company officials. (See Chapter 22.)
ABUSIVE DISCHARGE
An important variation on the retaliation theme arises when no statute expressly prohibits retaliation, but when a significant, well-established public policy is involved. When a firing tends to undercut
such a policy, courts may characterize the discharge as abusive or
wrongful and allow the employee to recover damages against the
employer despite an at-will employment relationship.
To illustrate, suppose an employee is instructed to make a delivery
using the company truck. The employee points out that the truck’s
safety inspection sticker has expired and that it is illegal to drive a
truck with an expired sticker. In addition, brake repairs are needed
for the truck to pass reinspection. The employer’s supervisor insists
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74 The SHRM Essential Guide to Employment Law
that the delivery be made anyway, and when the employee refuses,
he is fired. Many states would view that as an abusive discharge,
because it undercuts an important state highway safety policy.
There is no clear answer as to what public policies will override
the at-will employment doctrine. The doctrine of abusive discharge
has been developed (and is still developing) on a case-by-case basis
as suits come before the courts. In addition, judges’ views of what is
and what is not important and well-established public policy differ
from state to state and over time.
One consistent theme has emerged from the cases: firing an
employee for refusing to commit an illegal act or for fulfilling a duty
required by law is abusive and will provide grounds for a wrongful
discharge suit in most states. Another theme involves an employee’s
exercise of rights granted or protected by law. For example, employees covered by workers’ compensation statutes have a right to file
claims for work-related injuries and cannot be fired (or otherwise
disciplined) for doing so. Refusal to take a lie detector test is also
not grounds for firing, since in most circumstances administering
the test would be illegal.
Things become less clear when the employee is engaged in conduct that is permitted by law or seen as socially desirable but is not
necessarily protected by law.
CASE STUDY:
RIGHT TO CONSULT WITH COUNSEL
Suppose a dispute arises between employer and employee, and when the
employee threatens to contact a lawyer for advice regarding the dispute,
he or she is fired. Is the right to consult with counsel so fundamental
that termination for exercising that right violates public policy?
A 1994 federal case applying Iowa law concluded that termination
under those circumstances did violate Iowa public policy. An Ohio
state court reached the same conclusion. But a decision by Maryland’s
highest court in 2003 ruled otherwise, saying that while access to
counsel may be favored, there is no violation of any clear mandate of
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Terminating the Relationship 75
Maryland public policy in firing an employee for involving counsel in
an employment dispute.
Knowing how to proceed in the face of uncertain and changing rules can be difficult for an employer. At the least, a prudent
employer should hesitate to fire an at-will employee for engaging in
an activity that is protected or encouraged by the law or that is usually considered of value to society, or for refusing to engage in illegal
conduct or conduct that is usually considered immoral or otherwise
improper.
ALERT!
In a number of states it is illegal to fire or discipline an employee for his or her lawful,
off-duty conduct. In Washington, D.C., for example, an employer cannot discriminate
against an employee who smokes (although the employer has no obligation to allow
smoke breaks during working hours).
DEFAMATION LIABILITY
It may be surprising to learn that one of the more significant liabilities an employer faces is defamation. In fact many abusive discharge
cases include claims of defamation.
To defame someone is to make a false statement of fact that injures
the person’s reputation. A written defamatory statement is libelous;
a spoken defamatory statement is known as slander. In order for a
person to have a good claim of defamation, the false statement must
be published—communicated either in writing or orally to a third
person. Generally, to be defamatory the statement must be one of
fact, such as, “John stole office supplies for his personal use.” Mere
statements of opinion, such as, “John does not use office supplies
efficiently,” are not usually defamatory.
Conduct can also amount to defamation. Suppose that after
being informed of a termination, an employee is escorted off the
employer’s premises by senior management. Even though the
employee may feel embarrassed, that conduct alone probably
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76 The SHRM Essential Guide to Employment Law
does not constitute a defamatory publication. But suppose that
instead of being escorted by management, the company uses its
security guards who, in the process, search the employee and
question him or her at length about suspected stealing, all in
front of co-workers. That conduct could give rise to a good defamation claim.
Privileged Statements
A statement that might otherwise be defamatory can sometimes be
privileged or protected by law from a claim of defamation. Privileges
come in two types: absolute and conditional (sometimes called qualified). When a member of Congress makes a speech on the House
floor, for example, the statements are absolutely privileged, meaning
that he or she can never be sued for defamation, no matter how
offensive the words might be. In contrast, employers that give references for former employees, that issue warnings and termination
letters, and that offer candid employee evaluations are entitled only
to a conditional privilege.
The employer’s privilege is conditional because it can be lost if the
employer handles the communication in any of the following ways:
• issues it without any legitimate business purpose
• issues it with knowledge of its falsity or with a reckless disregard
for its truth or falsity
• issues it with malice, spite, or ill will toward the employee
• disseminates it beyond those who have a business need to know
To illustrate, suppose an employee is terminated, finds a new position, and after starting work at the new job, the old employer contacts the new employer and, without being asked, relates derogatory
information about the new employee. This blacklisting of a former
employee will be compelling evidence of malice and will also void
any privilege defense.
Unfortunately for the employer, issues of legitimate business purpose, malice, spite, ill will, and excessive dissemination usually turn
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Terminating the Relationship 77
on the specific facts of each case. As a result, even weak defamation
claims may result in protracted and expensive court proceedings.
Job References
Job references present a special problem. On the one hand, if
the employer provides highly detailed information about a
former employee, including factual statements and opinions
that go beyond what the prospective new employer specifically
asked, the employer runs a substantial risk of a defamation or an
invasion-of-privacy claim. On the other hand, if the employer
undertakes to provide a reference but then provides a skimpy or
inaccurate one, or leaves out favorable information, a defamation
claim may loom as well.
ALERT!
Giving a bad reference for a former employee in retaliation for the employee’s filing a
discrimination claim is itself illegal discrimination under Title VII. (See Chapter 14.)
Rather than run these risks, some employers have adopted a neutral reference or no-comment policy under which they do no more
than confirm dates of employment and perhaps title and salary.
While such a policy may be the safest for individual employers, it has
a social cost in restricting the amount of pertinent information available to prospective employers. Less qualified workers may get jobs
that more qualified applicants would have received had full information been available. Worse, persons who would otherwise be rejected because of the danger they pose to the public may not be weeded
out in the application process.
A middle ground is to adopt a no-comment policy but to make an
exception when the employee or former employee approves in writing the content of a proposed reference letter, authorizes its issuance, and releases the employer from liability for issuing the letter.
Whatever policy you adopt, be sure it is communicated to all
employees and that it is faithfully followed. The policy should also
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78 The SHRM Essential Guide to Employment Law
identify those persons within the company who are authorized to
give out reference information, and it should prohibit everyone
else within the company from doing so.
Some states offer a measure of protection for employers that
provide information to prospective employers about an employee’s or former employee’s job performance or reason for termination. In these states, by statute, mere negligence in providing
an erroneous reference is not sufficient to support a defamation
suit. Instead, the unhappy employee must show that the employer acted maliciously or intentionally in disclosing false reference
information.
Compelled Self-Publication
A bizarre twist on the law of defamation deserves mention. Suppose an employer terminates an unsatisfactory employee and tells
the employee the reason for the termination. Further, suppose
the employer tells no one else about the reason and, consistent
with the employer’s no-comment policy, confirms only the dates
of employment, job title, and salary to a prospective new employer. No defamation claim could possibly be brought, right?
Unfortunately, no. Some courts have adopted a doctrine
known as compelled self-publication, which holds that since the
employee must honestly tell a prospective employer about the
reason given for the termination, the employee has no choice but
to defame himself or herself and may therefore sue the former
employer. Fortunately, the doctrine of compelled self-publication
is not widely recognized.
ALERT!
Giving a favorable but inaccurate reference may expose an employer to third-party
liability. For example, if a former employer is asked for a reference by a subsequent employer but fails to mention the employee’s dangerous propensities, and the
employee later causes injury or damage, the former employer may be liable for the
injury or damage.
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Terminating the Relationship 79
CASE STUDY:
LIABILITY FOR MISLEADING REFERENCE
An anesthesiologist in Louisiana had a drug problem. After he failed
to answer a page while on duty, he was fired. When the anesthesiologist
later sought hospital privileges in Washington state, his former colleague
wrote a glowing letter of recommendation, saying he was an excellent
anesthesiologist and was capable in all fields of anesthesiology. The letter
concluded, “I highly recommend him.” No mention was made of the
drug problem. After being hired by the hospital and while working
under the influence of drugs, the anesthesiologist permanently injured
his patient. The hospital’s insurance company paid millions to the
patient and then successfully sued the former colleague who had given
the misleading recommendation.
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS
Another ground on which an employer can be held liable is intentional infliction of emotional distress. In general, if an employer (or
anyone else, for that matter) acts in an extreme or outrageous way
and either intentionally or recklessly causes someone else to suffer
severe emotional distress, the victim of such conduct can recover
damages in court. Claims for intentional infliction of emotional distress are sometimes coupled with charges of harassment based on
sex, race, or other protected categories.
CASE STUDY:
EMPLOYER POTENTIALLY LIABLE
FOR INTENTIONAL INFLICTION
In a strange case involving Georgetown University in Washington,
D.C., an employee of the university claimed that her supervisor placed
two electrically operated noisemakers outside the supervisor’s door aimed
at the employee’s workplace. According to the employee, the devices
emitted an unbearably loud, static-sounding, piercing, humming, and
droning noise every hour of the workday for some nine months, causing
the employee extreme emotional distress. Despite her complaints, the
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80 The SHRM Essential Guide to Employment Law
university did nothing. The U.S. Court of Appeals for the D.C. Circuit
ruled that the employee stated a good claim for intentional infliction
of emotional distress and that the case should not have been dismissed
before trial.
EMPLOYEE DUE PROCESS
We so often hear terms like due process, freedom of speech, freedom
of the press, and freedom of information that we may be tempted to
think these rights apply in all our relationships. Not so. The constitutional right of due process limits the ways in which the government
can deal with us. Our free speech right only prevents government
censorship. Federal and state freedom-of-information acts and sunshine laws guarantee us access only to certain government information and proceedings.
Except for government employees, the employment relationship
generally does not include employee due process rights. An at-will
employee can be arbitrarily disciplined or fired without any right to
a hearing, without any opportunity to explain or justify the supposedly offending conduct, and without any opportunity to confront
the person who supposedly reported any offending conduct. (Of
course, arbitrariness is seldom the best way to manage employees.)
There are a few limited exceptions to an employer’s ability to act
out of sheer arbitrariness. An employer cannot, for example, discriminate on the basis of race, ethnicity, gender, or other irrelevant
characteristics; an employer cannot discharge an employee in violation of a protected leave law or public policy; and an employer
cannot act contrary to its contractual obligations.
When an employee does have an employment contract, or when
an employee is a member of a union that has a collective bargaining agreement, an employer’s right to discipline or discharge the
employee is typically limited by the contract to for cause terminations. The contract may also provide a grievance procedure, leading
to binding arbitration, should an employee dispute the employer’s
personnel action. Even absent an employment contract, statements
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Terminating the Relationship 81
in an employee handbook dealing with disciplinary procedures may
rise to the level of a contractual obligation.
Fifth Amendment
The Fifth Amendment to the U.S. Constitution grants each person
the right against being “compelled in any criminal case to be a witness against himself.” In other words, no one may be compelled,
under threat of being held in contempt of court, to answer questions under oath when the answers might help convict the person of
a crime. Although the amendment is limited to compelled testimony in criminal cases, the Supreme Court has held that the protection
applies in a range of situations in which testimony is coerced, including civil cases, grand jury proceedings, depositions, and appearances
before Congress.
The privilege is limited to testimony and does not extend to compelled production of physical evidence such as handwriting exemplars and blood specimens. Nor does the privilege protect documents
from compelled disclosure, unless by the very act of producing the
document the person is admitting the existence or possession of
the document and thereby incriminating himself or herself. (The
Fourth Amendment’s right against unreasonable searches and seizures is discussed in Chapter 18.)
Corporations and other organizations have no Fifth Amendment
privilege. So if a corporation is served with a subpoena for records, it
has no basis, at least under the Fifth Amendment, to resist the subpoena and refuse to produce the records. While corporate officials
can claim the privilege to protect themselves from incrimination,
they cannot claim privilege to protect their corporate employer.
If employees are invited or required to testify, an employer
cannot in any way encourage employees to claim the privilege,
threaten them should they fail to do so, or promise rewards for
doing so. This type of conduct could amount to an obstruction of
justice—a serious crime that will likely get the prosecutor’s attention. Employers also need to avoid indirect encouragement. This
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82 The SHRM Essential Guide to Employment Law
can arise, for example, when the employer urges employees to
be represented by the same attorney who represents the company, and the attorney, in turn, advises the employees to claim the
privilege.
Employers are generally free, however, to require their employees to testify, and to discipline them if they refuse and claim the
privilege. Remember that the Fifth Amendment is designed to
protect against government, not private, coercion.
ALERT!
In jurisdictions in which the abusive discharge exception to the at-will employment
doctrine is unsettled, employers should be cautious in firing an employee for claiming
the privilege. It is conceivable that a court would find a public policy protecting an
employees’ Fifth Amendment rights.
DOWNSIZING AND MASS LAYOFFS
Terminating an employee is among the most difficult tasks facing
any employer. When a decision is made to lay off a significant portion of the workforce, the difficulty and the legal risks are multiplied. Particularly in tough economic times, laid-off employees
will have a more difficult time finding new employment, so their
incentive to sue is even greater.
QUICK TIP
When an exit incentive program is made available to a class or group of employees,
coupled with a severance agreement and release, the Older Workers Benefit Protection
Act requirements may be triggered. (See Chapter 16 for more details.)
While the legal risks associated with a mass layoff can never be
entirely eliminated, employers can take steps to reduce their exposure by doing the following:
• considering other cost-saving alternatives to a layoff, such as
offering wage rate or hour reductions to employees
• developing and documenting the business reasons for the layoff
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Terminating the Relationship 83
• focusing on positions, not people, to be eliminated
• hiring an outside expert to help decide what positions to
eliminate
• making sure that layoff decisions are not influenced in any way
by discriminatory factors, such as race, gender, or age
• using an outside expert to review the unintended impact along
race, gender, and age lines once tentative layoff decisions have
been made
• offering severance packages, early retirement packages, or other
exit incentives in exchange for a release of all claims
• following customary exit interviews and procedures for each
individual being laid off
Worker Adjustment and Retraining Notification
The federal Worker Adjustment and Retraining Notification Act
(WARN Act) requires an employer with 100 or more employees
to provide notification 60 days in advance of a planned plant closing or mass layoff. In determining whether an employer meets the
100-employee floor, only full-time employees are counted, unless
part-time employees in the aggregate work at least 4,000 hours per
week, in which case part-time employees are counted as well.
A mass layoff for WARN Act purposes is a layoff of at least 50
employees at a single site that amounts to at least 33 percent of the
employees at that site. So, if an employer has 1,000 employees at a
given site and lays off 100, that would not be a mass layoff.
The 60-day notice must be given to the affected employees, to
the state dislocated worker unit, and to the chief elected official of
the local government where the plant closing or layoff is to occur.
The WARN Act recognizes that in some circumstances employers may not be able to give the requisite notice. The act’s unforeseeable business circumstances exception is applicable when a
similarly situated employer exercising commercially reasonable
business judgment would not have foreseen the closing. So long
as an employer is exercising reasonable business judgment, the
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84 The SHRM Essential Guide to Employment Law
employer will not be held liable under the WARN Act for failing
to predict economic conditions that may affect demand for the
organization’s products or services.
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