Employers Still Overzealous When It Comes To Firing ‘with Cause,’ Despite Potential Costs

You can walk any employee to the door for any or no reason at all, but you must pay for it

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Employment Law

You can walk any employee to the door for any or no reason at all, but you must pay for it

Courts describe dismissal for cause as “the capital punishment of employment law.” Terminating for cause sends this message to the fired employee: Your conduct is so egregious, and caused such irreparable damage to the employment relationship that you are being fired without severance.

The weight of a “for cause” termination may not just deliver a monetary blow, with fired employees being deprived of severance. If the fired employee has a public profile, and/or works in a niche industry where they are well-known, the risks to the employer are more significant. Terminating the employee for cause could have damaging reputational implications on them and their ability to find any other job — if they can put a number on that damage, they can sue you for it.

We have written about what qualifies as cause for many years. There are thousands of court decisions. Yet, we are still faced with the following two scenarios in our own practice: Employer clients who sometimes want to pull the “for cause” trigger without the requisite ammunition; and employee clients who are terminated by employers for cause allegations that were concocted — sloppily.

In both of those cases, our advice and warnings are the same: You can walk any employee to the door for any or no reason at all, but you must pay for it.

Low-level misconduct and/or low-level competence is not cause. Maybe it is tardiness, innocent absenteeism, poor performance generally, or an attitude at work that simply does not align with the environment you are trying to build.

You cannot withhold someone’s entitlement to severance for that type of misconduct, unless you undertake vigorous progressive disciplinary measures. That means every time the incident arises, you document, investigate and warn accordingly. Where it happens continuously, the disciplinary file should contain those warnings in writing. Most importantly, the employee must know that being involved in the “it” again will get them fired for cause.

Where the misconduct is serious, high-handed and callous, you might be able to promptly investigate and fire right away (provided of course that the investigation is not a farce, where an outside investigator is called in and it is obvious their mandate was to establish cause). This list of misconduct is short-ish: fraud, misrepresentation, harassment of others (sexual and otherwise), conflict of interest, serious insubordination, etc.

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