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Legal Issues
Mar 15, 2015

Employment-At-Will: What Does It Mean For Your Business?

Sponsored Content provided by Benton Toups - Attorney, Cranfill Sumner & Hartzog LLP

I regularly field calls from small business owners who describe a problem employee to me and then ask, “Do I have good grounds to terminate the employee?” Many such callers are surprised when I explain to them that, in North Carolina, businesses technically don’t need any grounds for terminating an employee. That is because North Carolina adheres to the doctrine of employment-at-will.
 
Employment at Will: What it means for employers
 
North Carolina employers are free to terminate employees for a good reason, a bad reason, or no reason at all. Taken to its literal extreme, I explain to clients, this means that if you have an employee show up to work with an ugly tie, you are perfectly within your legal right to tell him, “Your tie is ugly. Pack your things. You’re fired!” Of course, such a termination would be terribly unfair. It would also be terribly foolish. But it wouldn’t be illegal.
 
Exceptions to the Rule
 
Like any good rule, however, the employment-at-will doctrine has exceptions – lots of them. For instance, under various state and federal laws, it is illegal to terminate employees because of:

  • Race
  • Sex
  • Religion
  • National Origin
  • Color
  • Pregnancy
  • Age
  • Actual disability
  • A history of disability
  • A perceived disability
  • A workers’ compensation claim
  • A complaint over wages
  • A complaint over workplace safety
  • Discussions with coworkers over the terms of employment
  • Use of tobacco products outside of working hours
  • The employee’s genetic makeup
  • And many more ...
As you can see, there are so many exceptions to the rule that the rule almost isn’t a rule anymore.  Taking this into account, clear communication and documentation are key. In addition to avoiding personnel decisions based on the protected categories listed above, employers must take care to avoid even the perception that the decision was motivated by some illegal animus, since perception alone is often enough to induce the affected employee to seek legal redress.
 
Last month I submitted an article for this series that focused on the need for honestly and transparency in employee terminations, and the discussion above further illustrates the importance of that. Because of the employment-at-will doctrine, your reason for termination does not have to be good. As counter-intuitive as it seems, it doesn’t even have to be fair. It just cannot be one of the reasons designated as illegal. Whatever your particular reason might be, it should be transparent.
 
I will end with a comment that I am sure need not be conveyed to the vast majority of readers. While employers technically do not need a good reason to terminate employees, requiring one is certainly the best practice. You aren’t characters in some law school exam question. You have a product to produce, or a service to provide, and your employees make that possible.  It’s no secret that employees are happiest and most productive when they are treated fairly. I also find that, in the majority of employment claims I defend, the employee simply feels “wronged.”  Avoid that, and you avoid lawsuits.
 
This content has been prepared for general information purposes only. This information is not intended to provide specific legal advice. Legal advice is dependent upon the specific circumstances of each situation. The information provided cannot replace the advice of competent legal counsel by a licensed attorney in your state.
 
Benton L. Toups is a partner at Cranfill Sumner & Hartzog LLP and serves as vice-chair of the Employment Law Practice Group. His practice concentrates on representing businesses in all aspects of labor and employment law. A firm believer in the adage that “an ounce of prevention is worth a pound of cure,” Toups counsels employers on day-to-day issues and assists them in developing and implementing policies to avoid employment litigation. To contact Toups, call (910) 777-6011 or email him at [email protected].

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