Firing an employee does not usually make national headlines, but the recent firing of FBI Director James Comey by President Donald Trump was a notable exception. The headlines continued when President Trump appeared to offer varying explanations for why Comey was fired. At first, the Trump administration asserted that the termination was based upon the recommendation of Assistant Attorney General Rod Rosenstein and was due to Comey’s conduct during the FBI’s 2016 investigation of Hillary Clinton. However, President Trump appeared to undercut this initial reasoning during a subsequent interview on national television with NBC’s Lester Holt and during an Oval Office discussion with Russia’s Foreign Minister and Ambassador to the U.S., in which the President at least arguably indicated that the decision was made by him solely in response to the FBI’s investigation into Russian interference in the 2016 presidential election. What could have been a normal Washington, D.C. personnel change (since the FBI Director serves at the pleasure of the President, who can fire him with or without cause) has now been seized upon (rightly or wrongly) by President Trump’s opponents as evidence of wrongdoing, and has led to the hiring of special counsel Robert Mueller to investigate these matters.
While this may all seem fascinating for a panel on Meet the Press, why is it at all relevant to employers in general? Particularly in the private sector, employers may often have almost complete discretion to terminate an employee, especially with respect to “at-will” employees, who can be terminated with or without cause at any time. However, such employees still cannot be terminated for an illegal reason (whether it is a President possibly trying to obstruct an investigation, or the owner of a company retaliating against a “whistleblower” or terminating an employee due to his or her race).
When an employee claims to have been fired for an illegal reason, an employer who gives an inconsistent, shifting or even implausible reason for the termination (even where arguably the employer did not need any reason for its actions) exposes itself to legal liability. Specifically, many of the civil rights, “whistleblower” and employment discrimination statutes have a burden shifting standard for determining liability, as adopted by the U. S. Supreme Court in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). As part of this standard, an employer can rebut claims of discrimination or retaliation by offering a legitimate nondiscriminatory (or non-retaliatory) reason for its decision to terminate an employee. The employee can then assert that the employer’s proffered legitimate, non-discriminatory/non-retaliatory reasons for its actions were “pretextual.” In other words, the employee can avoid having the case dismissed by putting forth adequate evidence to support a rational finding that the reasons proffered by the employer were false, and that “more likely than not” illegal discrimination or retaliation “was the real reason for the discharge.” Holt v. KMI-Continental, Inc., 95 F.3d 123, 129 (2d Cir. 1996). See also St. Mary’s Honor Center v. Hicks, 509 U.S. 502, 506-08 (1993). Thus, offering a false or shifting reason for termination can be the difference between having a case thrown out and having a case (and your company’s fate) put into the hands of a jury at trial, and worse.
Lessons Learned? When making a decision on terminating an employee (even if “at-will”), an employer should make sure that the personnel file and paper trail with respect to the employee’s deficiencies are consistent (and accurate). Over the years, I have had countless employers tell me that they did not accurately document (or even tell an employee about) his or her performance deficiencies out of fear of “hurting the employee’s feelings.” Such omissions will only cause the employer harm when it suddenly, after litigation commences, offers a previously undisclosed basis for its decision to terminate. In addition, a long delay between the misconduct and the disciplinary action will undermine the company’s case, as the employee’s attorney will doubtlessly assert that the employer has put forth a false reason for termination; in other words, if the misconduct was so serious, why did the employer fail to discipline the employee promptly, or even permit the employee to continue to work? Such delayed, shifting or false explanations for termination may cause a company to spend countless thousands of dollars defending, settling or even satisfying an adverse verdict, just as delayed, shifting or (possibly) false explanations for an FBI Director’s termination may cause a presidential administration to face a zealous investigation (or worse).