With exception of an employment contract or unionized employees, Michigan is employment “at-will”, which means the employer or employee can terminate the employment relationship for any reason or no reason at any time. However, employers are generally subject to possible legal action if the termination by the employer involved a violation of an employee’s legally protected rights under state and/or federal law (as applicable to the employer). By way of illustration, an employer cannot terminate an individual if such termination was based on a discriminatory reason(s). Over my 25 years of legal practice representing both employees and employers in the workplace in Michigan, the following are a list of common termination mistakes made by employers that may leave them legally exposed:
- Not having the proposed termination and related documentation reviewed first by legal counsel
- Making an emotional or impulsive decision
- Not following a progressive disciplinary process if the employer has one
- Terminating an employee after they have made a claim that the employer violated a protected right of an employee under the law
- Failure of an employer to investigate a prior employee complaint involving a potential violation of an employee’s protected right under the law
- Terminating an employee for an event/situation where prior employees were not terminated for the same event/situation
- Disciplining employees for frivolous issues
- Terminating an employee under false pretenses (i.e., making up a reason)
- Not having a witness for the employer at termination
- Not conducting an exit interview of the employee
- Not providing a legitimate, non-discriminatory reason(s) for termination
- Giving multiple, inconsistent reasons for the termination
- Giving bad performance reviews when the employee previously had consistently good performance reviews
- Terminating an employee for performance-based reason(s) that are not realistically obtainable
- Mishandling the termination
- Not following the procedures outlined in an employee manual/handbook
- Poor timing of the termination
- Not having documentation to support the termination reason(s)
- Waiting too long after an event/situation to terminate the employee
- Terminating an employee shortly after they filed a complaint with a government agency concerning the employer or where an employee threatens an employer to file a complaint with a government agency
- Terminating employees to save on wages
- Not following proper employer termination procedures
- Giving other employee preferential treatment
- Not offering a separation package when appropriate under the circumstances
- Unless a serious offense, failing to discuss the problem with the employee prior to termination
The U.S. Equal Employment Opportunity Commission (“EEOC”) is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person’s race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age (40 or older), disability or genetic information. It is also illegal to discriminate against a person because the person complained about discrimination, filed a charge of discrimination, or participated in an employment discrimination investigation or lawsuit. Most employers with at least 15 employees are covered by EEOC laws (20 employees in age discrimination cases).
The EEOC’s priority focus, include:
Eliminating Barriers in Recruitment and Hiring The primary focus will be on class-based recruitment and hiring practices that discriminate against racial, ethnic, and religious groups, older workers (over 40), women, and people with disabilities. Areas include exclusionary policies and practices, job segregation, channeling/steering of individuals into specific jobs due to their status in a particular group, restrictive application processes (including online systems that are inaccessible to individuals with disabilities), and screening tools that disproportionately impact workers based on their protected status (e.g., pre-employment tests, background checks impacting African Americans and Latinos, date-of-birth inquiries impacting older workers, and medical questionnaires impacting individuals with disabilities.
Addressing Selected Emerging and Developing Areas
- Qualification standards and inflexible leave policies that discriminate against those with disabilities;
- Accommodating pregnancy-related limitations under the ADAAA and Pregnancy Discrimination Act
- Protecting lesbians, gay men, bisexuals and transgender (LGBT) people from discrimination based on sex;
- Clarifying the employment relationship and the application of civil rights protections in light of increasing complexity of employment relationships and structures, including temporary workers, staffing agencies, and independent contractors.
Preserving Access to the Legal System The EEOC will focus on policies and procedures that limit substantive rights, discourage or prohibit individuals from exercising their rights under employment discrimination statutes, or impede EEOC’s investigative or enforcement efforts. Specifically, the EEOC will focus on: 1) overly broad waivers, releases and mandatory arbitration provisions; 2) employers’ failure to maintain and retain applicant and employee data and records required by EEOC regulations; and 3) significant retaliatory practices that effectively dissuade others in the workplace from exercising their rights.
Quite frequently, as an experienced business attorney, entrepreneurs have asked me what things they need to be conscious of and be knowledgeable in when owning a business. Although many business owners are great at what they do, they do not necessarily have the know-how about business related subjects which will ultimately play an important role in their success in their business venture. As such, I have come up with a list of areas that I feel are important for any business owner to be knowledgeable in or to at least have access to experienced legal counsel, a certified public accountant and a business related insurance agent or agency.
- Business Insurance. Almost all businesses need some form of insurance to protect either themselves as owners or the company as a whole. A business owner should sit down and explore all the business insurance programs available to them consistent with their business operations and needs. Business insurance is an important part of protecting business assets and the owners from potential exposure. For example, if a company handles a lot of money, the company should consider getting employee dishonesty insurance to cover the potential exposure of an embezzlement claim.
- Government Regulations. Business owners should be cognizant of all government regulations that could affect the workplace. This includes tax, employment, and conducting business in general (e.g. licensing). Some businesses, depending on the specific industry, are more regulated than others. For example, the trucking industry might be more highly regulated by laws than perhaps a pizza establishment.
- Business Taxes. A general understanding of all taxes related to the company is important. Knowing how much tax will be assessed to businesses is as equally important as getting an understanding of when they need to be paid as well as what forms need to be filed with local, state and the federal government. Failure to pay taxes when due and in the amount due could have a serious, detrimental impact on a business.
- Business Contracts. Ultimately businesses will be doing businesses with third parties (e.g. vendors, employees, individuals, other companies, etc.), and in many of those instances, a written agreement is important to protect the interests of the business. In many instances, contracts will dictate what the parties have agreed upon.
- Intellectual Property. Protecting your name, product, slogan, or services are extremely important in business. Getting trademarks, patents, and copyrights protects you from competitors.
In my opinion, when running a business, business owners should have 3 “trusted” advisors which would include an experienced business attorney, certified public accountant and a business insurance agent or agency