The general rule is that the employment of an “at will” employee can be terminated at any time and for any reason by either the employee or the employer. However, for employers, there are some very important caveats, and failure to take necessary precautions can be a very costly mistake.

Regardless of the employee’s “at will” status, if the reason for termination is an illicit reason (contrary to law), the employee may be entitled to recover damages (e.g., unpaid wages), penalties and attorney fees. Illicit grounds for termination may include illegal discrimination based on race, religion, national origin, gender, age or disability. Retaliation against an employee for making a complaint or claim for discrimination or sexual harassment, or for supplying information in support of another employee’s claim is also actionable. Whistleblowers (e.g., employees who report unsafe work conditions or criminal activity in the workplace) are also a class of employees who are, by law, protected against retaliation.

An employer contemplating the termination of an employee who has a prior claim, complaint or report should proceed with great caution. Even if the stated grounds for termination are lawful, the employee can allege that the stated grounds (e.g., tardiness, poor job performance, insubordination) are a “pretext” for the true, illicit motivation for termination. And, to successfully defend such a claim, the employer will need to be able to satisfy the court that its motivation for termination was non-discriminatory and non-retaliatory. An employer has a greater chance of successfully defending such claims when the lawful grounds for termination are (1) clearly and objectively documented, (2) company policy and procedures are strictly followed and (3) the employer can demonstrate a consistent practice, historically, of terminating other employees for the same or similar reasons.

It is always advisable to consult with an attorney with employment law experience before terminating an employee; in fact, some insurance companies covering risks associated with employers’ liability require an attorney consult as a condition of coverage. The attorney can assist you in determining whether the employee is truly an “at will” employee or an employee “for term,” in which case “just cause” may be required for termination. An attorney can also assist with assessing the risks of termination before the decision is finalized.

Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.