Category Archives: Discipline and Discharge

Quirky Question # 167; Who Has the Burden of Proof When Terminating an Executive For Cause?

Question:

Our company is considering terminating a C-level executive for cause pursuant to a provision in his employment agreement. I mentioned this to a friend of mine who is an attorney and she said the company will be obligated to prove our actions were justified. This does not make sense to me. I thought that, like nearly all plaintiffs, if our executive sued, he would have to prove his claims. Can you enlighten me? Answer→

Quirky Question # 160: Non-Competes and Public Policy

Question:

We are a nationwide company with offices and employees in nearly every state. One of our primary growth areas is California. We understand that California courts are generally inhospitable to post-employment restrictive covenants, including non-competes. But, we are trying to have uniform policies throughout our organization. Consequently, we still have confidentiality and non-compete language in our employees’ contracts, even for those who work in California.

Recently, one of our employees left our company and joined a competitor, also located in California. We understood that it would be difficult to enforce the non-compete so we simply called our competitor and pointed out our concerns regarding both our non-disclosure and our non-compete obligations. We advised our competitor that we would appreciate it if they would abide by the spirit of our non-compete and noted that we would reciprocate if provided the opportunity with regard to our competitor’s employees.

Our competitor terminated our ex-employee soon thereafter. Her lawyer has now written us to state that we have violated public policy. What is he talking about? We did not fire the employee. We just had a friendly chat with our competition. Answer→

Quirky Question # 156, Resignation for Good Reason

Quirky Question # 156

One of our key executives recently resigned. Under the terms of his contract, he had the right to resign for “good reason.” He claimed that due to certain financial restructuring our company underwent, his job was going to change significantly. Even if his supposition was correct, didn’t he have to wait until these events played out?

We checked his contract and the “good reason” provision is pretty employee friendly. The agreement states that his conclusion regarding “good reason” is entitled to deference from the company. Does that mean we have to accept any justification he advances?

As you likely suspect, if he resigns for good reason, he gets a substantial severance package. This too troubles us since he apparently resigned so he could accept a more highly compensated position with a friend of his at another company. This just isn’t passing the smell test for us. Do we have a reasonable chance of challenging him on these issues? Answer→

Bawdy Behavior Outside of Work, Quirky Question # 151

Quirky Question #151

We have several employees who periodically engage in somewhat bawdy behavior outside of work. (Surprise, surprise, sometimes alcohol is involved.) We don’t believe this behavior is consistent with the image our company would like to project. Can we discipline these employees for their conduct (which invariably is reported back to us)? Can we fire them?

Answer→

Firing Convicted Sex Offender, Quirky Question # 148

Quirky Question # 148:

Here’s a question that you may have addressed in the past. Unfortunately, the situation arises periodically and we’re still not sure how to handle it.

We recently learned that one of our employees is a convicted sex offender and is registered with a state agency as such. We want to terminate his employment. Will we be risking liability if we do so?

Answer→

Closely Held Companies and Lifetime Employment, Quirky Question # 143

Quirky Question # 143:

I read with interest your analysis of QQ # 140, dealing with closely held corporations.  We are in a similar situation, though we have the sticky additional issue you referenced of the matter involving a family member.  This person claims she is entitled to “lifetime” employment.  Given that she’s only in her late 40s, that’s a daunting prospect.  Moreover, as her siblings will attest (if forced), she simply is not competent.  Does the company really have to employ her for the next several decades? Answer→

Privately Held Corporations, Quirky Question # 140

Quirky Question # 140:

We have a small closely held company. Our owners are family members and a few close friends. Happily, our company has been increasingly successful. Unhappily, one of our executives does not seem capable of growing with the company. We have made a difficult decision to get rid of this at will employee. When we advised him of this decision, he said that because he felt he had been treated unfairly for some time, he had spoken with a lawyer. He also told us that he is not truly an “at will” employee and that we owe him higher duties. He claims we have breached the covenant of good faith and fair dealing. What is he talking about? Answer→