While employment at will is the law in most states, there
are a number of exceptions to this general rule that have been created
both by statute and by the courts. Through these exceptions, and contrary to an almost common belief,
employers cannot necessarily terminate employees for any reason.
Federal antidiscrimination laws protect employees from
losing their jobs on the basis of their race, color, national origin,
sex, religion, disability, pregnancy, age, or genetic information.
Employees can sue their former employers under a variety of antidiscrimination
laws, including Title VII of the Civil Rights Act of 1964 (42 USC Sec.
2000e et seq.), the Americans with Disabilities
Act (ADA) (42 USC Sec. 12101 et seq.), the Pregnancy
Discrimination Act (PDA), the Equal Pay Act(29 USC Sec.
206d), the Age Discrimination in Employment Act (ADEA) (29 USC
Sec. 621 et seq.), and the Genetic Information
Nondiscrimination Act (GINA) (42 USC Sec. 2000ff).
In addition, most states have enacted their own laws
prohibiting discrimination in employment, some of which include additional
protected classes such as sexual orientation, marital status, and
An employer may not terminate or otherwise discriminate
against an employee in retaliation for engaging in an otherwise protected
activity—for instance, making a discrimination complaint or participating
in the investigation of a discrimination complaint.
An employer may be found liable for retaliatory discharge
if the employee can prove that:
• He or she engaged in a protected activity;
• The employer was aware of the protected activity; and
• The employer subjected the employee to an adverse employment
action because of the protected activity (e.g., termination).
What is retaliation? The U.S. Supreme
Court has ruled that retaliation includes any action taken by an employer—whether
job-related or not—that is "materially adverse" and could dissuade
a reasonable employee or job applicant from exercising protected rights
(Burlington Northern and Santa Fe Ry. Co. v. White, 548 U.S. 53 (2006)).
Under the Court's decision, retaliatory actions are not
limited to actions that are employment-related (i.e., that affect
the terms and conditions of employment or that occur in the workplace),
but include any action by an employer that has a materially adverse
effect and could reasonably deter a person from engaging in activity
protected by Title VII.
Who is protected from retaliation? Title VII prohibits two types of retaliation: (1) the "opposition"
clause protects employees from retaliation when they oppose any practice
that is unlawful under Title VII; and (2) the "participation" clause
protects employees from retaliation when they make a charge, testify,
assist, or participate in an investigation, proceeding, or hearing
brought under Title VII.
The U.S. Supreme Court has held that the opposition clause
protects an employee from retaliation when he or she answers questions
during an employer's internal investigation of another employee's
improper conduct. The employee participating in the internal investigation
is deemed to have opposed unlawful conduct even if he or she did not
initiate the discrimination complaint (Crawford v. Metro. Gov't of Nashville and Davidson
County, 129 S.Ct. 846 (2009)).
The U.S. Supreme Court has also ruled that an "aggrieved
person" under Title VII is anyone with an interest intended to be
protected under the statute, including employees who have a relationship
with another employee who has brought a Title VII discrimination charge
against the employer (Thompson v. N. Am. Stainless, LP, 131 S.Ct.
863 (U.S. 2011)).
In this case, the plaintiff and his fiancée worked for
the same employer. Shortly after the employer learned that his fiancée
had filed a discrimination charge with the EEOC, the employer fired
the plaintiff. The plaintiff brought a lawsuit under Title VII claiming
unlawful retaliation, but the 6th Circuit Court of Appeals ruled that
the plaintiff could not pursue his claim because he had not engaged
in protected activity himself.
The Supreme Court reversed and ruled that the firing
could constitute unlawful retaliation against the fiancée and that
the plaintiff, by virtue of his relationship with her, was an aggrieved
person under Title VII who fell within the zone of interests protected
under the law. The Court concluded that the plaintiff was entitled
to bring his lawsuit claiming unlawful retaliation against him by
the employer. The Court declined to specify a "fixed class of relationships"
that would qualify an individual for third-party protection, other
than to state that firing a close family member would almost always
meet the standard and inflicting a milder reprisal on a mere acquaintance
probably would not.
Retaliation claims on the rise. The Crawford and Thompson decisions have significantly increased
retaliation litigation. The number of retaliation claims filed with
the Equal Employment Opportunity Commission (EEOC) has been climbing
steadily since those rulings, with retaliation claims marking the
most frequently filed type of workplace discrimination claim for several
years. These claims reinforce the importance of employers carefully
documenting the legitimate, nondiscriminatory reasons for terminating
Employers should be especially concerned about retaliation
claims because they can survive even when the underlying discrimination
claim is dismissed.
Retaliation against former employees. The U.S. Supreme Court has ruled that an employer may be held liable
for retaliation under Title VII if an unfounded and negative employment
reference is given for a former employee. In Robinson v. Shell Oil Co., 519 U.S. 337 (1997)), the Court
allowed a worker to sue a former employer for providing an unfavorable
job recommendation to another employer in retaliation for the worker's
filing a discrimination complaint. Accordingly, the term “employer,”
within the context of Title VII, may encompass former employers.
Statutes addressing retaliation.The principal federal civil rights
law, Title VII, prohibits employers from retaliating against employees
who oppose any unlawful employment practice or who make a charge,
testify, assist, or participate in any investigation, proceeding,
or hearing under the law. Illegal retaliation includes termination
as well as other employment actions, such as suspension, demotion,
altered work schedules or assignments, and negative performance evaluations.
Similar protections are also extended to employees under the ADEA,
the ADA, the Equal Pay Act, and the Family and Medical Leave
Section 1981 (Civil Rights Act of 1866). Even though the statute is silent on the issue of retaliation, the
U.S. Supreme Court held that 42 USC Sec. 1981, a federal civil rights
statute, also encompasses retaliation claims (CBOCS West, Inc. v. Humphries, 553 U.S. 442
Section 1981 is a post-Civil-War-era statute that gives
"all persons ... the same right ... to make and enforce contracts
... as is enjoyed by white citizens." In this case, the employee claimed
that his employer violated Section 1981 when it discharged him because
of his race and because he had complained to managers that a coworker
had also been discharged for race-based reasons.
Best practices. Terminating an
employee who has engaged in a protected activity is a matter that
should be approached with extreme caution. However, the mere fact
that a worker has filed a complaint should not alone prevent an employer
from terminating an otherwise undesirable employment relationship.
As long as the termination is warranted, is not imposed on a pretext,
and is consistent with past practice, the employer is theoretically
secure from liability.
The best possible protection against a claim of retaliation
is a written disciplinary record demonstrating that there was a legitimate
and nondiscriminatory reason supporting the action. An employer should
be able to show that clear, understandable work rules and disciplinary
policies were communicated to the employee and that the company personnel
policies were applied consistently in the case at hand.
There are also a number of federal laws that specifically
protect employees from retaliation for engaging in whistleblowing
Affordable Care Act (ACA). The
ACA amends the FLSA to prohibit employers from terminating or otherwise
discriminating against an employee who:
• Received a credit or subsidy under the ACA;
• Provided or is about to provide to the employer or the
federal or state government information the employee reasonably believes
relates to a violation of Title I of the ACA;
• Testified or is about to testify in a proceeding regarding
a violation of Title I of the ACA;
• Assisted or participated in such a proceeding; or
• Objected to or refused to participate in any activity,
policy, practice, or assignment that the employee reasonably believed
was a violation of Title I of the ACA (29 USC Sec. 218C).
These whistleblower protections are limited to Title
I of the ACA. Title I of the ACA contains a wide range of provisions,
including: the prohibition against denying health coverage based on
preexisting conditions; the prohibition against discrimination based
on the fact that an individual receives health insurance subsidies;
financial reporting requirements; automatic enrollment requirements;
requirements that an insurer receives rebate portions of excess premiums;
small business tax credits; and health insurance exchanges.
Please see the
national Health Care Insurance
Consumer Product Safety Improvement Act of
2008 (CPSIA). The CPSIA provides employees of manufacturers,
private labelers, distributors, and retailers of defective consumer
products with whistleblower protection (15 USC Sec. 2087). The law was enacted in
response to numerous recalls of defective consumer products, especially
children's toys. It toughens the standards for manufacturers, distributors,
private labelers, and retailers of these products and bans the use
of lead in children's products. It also prohibits the resale of recalled
products. Under the CPSIA, employers may not discriminate against
or discharge employees who:
• Report violations of the Act or any other law enforced
by the Consumer Product Safety Commission (CPSC);
• Testify, assist, or participate in proceedings regarding
such violations; or
• Object to or refuse to participate in any activity, policy,
practice, or task that they reasonably believe to be a violation of
the Act or any other law enforced by the CPSC.
The Department of Labor (DOL) is authorized to investigate
employee complaints under the CPSIA. If a violation is found, the
DOL may, among other things, order the employer to reinstate the employee
and award compensatory damages. If the DOL does not issue a final
decision within stipulated time limits, the employee may file a complaint
in civil court.
Fair Labor Standards Act (FLSA). Federal wage and hour law (FLSA) prohibits employers from, among
other things, discharging an employee "because such employee has filed
any complaint” alleging a violation of the FLSA (29 USC Sec. 215(a)(3). This includes claims for minimum wage, overtime, misidentifying
employees as exempt or nonexempt, and unpaid wages of any kind (29 USC Sec. 201).
The U.S. Supreme Court has held that this provision protects
oral as well as written complaints of an FLSA violation (Kasten v. Saint-Gobain Performance Plastics Corp., 131 S.Ct. 1325 (U.S. 2011)). This means that an employer may be
liable for retaliation if it discharges an employee because he or
she complained about an FLSA violation, even if the employee does
not make a formal, written complaint.
The Supreme Court did not resolve the issue of whether
an oral internal complaint is sufficient under the FLSA's antiretaliation
provision or if the complaint must be made to a government agency.
However, most lower courts have ruled that internal complaints are
also protected; therefore, employers should proceed cautiously before
terminating an employee who has made any complaint of wage
and hour violations.
Misuse of economic stimulus funds. The American Recovery and Reinvestment Act of 2009 (ARRA), an economic stimulus bill, prohibits nonfederal employers from discharging,
demoting, or discriminating against an employee for disclosing to
a covered entity that stimulus funds have been misused (H.R. 1-183,
Sec. 1553). Specifically, the employee must reasonably believe that
the information disclosed is evidence of gross mismanagement of an
agency contract or grant relating to agency funds; a gross waste of
agency funds; a substantial and specific danger to public health or
safety related to the implementation or use of stimulus funds; an
abuse of authority related to the implementation or use of stimulus
funds; or a violation of a law, rule, or regulation related to an
agency contract or grant related to stimulus funds.
After exhausting all administrative remedies through
the appropriate agency, the employee may bring a civil action in federal
court against his or her employer. Employers may not attempt to have
employees waive their rights and remedies under ARRA's whistleblower
provisions by an agreement, policy, form, or condition of employment,
including any predispute arbitration agreement (other than one in
a collective bargaining agreement).
Occupational Safety and Health Act (OSH Act).
Under the OSH Act, employers may not retaliate against employees
on the basis of the filing of a complaint concerning work safety (29 USC Sec. 651 et seq.
Please see the
Public employees, protected speech, and testimony
in court. In the context of public employment, issues
can arise when an employee's individual First Amendment right to engage
in protected speech (including whistleblower activity) is balanced
with a government employer's interest in managing, controlling, and
issuing discipline related to statements made by a public employee
that could be seen as representing, disparaging, or otherwise compromising
Citizens do not automatically surrender First Amendment
rights by accepting public employment. However, the Supreme Court
has held that when public employees make statements pursuant to their
official duties, these individuals are no longer speaking as citizens
for First Amendment purposes, but are operating in the employment
context. Therefore, when disciplining a public employee for speech,
it is critical to determine whether the speech was "employee speech"
or "citizen speech," the latter of which is protected by the First
Amendment (Garcetti v. Ceballos, 547 U.S. 410 (2006)).
This distinction can be fact-specific depending on the
speech and the employee's duties. For example, in a recent decision,
the Supreme Court unanimously held that a public employee who provided
subpoenaed testimony in court was afforded First Amendment
protection—even though the testimony was related to the employee's
official duties—because providing testimony was not part of the employee's
ordinary job responsibility. The court held that the employee's act
of testifying in court was outside the scope of his employment and
was entitled to First Amendment protection as a matter of public concern (Lane
v. Franks, 573 U.S. ___ (2014)).
Act of 2002 (SOX). SOX prohibits retaliation against employees
of publicly traded companies who report acts of mail, wire, bank,
or securities fraud; fraud against shareholders; or violations of
any rule or regulation of the U.S. Securities and Exchange Commission
(SEC) to their supervisors or other appropriate officials within their
companies or federal officials with the authority to remedy the wrongdoing.
The law also prohibits retaliation against employees who assist in
any investigation of such violations or participate in any proceeding
related to an alleged violation of these laws (18 USC Sec. 1514A).
Employees claiming retaliation
under SOX must exhaust administrative remedies before bringing an
action in court. Complaints are handled by the DOL. If the DOL does
not issue a ruling within 180 days, the employee may seek a trial
in federal court.
Tax fraud. The Tax Relief
and Health Care Act of 2006 created the IRS Whistleblower
Office, which is responsible for overseeing the law's whistleblower
program. Under the Act, individuals who believe that they have evidence
of tax fraud can make an anonymous complaint to the IRS about anyone,
including coworkers and employers. If the IRS investigates the claim
and collects money as a result of the complaint, the whistleblower
will receive a portion of the recovery.
Whistleblower Protection Act of 1989. The Whistleblower Protection Act of 1989, codified in various sections
of federal law, prohibits discrimination against federal employees
for reporting certain unlawful activities (e.g., gross mismanagement)
(5 USC Sec.
1213 et seq.).
Wall Street Reform and Consumer Protection Act (Dodd-Frank) created several new whistleblower protections, while also expanding
those in existing law and providing significant financial incentives
for employees to disclose to government officials what they believe
may be illegal conduct by their employers. Below is a summary of the
laws affected by Dodd-Frank's whistleblower provisions.
SOX. As noted above, SOX prohibits retaliation against employees of publicly
traded companies who report or assist in an investigation of acts
of mail, wire, bank, or securities fraud (18 USC Sec. 1514A).
Dodd-Frank clarified some unsettled SOX issues. For example,
courts were split on whether SOX grants whistleblowers a right to
a jury trial. Dodd-Frank makes clear that jury trials are available
under the law. In addition, it amended SOX by adding the following
• Non-publicly-traded subsidiaries of publicly traded companies
are now covered by SOX.
• Nationally recognized statistical ratings organizations
are now covered by SOX.
• The statute of limitations is extended from 90 days to
• Predispute arbitration agreements are prohibited under
• Individuals cannot waive their rights or remedies under
SOX (18 USC
SEC. Dodd-Frank also created new
whistleblower protections under the SEC. Employees who provide information
regarding securities law violations are entitled to between 10 percent
and 30 percent of monetary sanctions recovered that exceed $1 million
(15 USC Sec.
Employers may not retaliate against employees who provide
information regarding securities law violations to the SEC, assist
in the SEC's judicial or administrative investigations, or make required
or protected disclosures under SOX or other laws subject to SEC jurisdiction.
Employees claiming retaliation may bring a claim in federal court,
and if they prevail, they may be awarded double back pay, attorneys'
fees, and other costs. Employees must bring their claim within 6 years
of the retaliation, or within 3 years after the employer knew or should
have known of the retaliatory conduct; a claim cannot be made more
than 10 years after the retaliation.
Note: Practically speaking, this
provision gives SOX plaintiffs the opportunity to bring a claim in
federal court without first following the administrative procedures
required by SOX.
Commodity Futures Trading Commission (CFTC). Dodd-Frank also created a whistleblower program to protect employees
who provide information related to violations of the Commodity
Exchange Act or assist in an investigation or judicial
or administrative action based on such information (7 USC Sec. 26).
CFTC whistleblowers are eligible to receive 10 percent to 30 percent
of any fines recovered by CFTC that exceed $1 million. Also, individuals
may bring retaliation claims in federal court. Predispute arbitration
agreements are prohibited, as are waivers of rights under the Act.
However, unlike the SEC Act, complaints under CFTC whistleblower provisions
must be brought within 2 years of the violation.
Consumer Financial Protection Act of 2010 (CFPA). Dodd-Frank also included the CFPA, which created the Bureau of Consumer
Financial Protection and provides whistleblower protections for employees
who work in the consumer financial services sector. These employers
may not retaliate against an employee "performing tasks related to
the offering or provision of a consumer financial product or service"
• Provided information to his or her employer, the Bureau,
or any local, state, or federal authority relating what the employee
reasonably believes to be a violation of one of the consumer financial
services laws protected by the Bureau or other Bureau rules;
• Testified in any proceeding related to enforcement or
administration of the CFPA, any of the other laws protected by the
Bureau, or Bureau rules;
• Filed or instituted any proceeding under federal consumer
financial law; or
• Objected to, or refused to participate in, any activity,
policy, practice, or assigned task that the employee reasonably believed
to be in violation of any law subject to the jurisdiction of or enforced
by the Bureau.
Employees who believe they have been retaliated against
for taking any of the actions set forth above may file a complaint
with the DOL. If, after an investigation, the DOL finds in favor of
the employee, it will order the employer to take affirmative action
to abate the violation. In addition, the employee will be awarded
back pay, reinstatement, compensatory damages, and upon request, attorneys'
fees up to $1,000. If the DOL does not issue a final order within
210 days after the employee filed the complaint, or within 90 days
after it has issued a written determination on the claim, the employee
may file suit in federal court.
As with other whistleblower provisions under Dodd-Frank,
employees may not waive their rights under this provision of the law.
Also, predispute arbitration agreements are prohibited.
False Claims Act. Under the False Claims Act, an individual may bring a court action,
known as a qui tam action, against any person who knowingly
makes a false claim for payment from the government (31 USC Sec. 3729 et seq.) Employers are prohibited from retaliating against
employees who participate in a qui tam action. Employees who
prevail on a retaliation claim may be entitled to reinstatement, as
well as double back pay, special damages, costs, and attorney's fees.
Dodd-Frank expanded covered individuals to include not
only the whistleblower but also "associated others." It also provides
that employees have 3 years from the time of the retaliation to bring
Practice tip: To avoid liability
under whistleblower laws, employers should make sure that adverse
actions against employees are well documented and based on legitimate,
nondiscriminatory, and nonretaliatory reasons. Also, employers should
encourage employees to report suspected improprieties internally so
that they can be investigated and resolved by the employer.
Though an employment contract is generally understood
to be a written agreement entered into by the employer and the employee,
an unwitting employer may ultimately find itself bound to a promise
made by a personnel manager during an interview, in the course of
the worker's employment, or in a memo posted on a bulletin board.
A promise, or “contract,” may also be implied in an employee handbook.
Most often, the promise boils down to this: no discharge except for
Although the enforcement of such promises varies considerably
from state to state, employers should be extremely careful about the
promises and representations that are made to employees before and
during employment. Employers should train their managers not to make
any statements or promises regarding terms or conditions of employment
to job applicants or employees. Some careless promises can place an
employer in an unexpected and undesirable contractual relationship
and effectively remove any right it may have had to terminate an employee
Disciplinary policies. Many companies
have specific disciplinary procedures set forth in a policy manual
or employee handbook. If the employer has failed to follow such established
procedures or the policies limit the employer's discretion to terminate
its employees, the employee may have a state law cause of action for
breach of implied employment contract or wrongful discharge.
Federal law makes it illegal to discharge an employee
for performing jury service in any U.S. court (28 USC Sec. 1875).
Although the concept of “concerted activity” is usually
associated with union organizing efforts, it often extends beyond
union activity. Under federal labor laws, employers are forbidden
from terminating employees that work together, even if not in a union,
to bargain with the employer, challenge the employer's policies or
practices, or advocate for better pay, benefits, or working conditions.
As a result, “concerted action” is defined broadly and may include
just about any lawful act undertaken by two or more employees, whether
the employer has a unionized workforce or not.
Please see the
national Unions, National Labor Relations Act
The Uniformed Services Employment and Reemployment
Rights Act of 1994 (USERRA) (38 USC Sec. 4301 et seq.) provides protection for employees who are returning
home from active military service and protects them from discharge
without just cause.
Cat's paw liability. The U.S. Supreme
Court has ruled that an employer may be held liable under USERRA for
an adverse employment action taken by an unbiased human resources
(HR) manager when the action is based on the recommendation of a supervisor
who had discriminatory intent (Staub v. Proctor Hosp.,131 S.Ct. 1186 (U.S.
In this case, the vice president of HR fired an employee
following a report by the employee's supervisor that the employee
had violated the terms of a disciplinary warning and a review of the
disciplinary documents in the employee's personnel file. However,
the disciplinary documents were put in the file by the employee's
supervisors, both of whom were hostile to the employee's military
obligations that were protected under USERRA. The vice president of
HR did not investigate the supervisor's report nor investigate whether
the disciplinary documents were based on legitimate, nondiscriminatory
factors. The fired employee subsequently brought a lawsuit under USERRA.
Even though the vice president of HR had no discriminatory
motive, the Court ruled that the employer could be liable. Under the
standards established by the Court, an employer may be liable if all
the following are established:
• A supervisor performs an act motivated by unlawful bias;
• The act is intended to cause an adverse employment action; and
• The act is the proximate cause of the ultimate employment
This case illustrates the
importance of having a process in place to effectively review disciplinary
actions. Additionally, although this case was brought under USERRA,
the Court noted that USERRA's language regarding a "motivating factor"
is very similar to Title VII. Thus, "cat's paw liability" maybe applied
by courts in cases brought under Title VII.
Please see the
national Military Service, national Civil Rights
In addition to federal law, most states have enacted
a number of laws that affect an employer's ability to terminate its