New Hampshire recognizes the employment at-will doctrine, which generally
permits an employer to terminate an at-will employee at any time for any
reason. However, with wrongful termination lawsuits on the rise, employers
should take precautions when terminating an employee to ensure the termination
is risk-free.
First, employers should make certain that an employee falls into the “at
will” category. Where neither an employment contract nor a labor agreement
exists, an employer can generally terminate an employee with or without cause.
Employee handbooks and personnel manuals, although often beneficial, may give
rise to implied contracts. Where an employer has supplied these materials,
it should consider the contents prior to terminating an employee. To
illustrate, an otherwise at-will employment relationship may be transformed into
a contractual relationship by an employee handbook provision that indicates that
the employer will only discharge an employee for “just cause.”
Once an
employer has considered whether any implied or express contractual obligations
exist limiting an employer’s termination powers, an employer need not provide
the employee with prior notice of the termination. An employer is also not
obligated to provide a terminated employee with severance pay. Employers
should, however, keep in mind that R.S.A. 275:44, I, requires an employer to pay
a discharged employee his/her full wages, whether hourly wages, salary, or
commissions, including any amounts owed for unused vacation or “comp” time,
consistent with the company’s accrual policy, within three days (72) hours of
discharging the employee.
There are only a few exceptions to the at-will doctrine in New
Hampshire. A former employee could prevail in a wrongful discharge action
against a former employer if the employee were able to prove (i) that the
discharge was motivated by bad faith, malice, or retaliation; and (ii) that the
termination was contrary to public policy. For instance, as New
Hampshire’s workers’ compensation law clearly encourages employees to make
claims for work-related injuries, a court would likely determine that the
termination of an employee who files such a claim without any other valid
business reason, is contrary to public policy.
Both large and small employers
can take steps to minimize their potential liability for a wrongful discharge
claim. Prior to terminating an employee, an employer should review all
relevant documentation, employee handbooks, and personnel policies, and ensure
that management adhered to all stated policies. An in-person termination
meeting with the employee, with another manager present, is often more
appropriate than terminating the employee via telephone or a written notice. The
employer should always document the termination meeting in a letter or
memorandum that includes the time, date, attendees, and substance of what was
communicated at the meeting. The employer should also be prepared to
provide the employee with information regarding health insurance continuation
(COBRA), the employee’s life and/or disability insurance, and the employee’s
status as to any pension, retirement, or profit sharing plan. Last, while
an employer is not required to give an at-will employee the reason for
termination, it is usually prudent to do so, and often helps to minimize
misunderstandings.
In sum, there are simple and effective steps which employers can take to
ensure risk-free terminations. When an employer is in doubt on any aspect
of terminating an employee, the employer should consult with a qualified
employment law attorney prior to the termination. By taking the
appropriate steps in advance of and during the termination process, an employer
can avoid the significant time and expense of litigating a wrongful termination
lawsuit.
