Termination of Employees
By Richard R. Hammar, J.D., LL.M., CPA
© Copyright 1991, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m43
It is the prevailing rule that an employee hired for an indefinite term may be discharged by the employer at any time with or without cause,1 subject to the following limitations:
1. The National Labor Relations Act makes it unlawful for an employer engaged in a business or activity “affecting commerce” to discharge an employee on the basis of union activities.2
2. The Civil Rights Act of 1964 makes it unlawful for an employer that is engaged in a business or activity “affecting commerce” and that employs 15 or more employees for each working day in each of 20 or more calendar weeks in a year to discharge any individual on the basis of race, color, religion, sex, or national origin. The Act does permit religious organizations to discharge or otherwise discriminate against employees on the basis of religion. The constitutionality of this exemption provision has been upheld by the United States Supreme Court, which means that it is not unlawful for a religious employer covered by the Act to discriminate in any position (involving either religious or “secular” duties) on the basis of religion.3 Few churches will be covered by the Act. See The Civil Rights Act of 1964 for a complete discussion.
3. Although not directly limiting an employer's right to discharge an employee engaged for an indefinite term, some states have enacted laws requiring employers to provide discharged employees with a letter setting forth the “true cause” of the discharge.4 Ordinarily, however, the employer is not obligated to provide such a letter unless it receives a written request from a discharged employee.
4. A number of courts have protected “at will” employees by permitting them to sue their former employer if their dismissal violated “public policy.”5 Thus, for example, employees who were discharged for refusing to commit perjury or a crime, for performing jury service, or for filing a workers compensation claim against their employer have been able to sue their employer for retaliatory discharge.6 This exception to the employer's right to discharge employees engaged for indefinite terms of employment has been narrowly construed, and is rejected altogether by some courts. One court has rejected the argument that the “national policy” against religious discrimination is sufficiently compelling to create an exception to the “terminable--at--will” doctrine in the context of religious employers.7
5. A few courts have eroded an employer's right to fire “at will” any employee hired for an indefinite term by finding that the employer's “employee handbook” became a part of the contract of employment and afforded employees certain procedural protections.8 This approach has been rejected by other courts.9 Many courts have upheld the validity of “disclaimers” appearing in employment contracts and handbooks, which purport to disclaim any contractual meaning or intent.
An employee who is discharged without good cause before the end of a specified term of employment generally is entitled to recover as damages the salary and other benefits agreed upon for the remainder of the employment term less the amount the employee earned, or with reasonable diligence might have earned, from other employment of the same or a similar nature during the period.
Finally, note that the civil courts generally will not interfere with a church's decision to terminate a minister's services. This subject is covered fully in Termination.
For related information on this topic see the following articles:The Church as Employer—Unemployment Taxes