What is "good cause" for a termination?

Question:

I have worked for a small, family-owned business for more than 20 years. Our employee handbook says employees will not be fired without "good cause." It also has a progressive discipline policy, which lays out the disciplinary steps the company will take before resorting to termination (verbal warning, written warning, etc.) In the time I've worked here, only a few employees have been fired, all for serious misconduct like stealing from the company. A few months ago, the company's new CEO announced that he was planning to "clean house" and get rid of employees who were not pulling their weight. He said he wants to bring in a more professional workforce. I was just told that I'll be losing my job in two weeks. When I brought up the good cause requirement, I was told that the company can fire employees whenever it wants, for any reason. Do they need good cause to fire me?

Answer:

In general, most employers in the United States have the right to fire employees at any time, for any reason (called "at-will employment"). However, your employer may not enjoy this same right. By promising to fire employees only for good cause, your employer may have given up the right it would otherwise have to terminate your employment "at will."

An employee who works at will can be fired at any time, for any reason, without any notice. Employees are generally presumed to work at will (except in Montana, where the rules are different). However, this presumption may be overcome if the employer makes promises that are inconsistent with at-will employment. By including language in the handbook that employees will be fired only for good cause, as well as promising to use progressive discipline, your employer appears to have given up the right to fire at will.

The next question is whether your employer has good cause to fire you. Good cause may be defined in your employee handbook, in which case that definition will apply. If the term isn't defined anywhere, a judge will have to decide what "good cause" means, based on the facts and context of your situation. Typically, good cause is defined as a legitimate, good faith, business-related reason. In your situation, the company has fired only a handful of employees in 20 years, all of who were fired for serious misconduct. You can use this fact to argue that, at your company, "good cause" means that you must have engaged in serious misconduct.

The CEO at your company has implied that he's firing employees with poor performance. Poor performance can also certainly constitute good cause to fire someone. However, given that employees have not been fired for performance-based reasons in the past, and that you did not receive the benefit of the company's progressive discipline program to put you on notice of any performance problems, the company might have a difficult time winning this argument.

Your best bet right now, in the two weeks you have left, is to talk to an experienced employment attorney. An attorney can evaluate all the facts and let you know how strong your claim is. An attorney can also help you try to negotiate with your employer immediately, either to allow you to keep your job or to leverage a generous severance package. And, if negotiations fail, an attorney can help you make your case in court for wrongful termination.

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