Terminating employment, notice periods, termination payments and rights to references.
Although there is no specific legislation on informing employees of their benefits upon termination (with the exception of California), it is advised to do so to avoid claims by former employees who lost their benefits because they were not informed that they had to claim them by a specific deadline …
In Mui vs Massachusetts Port Authority (2017), the Massachusetts Supreme Court found that the right to sick pay accumulated during the course of employment, but unused, does not count as unpaid wages for wage arrears purposes when an employment relationship is terminated. It thus does not give rise to fixed penalties – such as treble pay damages.
In Gogos vs AMS Mechanical System Inc (February 7th 2017), the 7th circuit court gave backing to a summary dismissal against an employee who had claimed an urgent need for medical treatment. They had quarrelled with their Supervisor about production of a sick note to cover their impending absence and the individual had limited English language skills. They were later able to produce medical evidence that they were justified in seeking medical treatment.
In Kaye LLC vs Rosefield (2017), the New Jersey Supreme Court found that an employer had the right to reclaim salary paid to an employee (equitable Disgorgement) for extreme disloyalty, even if the employer’s business didn’t experience a direct loss. However, they could only reclaim that part of the salary paid during the specific period of disloyalty and where the employee was highly paid and where they had committed several acts that jeopardised the employer’s business.
2018: When a factory manager working for the US farm equipment manufacturer John Deere was transferred from China back to Iowa “under a cloud” for alleged personal misconduct and demoted he tried to take his company to court under the State Civil Rights Act. However, the Iowa Supreme Court, ruled (on appeal) that the case could not be heard under state law. This was because the company had its headquarters cross state lines and the disciplinary matter related to events in another country.
2018: The Securities and Exchange Commission (SEC) is scrutinizing termination severance deals to ensure that they are not linked to whistleblower restriction clauses. If payments of severance are so linked the SEC will take action against the company and fines have been in the order of US$500,000.
2019: When government agencies detect potential wrongdoing in companies they may ask the company concerned to appoint an external counsel to investigate and report regularly to them. In such circumstances, employees are under an obligation to cooperate or lose their jobs. However, if the investigation uncovers wrongdoing that leads to a prosecution of any individual employees based on the evidence so gathered (i.e.: under compulsion) they have the right under the US Fifth Amendment (non self-incrimination) right. This is called a “Kastigar” challenge and it could lead the individual to be cleared of any charges or court sentences. Employers should therefore seek to quickly distance themselves from such outcomes and take what steps necessary to allow them to terminate employment in a final, irreversible way.