No, we’re not arresting anyone. An Ohio appeals court significantly expanded employees’ rights recently when it upheld a fired employee’s right to trial after her employer terminated her because she threatened to talk to her attorney.
Generally, Ohio employees are “at-will” employees, meaning employers may fire them for any reason or no reason at all. But employment laws and judicial decisions continue to limit employers’ rights to fire employees. This case marks the further erosion of the at-will employment doctrine in Ohio.
Caterer cuts portions
Debra Newcomb began working for Hostetler Catering in 1987. Hostetler paid its employees a monthly bonus of $10 for each year the employee had been with the company. But in 2003, business was slow. Business owner Edward Hostetler decided to cut the bonus to $5 for each year served. The reduction didn’t sit well with Newcomb.
Newcomb stewed over the bonus situation and mentioned to Hostetler that she would be consulting an attorney. A week later, Hostetler fired her, alleging that she threatened another employee. Newcomb filed suit charging Hostetler with breach of implied contract, promissory estoppel and a public-policy wrongful discharge. Hostetler served up a motion to dismiss the case, and the trial court agreed. Newcomb appealed the ruling.
Charges à la carte
The appeals court examined Newcomb’s claims, starting with the breach of implied contract. Newcomb tried to argue that Hostetler’s promise to pay the $10 per year of service per month was an implied contract. But Newcomb’s lawyer made a strategic error that dampened the court’s appetite for this argument, and the promissory estoppel charge as well. Prior to the trial court’s ruling, the attorney had voluntarily dropped those arguments, effectively taking them off the menu. Consequently, the trial court never ruled on those issues. The appeals court can address only what the trial court did.
But the public-policy argument definitely whetted the court's appetite. The court noted that in violation of public policy can occur when:
- A clear public policy existed and was manifested in a state or federal constitution, statute or administrative regulation, or common law.
- Dismissing employees under circumstances like those involved in the plaintiff’s dismissal would jeopardize the public policy.
- The dismissal was motivated by conduct related to the public policy.
Now Newcomb had something to work with. For starters, the right to legal representation is clearly listed in the Ohio Constitution and common law. But the real argument was whether employees would be unlikely to seek counsel if they knew they would be fired for doing so. The court determined that the employer’s action was intended to deter the employee from seeking legal representation.
By firing the employee over such a minor disagreement, the employer really made something out of nothing.
Although neither court actually ruled on the issue, employers are not legally required to pay bonuses and may change them at will. Ideally, bonus formulas should not be set in stone, but subject to market pricing. Employers can protect themselves by making it clear that bonus formulas are subject to change. An explanation of bonus formulas should be in writing and placed in the employee handbook. Including notice in the handbook that bonuses are subject to change reinforces the notion that neither the handbook nor the bonus policy is a contract.
Finally, employers shouldn’t let the idea of an employee seeing an attorney ruin their appetite. Most attorneys would have told Newcomb that $5 per month per year was not worth suing over. It’s the same as being stiffed for a tip, nothing more.
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