To fire or not to fire: Remember arrested employee may not be guilty

Learning that a trusted employee has been arrested and accused of theft is always alarming, but the question of what to do—suspend, terminate, or wait and see how the case plays out—adds even more stress. Recently, several attorneys who represent employers were asked what to do in such a situation. Their advice: Suspension or termination may be appropriate, but always remember that arrest doesn’t equal conviction. 

After learning that an employee who often worked by himself and had access to tools and equipment had been arrested, an employer wondered about the legal risks of terminating or suspending him to remove a possible threat to the business.

Reggie Gay, an attorney with the McNair Law Firm, P.A. in Columbia, South Carolina, says the decision about what to do about such an employee depends on the specific facts. If the employee is employed at will, the employer can terminate for any reason as long as it’s not an unlawful reason, such as illegal discrimination based on race, national origin, gender, or any other protected class.

But taking action against an employee because of an arrest can get tricky since the arrest doesn’t necessarily mean the employee is actually guilty of theft and the action could be seen as unlawful discrimination instead of a legitimate effort to protect the business. Gay reminds employers of the Equal Employment Opportunity Commission’s (EEOC) position emphasizing the difference between an arrest and a conviction.

In April 2012, the EEOC issued guidance intended to prevent discrimination against certain protected classes of individuals. That guidance states that taking action against an employee “based on an arrest, in itself, is not job-related and consistent with business necessity.” But the guidance also says “an employer may make an employment decision based on the conduct underlying an arrest if the conduct makes the individual unfit for the position in question.”

In addition to consulting the EEOC guidance, Gay says the employer should consider the employee’s length of service and record on the job when making its decision, and it should try to learn details about the arrest before taking action since it’s important to determine whether the employee poses a risk to the employer.

“For instance, the conversation may reveal that an ex-girlfriend has accused the employee of stealing some personal item that’s related to the end of their relationship,” he says. But an arrest may justify termination if, for example, “the employee was arrested for selling stolen tools at a local flea market.”

Ryan B. Frazier, an attorney with the Kirton McConkie law firm in Salt Lake City, Utah, also urges considering the EEOC’s guidance since it has stated that taking adverse employment action on the basis of an arrest could be discriminatory “if it results in a disparate impact on particular protected groups,” for example people of certain races or ethnicities.

Another issue to consider when deciding how to handle an arrested employee relates to contractual obligations, such as a collective bargaining agreement (CBA), employment contract, or employee handbook governing when someone can be suspended or terminated, Allison Wannop, an attorney at Dinse, Knapp & McAndrew, P.C. in Burlington, Vermont, says.

If employment at will hasn’t been modified by a CBA, contract, or handbook, the employer in theory could terminate the employee and cite no reason, Wannop says. But taking that course could make the employer vulnerable to a retaliation or discrimination charge based on a protected characteristic such as age, gender, race, or disability.

Getting legal advice for an individual situation also can serve the employer well, Benjamin W. Mounts, an attorney with Steptoe & Johnson PLLC in Charleston, West Virginia, says. “There may be facts relevant to your situation that could change the analysis. Also, make sure you’re treating this employee like you’ve treated others. Consider whether other employees have engaged in similar off-duty conduct. If so, were they disciplined?”