HR Management & Compliance

Waiving Departing Employee’s Notice Period Can Raise Discrimination Concerns

In a recent article, we looked at the pros and cons of letting soon-to-be-departing employees work the duration of their notice period or whether it’s better to cut ties quickly. Of special concern to many HR managers is whether waiving the notice period can somehow be considered discriminatory. Coincidentally, the Iowa Court of Appeals just decided a case addressing the issue.

Facts and Findings

Alisha Munoz was a seasonal employee at Adventure Land. She gave a one-day notice, letting the employer know Labor Day would be her final day of work. The company determined it didn’t need her to work and waived her notice.

Munoz filed a lawsuit against Adventure Land alleging sex and disability discrimination as well as wrongful discharge in violation of public policy. The original court granted summary judgment (dismissal without a trial) to the employer on all charges.

While the appellate court agreed summary judgment was appropriate for most counts, it did send Munoz’s hostile work environment claim back to the lower court for further review.

Terminations and Benefits Qualifications

If Munoz had worked through Labor Day, the court noted she would have received a seasonal bonus. When her notice period was waived, instead of just not getting paid for the hours she didn’t work, she was losing out on a bonus as well. Although the court didn’t address the matter, be aware that terminating employees immediately before they qualify for certain kinds of benefits (e.g., disability coverage) can result in not only the types of claims Munoz filed but also potential Employee Retirement Income Security Act (ERISA) issues.

Munoz gave only one day of notice but claimed (in her initial complaint) she was “terminated.” The appellate court reiterated the idea that an employee who resigns may not subsequently claim the employer’s acceptance of the resignation was somehow a discriminating employment action.

Hostile Work Environment

Munoz based the hostile work environment claim on disability-related concerns (and not the quick acceptance of her resignation) and allegations of almost “daily bullying and harassment from her supervisors at Adventure Land.” In the court’s eyes, the claim was bolstered by the fact she alleged daily and highly inappropriate comments from supervisors, adding the “harassing behavior of her manager carries more potency than that of a co-equal.”

On the other hand, Munoz had worked at Adventure Land for only a short period of time, which the court noted can make a hostile work environment claim less viable. At the summary judgment phase of the proceedings, however, the court decided the claim could go forward. After all, hostile work claims usually present mixed questions of law and fact, which is normally the jury’s purview.

Wrongful Discharge

Wrongful discharge in violation of public policy is a somewhat amorphous claim in Iowa that allows an employee’s counsel to look to not only specific statutory policies but also more general ideas of what is and is not a public policy.

In not allowing the claim to go forward, the appellate court underscored consistent findings that (1) the public policy must be clearly defined, and (2) a specific statute preempts secondary claims of wrongful termination in violation of public policy. The court stated once again the statute would be the “exclusive remedy for [any] violation.” Alisha Munoz v. Adventure Lands of America Inc.

Court Reiterates Decision

Two weeks after the Munoz ruling, the Iowa Court of Appeals addressed the matter again in Nemmers v. City of Spencer, Iowa. In a very short ruling, the court stated the Iowa Civil Rights Act (ICRA) preempts claims that would otherwise be covered under the Act.

The Nemmers case involved an age discrimination claim, which the ICRA clearly addresses. The short opinion might be read as a message from the court saying: “Stop bringing this stuff to us. We already told you.”

Big Picture

What’s an HR manager to do? Draft policies giving you the ability to waive notice periods but still enforcing them when it’s appropriate to do so. Assess your business needs carefully including any issues relating to confidential data.

The upshot of the Munoz case? First, simply ending the notice period in and of itself isn’t typically discriminatory action. Second, accepting the resignation, even if you act on it early, isn’t per se discrimination.

Jo Ellen Whitney is an attorney with the Davis Brown Law Firm in Des Moines, Iowa. You can reach her at joellenwhitney@davisbrownlaw.com.