HR Management & Compliance

Unconditional Offer to Reinstate Employee Prevents Wrongful Discharge Claim

I often receive calls from employers that say they just met with an employee to talk about job performance, the session didn’t go well, and now the company has received a bizarre communication from the individual and doesn’t know how to proceed. After I’ve read the message and talked with the employer, it becomes clear (at least to me) the parties have completely different views of what transpired during the meeting, and no one truly understands the employee’s status. A recent Montana Supreme Court case reminds employers that an unconditional offer to reinstate an employee often reduces an employer’s legal liability.

Confusion Arises

Daniel McCaul started working for Southwest Montana Community Federal Credit Union (FCU) in August 2016. In November 2017, the credit union’s CEO Tom Dedman met with him to review his position.

There’s no doubt the discussion was at least somewhat contentious: Dedman instructed McCaul to “justify [his] position with a cost-benefit analysis” because other employees “did not want [him] working there.”

Nevertheless, the parties left the meeting with very different impressions of what happened. McCaul contended Dedman had told him during the meeting that “he no longer had a job” at the credit union, while the CEO denied terminating him.

The resulting confusion colored the parties’ subsequent conduct. Three days after the meeting, McCaul sent Dedman a 20-page letter claiming he had been wrongfully terminated. The CEO responded he hadn’t fired McCaul and that the employee needed to return to work as soon as possible. McCaul, however, declined the offer and continued to insist he had been wrongfully let go.

Consequently, the credit union, through its attorney, reiterated to McCaul that (1) he had not been terminated, and (2) if he didn’t return to work, his continued absence would be treated as job abandonment. Thus, when the employee still didn’t return, the employer fired him for abandoning the position.

Litigation Ensues

McCaul filed a lawsuit under the Montana Wrongful Discharge from Employment Act (WDEA) claiming the credit union lacked good cause to terminate him during his meeting with Dedman. A fundamental element of a WDEA claim is that the employee must take reasonable steps to find subsequent employment and lessen or mitigate his damages. Here, the credit union asked the district court to grant judgment in its favor before trial because McCaul failed to mitigate his damages.

Specifically, the credit union argued that regardless of whether McCaul was in fact initially fired, it was undisputed the employer unconditionally offered to return him to work, yet he refused. Therefore, even assuming the meeting with Dedman resulted in a wrongful termination, the employee failed to minimize his damages by accepting the unconditional reinstatement offer. McCaul, on the other hand, claimed special circumstances made his conduct reasonable, but he failed to offer any real justification for refusing to accept the return-to-work offer.

Considering the evidence and the parties’ arguments, the district court granted summary judgment (dismissal without a trial) in the credit union’s favor, and the Montana Supreme Court affirmed. McCaul v. Southwest Montana Community Federal Credit Union, 2022 MT 6N.

Bottom Line

McCaul’s case is a reminder of a powerful tool employers have at their disposal: an unconditional offer of reinstatement. Even when (1) there is confusion about an employee’s job status or (2) a supervisor has mistakenly terminated a worker, any resulting issues can likely be fixed by simply offering the individual’s job back.

Of course, there are situations when a reinstatement offer cannot rectify a wrong. For example, it wouldn’t be reasonable to require an employee to return to work if it meant continuing to report to a supervisor the individual has accused of discrimination or harassment. But in most cases, the offer is an effective silver bullet to prevent, or at least drastically limit, liability for a wrongful discharge claim.

Jason S. Ritchie is a partner with Ritchie Manning Kautz PLLP in Billings, Montana. You can reach him at jritchie@rmkfirm.com.